The Debt Monster How Four Credit Counseling Agencies Used Human-Centered Design to Reach Consumers with Sustained Balances

Home , Monster (mixtape)

AUTHORS: Ivan Avila, Stephanie Landry, Spectra Myers

Acknowledgements

We give thanks to the team of people who made this report possible. We are especially grateful to our partners at the Credit Counseling of Arkansas, Consumer Credit Counseling Service of Rochester, Consumer Credit Counseling Services of the Savannah Area, Inc. and OnTrack WNC Financial Education & Counseling for their engagement and support through all project components. Our colleagues at Prosperity Now, Pamela Chan, Emma Polson, Kasey Wiedrich and Guillermo Cantor, provided helpful feedback and guidance. Applied Research intern Jordan Beeker supported pilot data collection. We would also like to thank Sandiel Thornton, Lauren Treadwell and Ursula Cisneros for support in graphic design and campaign development. Sawyer Blur provided volunteer media planning support. Lastly, we’d like to extend our gratitude to MIQ for paid marketing support and Cornershop Creative for website design. This report was made possible with the generous support of Capital One.

About Prosperity Now

Prosperity Now believes that everyone deserves a chance to prosper. Since 1979, we have helped millions of people, especially people of color and those of limited incomes, to achieve financial security, stability and, ultimately, prosperity. We offer a unique combination of practical solutions, in-depth research and proven strategies, all aimed at building wealth for those who need it most. We recognize the devastating impact of the racial wealth divide on people and our economy, and we strive to equip organizations of color and others with the capacity, tools and cultural competency necessary to address structural and systemic barriers facing families of color. Gary Cunningham is our President and CEO.

About Capital One

Capital One Financial Corporation is headquartered in McLean, Virginia. Its subsidiaries, Capital One, N.A. and Capital One Bank (USA), N. A., offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients. We apply the same principles of innovation, collaboration and empowerment in our commitment to our communities across the country that we do in our business. We recognize that helping to build strong and healthy communities – good places to work, good places to do business and good places to raise families – benefits us all and we are proud to support this and other community initiatives. https://www.capitalone.com/about/

Contents

Executive Summary ...... 4 Introduction ...... 5 What this Project Accomplished ...... 6 Key Findings and Recommendations ...... 6 The Smart Growth Innovation Program ...... 7 The Agency Partners ...... 7 The Process ...... 9 Discover ...... 10 The Design Challenge ...... 10 The Target Audience ...... 12 Design ...... 15 Website ...... 16 Marketing and Outreach ...... 16 Potential Sustainability Strategy ...... 16 Test ...... 17 Concept and User Test Findings ...... 18 Mini-Pilot Design ...... 20 Mini-Pilot Findings ...... 21 Potential Limitations ...... 23 Implications and Recommendations...... 23 Reflections from Cohort on Human Insights Approaches...... 24 Appendices ...... 25 Appendix A: Debt Slope ...... 25 Appendix B: Persona Development ...... 26 Appendix C: Web-based Diagnostic Quiz ...... 27

Executive Summary

Debt is a significant challenge in the lives of many American families. In fact, household debt reached $14.25 trillion at the end of 2019.i The economic crisis caused by the COVID-19 pandemic has only exacerbated this challenge, with many families turning to credit products to manage financially.ii Although the work discussed here took place before this crisis, the findings are even more relevant because of the current context.

Reputable nonprofit credit counseling agencies are available around the country to help consumers who are worried about unsecured debt. Unfortunately, the nonprofit credit counseling industry is under pressure from regulatory changes, reduced consumer demand and increased market competition. Experts recognize that the nonprofit credit counseling industry is in a difficult period and must find ways to innovate in order to sustain itself and grow in the future.iii

To explore and attempt to address these challenges, Prosperity Now, with support from Capital One, convened the Smart Growth Innovation Program. The program supports credit counseling agencies to respond to consumer challenges while learning human-centered design and researching approaches to innovation. The most recent group of agencies drew on Prosperity Now’s human insights approach as a framework to iteratively discover, design and test interventions.iv The cohort identified an opportunity to raise consumer awareness about the dangers of sustained debt balances and explored a design challenge around how to market to consumers and support them in contacting credit counseling agencies in the early stages of their debt cycle.

All four participating agencies built their skills in using human insights processes and tools. Through the human insights process, the cohort:

• Affirmed that most credit counseling clients are reaching out later than ideal and pinpointed sustained balances as a recognizable cue to emphasize. • Designed and tested an online diagnostic tool and agency locator with a supporting marketing campaign. • Subjected their work to rigorous testing and shared transparently their process and findings with the field so that others might learn from their experiences. While every test has limitations, the cohort did not see evidence that the marketing campaign drove a sufficient number of people to the diagnostic tool.

Several opportunities for future research emerged through this work, including:

• To reach consumers with sustained balances, Prosperity Now recommends that future interventions consider placing the onus of action on institutions rather than on individuals who are often facing personal upheaval. • There are opportunities for more exchange and collaboration among small to mid-size agencies on outreach and marketing strategies. Whether simply sharing advice or even banding together to gain efficiency in paid media, there are ways to leverage these agencies’ experiences for the benefit of industry, and, ultimately, of the communities they serve.

