Part I of this series — intended to highlight shifting debt collection communication techniques — focused on characteristics of the millennial generation, their communication preferences and the challenges and opportunities millennials present to those who collect debt. Part II, below, will draw out the unique characteristics of seniors and the challenges and opportunities they present from a debt collection perspective.
Profile of the Seniors
The senior generation is composed of people over the age of 55. It contains a formidable subset, those over age 65, who comprise the fastest growing segment of the U.S. population categorized by age. This growth is fueled by the aging baby boomer — those born between 1946 and 1964 — population. Based on current estimates, the 65+ crowd will grow from 13 percent to 20 percent of the U.S. population over the coming years.
As a group, seniors are currently grappling with both unemployment and underemployment. Older workers, like all other workers, have been hit hard by the recession. Unemployment for seniors is on the rise, and older men have been hit hardest. Workers aged 55 and older experienced a 7.1 percent unemployment rate in May, up from 7 percent in April. Older men in this same category saw a 7.6 percent unemployment rate as compared with 5.9 percent for older women.
Following a departure from employment for any reason, seniors are currently only half as likely to rejoin the workforce as compared to other unemployed workers. Those who are able to rejoin will be paid at least 20 percent less than the amount they were paid before they left the workforce.
Baby boomers, also called the sandwich generation, are also finding challenges beyond the workforce. Nearly 60 percent of all baby boomers are supporting their grown children financially, and many are providing their aging parents with care as well.
These responsibilities, coupled with the impact the recession has had on seniors as a whole, have forced 75 percent of baby boomers to find some means to supplement their retirement income in order to meet their basic living expenses. In fact, since 2008, half of those over age 55 have actually extended their retirement due to financial necessity by at least three years causing the average retirement age for seniors to move to age 70 and their average annual spending to decrease.
Seniors generally have lower incomes than other demographic groups striated by age. Among those over age 65, 20 percent of all couples and 41 percent of all singles rely solely on social security as their source of income.
Seniors have become the face of the indebted and their debt levels are rising. Over 63 percent carried housing debt in 2007 as compared to the 49 percent of seniors who carried housing debt in 1989. The recession has further eroded the wealth of American seniors by reducing the value of their homes. Seniors representing all socioeconomic groups are upside down on their mortgages and now owe more money on their home loans than their residential property is worth. This increase in the loan to value ratio of many properties coupled with an increase in the popularity of reverse mortgages is contributing to the denigration of senior wealth and the creditworthiness of seniors generally.
Credit card debt also plagues the senior generation. Seniors are using their credit cards to fund income shortfalls and to pay medical debt. Between 1995 and 2004, senior citizen credit card debt rose 149 percent, and it is still rising. Today 41 percent of eligible workers over the age of 55 have credit card debt equal to or in excess of their savings.
Many would assume seniors are free of student loan debt. But this is not the case. Of those over age 50, 5 percent still carry student loan debt originally incurred to fund their own college educations. It is also true that seniors are likely to be primary obligors or serving as guarantors on student loans incurred by their children in order to fund their college educations.
As a group, seniors are fiercely loyal, stable and habit driven. They are loyal to well-known brands, retailers and service providers. They do not change doctors, banks, auto dealers, insurance companies or shopping patterns easily and will pay more for real or perceived quality. Dependability and predictability are important to seniors. People become risk-averse with age and prefer hassle-free products and services, often looking for well-known brands, retailers, or service providers. Seniors have a very strong to desire to do business with a person rather than a company and want to believe any company they patronize actually cares for them and their needs.
Seniors love personal service and prefer face-to-face interaction over all other forms of communication. If face to face interaction is not practical or possible, seniors prefer, in order of preference, one on one communication by telephone, written communication and email communication. In contrast to the millennials, seniors read their mail, answer their phone calls and respond to emails. They are not text savvy at this time.
Of critical importance to debt collectors should be the realization that seniors want others to cater to their limitations without highlighting them. They appreciate easy to read text, larger font options, easy to hear announcements and uncomplicated, consistent messages. Debt collectors should take care to speak slowly, clearly and at a relatively high volume when communicating with seniors. Care should be taken to match dialects, accents and in a perfect world the relative age of the caller with the age of the senior who is receiving the call.
