Consumer Value Study. Debt Cancellation & The Credit Card Marketplace Aon Integramark. All rights reserved.

Transcription

1 Consumer Value Study Debt Cancellation & The Credit Card Marketplace 00 Aon Integramark. All rights reserved.

2 Introduction: Debt Cancellation & The Credit Card Marketplace Among US credit card customers, a certain percentage choose to enroll in the optional debt cancellation program offered by their bank. The enrollment action is often based on one s feeling of financial security and potential to be at risk. In the pages that follow, you ll learn more about providing value in a debt cancellation program. You ll learn more about meeting the needs of the credit card customer. Whether you are launching a new program or looking for ways to improve an existing one, the Consumer Value Study provides information that may assist your organization. How Do People Learn About The Debt Cancellation Program? More than one-third (%) of total respondents learned about the debt cancellation protection program with their credit card application, while only % learned of the debt cancellation protection program by word-of-mouth. Method Bank Card Retail Card Total With the credit card or loan application % % % Through telephone solicitation 0% % % Through mail solicitation or statement stuffer % 0% % From a bank or store employee % % % By word-of-mouth % 9% % Bob Reilley Ty Ragland Authors of the Consumer Value Study

3 What s Important To Credit Card Customers? Determining The Value Issues Total respondents feel that protection against identity theft (%), long-term or permanent disability (%), or an involuntary loss of job (%) are most worth paying for in their debt cancellation protection program, followed by disability from an accident and unplanned hospitalization (each 9%). The core of our Consumer Value Study is based on creating a Value Analysis Map that visually depicts the data gained from our research. It not only looks at what is important to the customer, yet also plots the value perception of a given topic. By adding value perception data to the ranked items of importance, we establish a very realistic picture of what a customer cares about and is also willing to purchase. Type of Coverage Total Value Analysis Map Fig. Identity theft % Long-term or permanent disability % Involuntary loss of job % Disability from an accident 9% Unplanned hospitalization 9% Primary residence is in a federally-declared natural disaster area % Accidental death % Assisted living arrangements % BASIC ISSUES UNIMPORTANT ISSUES VALUE ISSUES CUSTOMER IMPORTANCE HIGHEST LOWEST Spouse dies from natural causes % LESS CONTRIBUTES TO VALUE PERCEPTION MORE Disability leave that ends within one year % How to Read the Value Analysis Map Vertically: Issues are plotted according to customer satisfaction, whereby satisfaction scores increase as they move from the lower half of the map to the upper half of the map. Horizontally: The map plots the issues by the degree to which they contribute to customers perception of value in a debt cancellation protection program, whereby issues increase in their contribution to value as they move from the left to the right of the map.

