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Customer communication is a fine art. When interacting face-to-face, you naturally alter your communication according to their age, tone, facial expressions, and more. When interacting digitally with thousands of consumers, however, this becomes incredibly tricky.

Companies must increasingly embrace digital communication. COVID-19-enforced quarantines and lockdowns have pushed life online, forcing consumers of all ages onto digital channels. Consider the facts that:

  • In 2020, Fintech apps rose 72% in popularity throughout Europe
  • European digital adoption jumped from 81 to 95%
  • Over 70% of consumers will continue using digital services with the same frequency even when the pandemic ends

It is clear that digital communication is now the de facto norm for modern organisations. However, how do different generations react to different communication strategies? This article will delve into each generation’s communication preferences, and assess which methods work best for which segment before leaving you with 5 top tips to guide your communications strategy going forward.

Generational gaps

Do you speak to your grandparents in the same way that you speak to your friends? Probably not. Appropriately tailoring what you say, and how you say it, is a crucial aspect of communication.

Let us therefore examine which communication methods work best for each generation.

  • Mature/Silents (born 1928 – 1945)

This generation generally prefers to either interact with a customer service agent face-to-face or over the telephone. Their low levels of tech literacy mean that they would usually prefer speaking with somebody to resolve their issue rather than having to work things out for themselves. If you are going to write to them, direct mail might work better than emails or SMS.

  • Baby Boomers (born 1946 – 1964)

Likewise, boomers grew up in a pre-digital world and so are also big fans of face-to-face or over-the-phone conversations. It is a given that they would prefer to resolve an issue by speaking to an actual employee rather than having to use some sort of self-serve portal. However, boomers are surprisingly active on social media. An estimated 82.3% of boomers have some form of social media presence. Thus, it is worth digging into each boomer’s individual preferences before crafting your communication accordingly.

  • Generation X (born 1965 – 1980)

Generation X is pretty well-versed in most digital technologies. They generally prefer SMS or email-based communication and always appreciate more information rather than less. Gen X-ers lead the way when it comes to conducting pre-purchase research. In other words, if you can provide this information in abundance and do manage to convert them, they are arguably the most loyal out of all generations. So it is well worth going the extra mile to acquire and please Gen X-ers.

  • Generation Y/Millennials (born 1981 – 1996)

This generation is extremely comfortable with digital technology, wanting to resolve issues quickly and often independently. 75% of millennials find phone calls to be too time-consuming, while 69% enjoy resolving issues on their own. The vast majority of millennials are on social media, meaning this is another good communication avenue to consider. It is highly likely that millennials’ strong preference for digital communication will only increase in post-COVID times.

  • Gen Z/Boomlets (born 1996 – 2011)

This is the smartphone-first generation. An estimated 75% actively prefer using their smartphone versus computer or other devices. In the meantime, SMS/text message marketing has been found to be more effective with this generation than any other. Since Gen Z is already the largest generation, every company needs to update and adapt their systems to cater to mobile-first communications going forward.

Your weapons of choice in collections

Let us now dig into the pros and cons of each channel before identifying which works best for each generation.

  • Direct mail/letters

Direct mail is pretty ineffective, with 51% of past-due customers taking no action whatsoever after receiving a dunning letter. It takes plenty of time and effort, while also costing far more than sending an SMS/email/social media message. Postage is a large cost for most collections teams (after employee salaries).

You are also unable to identify if a customer has even opened your letter, let alone read it. However, if you have certain older consumers (especially in the mature/silent generation), then it is highly likely they will respond to direct mail more than to their digital communication counterparts.

  • Phone calls

Phone calls are perhaps the most direct way to communicate with a consumer. However, if these calls are unexpected, they may go unanswered—especially if you try ringing a younger consumer out of the blue. This is unsurprising as younger generations are now more used to texting with a mobile device. But this is more than just a young people problem. If you have not previously spoken with consumers, or if they are not expecting your call, expect it to go unanswered.

So while phone calls are still a viable communication option, especially for slightly older consumers, they are far from the most effective—especially if past-due customers are not expecting your call.

  • SMS

On the face of it, SMS messages are a fantastic communication channel. Most mobile users check a text very quickly after having received it, meaning it is likely that your messages will at least get read. Simply send consumers a link to a dedicated payment landing page where you can measure metrics like repayment rates, and see if consumers were interrupted throughout the repayment process, before optimising the landing page accordingly.

However, not all generations view SMS payments in the same light. Some consumers (especially older ones) might worry about fraudulent activity and may end up blocking your number—making the dunning process even harder than before. Younger generations, on the other hand, are increasingly comfortable with SMS-based payments.

  • Email

As with SMS messages, emails give you the advantage of being able to accurately track key metrics: open rate, click-through rate, bounce rate, and more. You can therefore use these results to better tweak and tailor your copy. You can also run A/B tests to discern which results work best for which segment, making your communication strategy as effective as possible.

5 top tips to master your communication in 2021

Here are our 5 general recommendations for how to effectively communicate with past-due customers in 2021:

  1. Segment customers according to their age, communication preferences, and previous behaviour.
  2. Embrace digital communication methods that link out to self-service portals.
  3. Leverage A/B testing and the multi-armed bandit to improve your communication on an ongoing, iterative basis.
  4. Track—and analyse—the performance of your digital communications.
  5. If in doubt, or if a customer seems to really be struggling, give them a call.

Embrace the shift towards digital communication

Elder consumers may well prefer direct mail and phone calls to digital communication, so you should always be willing to cater to their needs. On the whole, however, the most successful collections teams will be those that embrace digital communication.

Digital communication is easier and cheaper to scale and it provides key metrics, allowing you to optimise your strategy going forward. Not to mention it is more welcome amongst younger consumers. Most importantly, offering digital repayment methods has been proving to be far more effective than providing traditional channels alone.

To learn more about how receeve enables collections teams to craft, hone, and scale their digital communications with ease, get in touch.

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