Reducing financial hardship by establishing contact A personalized and targeted communication intervention to prevent problematic debt

Since financial hardship is increasing in the Netherlands, we conducted two studies to test possibilities to prevent unnecessary debt accumulation. In these studies, we investigated two communication strategies to motivate customers to make a payment arrangement with their creditor before their debt increased. Among clients of a large Dutch energy provider we tested the effect of personalization of text messages (compared to non-personalized messages) on
payment arrangements. Results confirmed our hypothesis that a personalized text message (versus a non-personalized text message) increased the amount of payment arrangements customers made, particularly among one of their labels. In our second study, we tested the effect of targeting among loyal customers of a telecom provider, who suddenly failed to pay their bill on time. We tested the effectiveness of four different text messages on this group.
Two messages were fitted to their specific situation, mentioning the possibility of a payment arrangement, and the other two messages did not contain any targeting. We found that one of the targeted messages resulted in significantly more payment arrangements compared to the original text message of the company. We conclude that both personalization and targeting are interesting strategies to further explore to prevent unnecessary debt accumulation.