4 Mapping the Consumer Value of Debt Cancellation Program Elements 0 9 Issues plotted in the upper left portion of the map are the Basic Issues, or those issues that customers expect all debt cancellation protection programs to perform well on. Issues plotted on the right side of the map are Value Issues, since they offer added value to customers. Value Issues plotted in the lower right portion of the map are of particular importance, since these are the issues that are valued by customers and with which they are least satisfied. Unimportant Issues are noted in the lower left area of the map. Customers are generally dissatisfied on these issues; however, these issues do not add value, and are therefore not important enough to drive customers away. 9 Over time, many issues on the Value Analysis Map move counterclockwise as the market evolves and responds to customers needs. These shifts on the map (see arrow in Fig. ) follow a clear and logical pattern: ) Issues that truly have the ability to change the course of customers perceptions often begin as Unimportant Issues with which customers have low satisfaction and do not perceive as being valuable. ) Innovation allows these issues to move from Unimportant to low satisfaction Value Issues. These issues are still low in satisfaction because not all debt cancellation protection programs offer the innovative improvement yet. ) Over time, performance improves on these issues. As more and more debt cancellation protection programs make the needed improvements valued by customers, these issues become high satisfaction Value Issues. ) Eventually, customers begin to take the high satisfaction Value Issues for granted, and the issues lose influence as major contributors to value perception as they evolve into Basic Issues. Putting The Information To Use The Value Analysis Map shows us the path to: ) Meeting customers needs (today s debt cancellation offering) Be competitive on the Basic Issues Give customers what they want LESS 0 CONTRIBUTES TO VALUE PERCEPTION Basic Issues MORE Value Issues Identity theft as a covered event Primary residence in federally-declared natural disaster area Involuntary job loss as a covered event Disability leave ending within one year Unplanned hospitalization as a covered event Knowing where to get coverage questions answered Long-term or permanent disability as a covered event Planned retirement as a covered event Easy claims process if qualified for benefits Newly born or adopted child as a covered event Disability from an accident as a covered event Divorce as a covered event Easy-to-access customer service Terms & conditions are reasonable and easy to understand Accidental death as a covered event New marriage as a covered event 9 Assisted living arrangements as a covered event 9 Potential to receive benefits from the program 0 Life events covered by the program 0 Household family member starts college Spouse dies from natural causes Called to active military duty Nursing home confinement as a covered event Unimportant Issues Loss of eyesight or hearing as a covered event Leave of absence from work as a covered event ) Anticipating customers needs (future debt cancellation offering) Structure to deliver on Low Satisfaction Value Needs Determine how to make Unimportant Issues more valuable How Issues Move Over Time HIGHEST CUSTOMER IMPORTANCE LOWEST Fully Understanding The Value Analysis Map Fig. Features and benefits of debt cancellation program Clear, easy-to-understand sales materials/presentations New home purchase as a covered event Product delivered exactly how it was described at sale Relocation of more than 0 miles as a covered event

5 Preferred Methods Don t Keep Me Waiting! Preferred Method of Contact When it comes to a debt cancellation program, half (0%) of total respondents feel that it would be easiest for them to enroll in the program or request a benefit (claim) for debt cancellation over the telephone, while % prefer through the mail and % prefer on a web site. The preference for web site enrollment or using the web to make a claim is increasing slightly from prior studies while use of mail is decreasing. Telephone 0% Mail % Web Site % Respondents were asked about waiting period provisions common to many debt cancellation programs. Most waiting periods require a length of time to pass before a customer is eligible to receive program benefits. As it might be imagined, respondents preferred shorter vs. longer waiting periods to receive program benefits. Customers often only understand the full consequence of a waiting period when they need the protection the most. Both the 0-day waiting period and no waiting period (at the highest monthly rate) are equally preferred by total respondents (each %), while only % prefer the 90-day waiting period (at the lowest monthly rate). 00% Preferred Method of Payment The industry is dominated by use of rate per $00 costing method applied to the customer s monthly outstanding or average daily balance. Respondents showed interest in alternative payment methods with % preferring to pay a monthly amount that is based on a percentage of their current credit card balance. % % % % % % FAST FACT: More than half of total respondents (%) prefer that the debt cancellation protection program cover more than one person in the household. No waiting period for higher cost 0-day waiting period for moderate cost 90-day waiting period for lower cost

6 Why People End Their Protection Almost half of total credit card respondents (%) mentioned a need-related reason as the most important reason for cancelling the debt cancellation protection on their credit cards, followed by a communication-related reason (%), a cost-related reason (%), and a product-related reason (%). Reason Bank Card Retail Card Total Need-Related % % % Pay off balance each month 0% % 9% About the Consumer Value Study Aon Integramark creates and deploys the Consumer Value Study on debt cancellation programs. This particular research study included 00 quantitative interviews completed via telephone with people who have an active credit card account with a bank or major retailer. The study was conducted from August to September, 00. About Aon Integramark We are the first and only organization fully devoted to supporting lenders with their debt cancellation programs. It s been our sole focus since opening our doors in 99. Today the organization provides functional services that bring hands-on experts and end-to-end solutions designed specifically for a credit card organization. Learn more by visiting or calling No longer have card % % % Other coverage is sufficient % % % Change in household situation % % % Don t need % % % Communication-Related 0% % % Don t remember buying % % 0% Don t understand benefits % 0% 9% Never received materials % % % Cost-Related % % % Product-Related % % % Life events not needed % % % Didn t pay a claim % % % Refused % % 9%