As consumers they are driven by convenience and ease of use; but not in the same way millennials are drawn to e-convenience at the expense of personal service or privacy. Convenience to seniors means smaller stores, shorter lines, live operators and little or no wait time. Service providers and stores that understand how to quietly, effectively and almost subliminally target seniors without making them feel old will be most successful. Examples of retail techniques that will make a store “senior friendly” include wide aisles; warm, bright lighting; well-lit parking areas; stairs marked with contrasting colors; easy to locate restrooms, comfortable and ample seating/resting areas; package carryout, rewards for long-term patrons and of course coupons. Examples of online techniques that have been used to attract seniors include web sites with high readability, high contrast, large font and an easy to use magnification feature; high volume for audio presentations and an easy to find contact list for those who wish to speak with a live person. Apps designed for the senior population should definitely be designed with a large font and a magnification feature. Never overlook the benefit of large font in any sort of senior communication.
In sharp contrast to the millennials, seniors place an extremely high value on their privacy and confidentiality. They are suspicious of scams, bait and switch tactics and off-brands. They will willingly share their personal financial information and their protected health information with individuals they know and trust but not with websites. As a result, they are reluctant to handle business matters online. There is some evidence seniors are changing their attitude about handling business matters online as the baby boomers become more comfortable with the internet. Today, approximately 15 percent of people over the age of 55 are using online banking and more are being drawn to it every day. However, notwithstanding their skepticism about the Internet, seniors do not believe the government should decide with whom and about what they communicate online. They are not huge fans of big brother.
Debt collectors face a number of unique challenges when dealing with seniors. Some are related to the age of this population and their physical limitations. Others are more directly related to the life, business and political experiences of this generation. Regardless of the reason, debt collectors need to tailor their communications, their contact methods and even their approach to a conversation with seniors based upon the unique characteristics of this population.
Takeaways About the Seniors
- It’s not about collecting debt. It’s about first creating a relationship built on trust.
- Don’t expect them to call you back until they understand who you are and why you are trying to reach them.
- Do your homework. They will certainly do their homework on you and your company. Know as much as you possibly can about their employment, living and health situation before making demands upon seniors for payment.
- As a general rule, the older they are the earlier you should call between the hours of 8:00 a.m. and 9:00 p.m.
- Some collection agencies specialize in credit card debt. There may be an opportunity to specialize in Elder-Debt.
- Keep your promises. If you said you would call them back at a certain time – do so. They will probably be waiting for your call.
- Consider assigning a specific debt collector consultant to each senior in your data base and to the extent the law allows, empower that particular debt collector consultant to work exclusively with that particular consumer.
- Make appointments with seniors to discuss important matters; don’t just call them randomly. They do not respond well to surprises and do not act on the fly. In fact, consider arranging debt collection conference calls with specific appointment times rather than catching seniors by surprise.
- If they tell you they are unemployed, they probably are.
- If they tell you they have no equity in their home, they are probably telling you the truth.
- If you leave them a voice mail, they will probably call you back if they understood the message. Keep in mind they will call YOU back before they will call your company. They like personal service and will demand YOU provide it to them.
- If the print is too small they won’t read it.
- If they tell you they can’t hear you, they probably can’t.
- If you don’t speak loudly and enunciate you will at best be accused of mumbling or at worst, hung up on.
- If you convince them to honor a payment plan, you may have to give them self-addressed, stamped envelopes or even a coupon book. They are creatures of habit and this is what they have come to expect.
- They like receipts or proof of payment.
- They may consider paying you online but still prefer to pay by check.
- If they tell you they are still paying off their own student loan and cannot begin to pay off their child’s student loan, they are probably telling you the truth.
- If you are looking for their 25 year old son, he probably lives at home with his senior parents.
- Seniors deserve to work with debt collectors who are patient and mature. If you can hire a senior to collect from a senior, do it.
If you don’t want to collect debt from seniors, think about expanding into the fast growing area of elder bill pay services. These companies hire and assign personal bookkeepers to a particular senior for as little as $100.00 per month. It is not a traditional new source of business for debt collectors but it is certainly within your skill set.
The purpose of this four part series is to enlighten and promote discussion about the changing face of the consumer. I remain convinced that if the debt collection industry had better, more robust information about the consumers from whom they are collecting debt, debt collectors would respond with marketplace driven solutions. Part III will focus on social media norms across both generations and Part IV will apply the information gleaned from the first three parts in this series to the healthcare environment.
Sources include: Department of Health and Human Services, National Center for Health statistics, May 2009; U.S. Census Bureau; AARP; CTIA The Wireless Association, 2010 Year End Figures; Forrester. If you would like additional information about the research and supporting resources used to prepare this article please feel free to contact the author Rozanne M. Andersen, Chief Compliance Officer and Vice President of Government Affairs, Ontario Systems LLC, a leading software company for the ARM industry at firstname.lastname@example.org or Melissa Jenkins, Senior Director, Strategy & Business Development, Ontario Systems LLC at Melissa.email@example.com.