Introduction

Debt is a significant challenge in the lives of many American families. In fact, household debt reached $14.25 trillion at the end of 2019.v The average family holds approximately $40,000 in debtvi. But for lower-income families, the debt burden often means a larger percentage of their income goes to paying off debt (for example, lower-income households pay a shocking 18% of their annual incomes just to service credit card debt).vii The economic crisis caused by the COVID-19 pandemic has only exacerbated this challenge, with many families turning to credit products to manage financially.viii Although the work discussed here took place before this crisis, the findings are even more relevant because of the current context.

Reputable nonprofit credit counseling agencies are available around the country to help consumers who are worried about unsecured debt. Between 1.5 and 2 million people receive services from nonprofit credit counseling agencies each year.ix

What is credit counseling?

Nonprofit credit counseling agencies provide financial reviews and education to consumers in person, over the phone or online. Typical credit counseling agency services include:

• Budget and/or financial counseling • Debt Management Plans (DMPs) • Referrals to other organizations for applicable relief services • Consumer financial education and debt specific services (e.g., services specific to student loans, mortgages, etc.) • Bankruptcy services • Financial capability services

Unfortunately, the nonprofit credit counseling industry is under pressure. Over the past 30 years, regulatory changes, reduced consumer demand and increased market competition—including from debt settlement services, which rivals credit counseling in consumer awarenessx—brought on a wave of agency consolidations and closures. xi Today, agencies are struggling to serve clients coming to them in financial crisis or with types of debt the traditional credit counseling model and product typically do not address. Experts recognize that the nonprofit credit counseling industry is in a difficult period and xii must find ways to innovate in order to sustain itself and grow.

to innovation. The most recent group of agencies worked together from 2018 to 2020. The cohort identified an opportunity to raise consumer awareness about the dangers of sustained debt balances and explored a design challenge around how to market to consumers and support them in reaching out to credit counseling agencies in the early stages of their debt cycle. What this Project Accomplished

• This discovery research affirmed that most credit counseling clients are reaching out later than ideal and pinpointed sustained balances as a recognizable cue to emphasize. The cohort identified five major barriers that keep clients from reaching out in time. The clients: 1) lacked the knowledge to identify when their debt was problematic; 2) felt the situation was not painful enough; 3) felt a sense of pride/shame and preferred self-reliance; 4) dismissed credit counseling agencies as an option with a misunderstanding; 5) didn’t know credit counseling was an option. • All four participating agencies built their skills in using human insights, learning how to conduct one-on-one interviews, create journey maps and analyze barriers community members face. They learned how to create prototypes to quickly explore an idea and get feedback from stakeholders through focus groups, concept tests and user tests. • Finally, they subjected their work to rigorous testing and shared transparently their process and findings with the field so that others might learn from their experiences. Key Findings and Recommendations

The cohort designed and tested an online diagnostic tool and agency locator with a supporting marketing campaign. The findings from the testing include:

• While every test has limitations, we did not see evidence that the marketing campaign drove a sufficient number of people to the diagnostic tool. • To reach consumers with sustained balances, Prosperity Now recommends that future interventions consider placing the onus of action on institutions rather than on individuals who are often facing personal upheaval. For example, credit card companies could leverage consumer data to identify when people are struggling with debt and proactively connect consumers with supportive resources, such as credit counseling. • There are opportunities for more exchange and collaboration among small to mid-size agencies on outreach and marketing strategies. Whether simply sharing advice or even banding together to gain efficiency in paid media, there are ways to leverage these agencies’ experiences for the benefit of industry, and, ultimately, of the communities they serve. o This potential for more marketing and outreach collaboration is especially needed since debt settlement rivals credit counseling in awareness.xiii Debt settlement services are often a risky option for consumers. Some companies (often called debt settlement, debt relief, debt adjusting, or credit repair companies) tell clients to stop paying debt and the company will negotiate a settlement with the creditors. However, these companies often charge high fees and are sometimes unable to negotiate with creditors. And because the client has stopped paying the debt, they can be charged late fees and penalty interest rates. These situations can leave clients with higher debt than they started with and potentially a negative effect on their credit scores.

6 The Smart Growth Innovation Program

In partnership with Capital One, Prosperity Now began convening the Smart Growth Innovation Program in 2015 to bring together nonprofit credit counseling agencies to think strategically about industry problems and to explore innovative solutions. Through a human-centered design process guided by Prosperity Now, the program’s many participating agencies designed solutions to the challenges faced by their clients. Cohort members received funding and technical assistance to respond to consumer challenges while learning human-centered design and researching approaches to innovation.

Program Objectives:

• Think strategically about key industry problems and explore innovative solutions • Introduce human-centered research, and design methods to credit counseling agencies • Provide opportunities for collaboration and peer learning

The Agency Partners

Credit Counseling of Arkansas, CCCS of Rochester, CCCS of the Savannah Area, Inc. and OnTrack WNC Financial Education & Counseling were selected to participate in the Smart Growth Innovation Program in 2018 and embarked on a shared project with facilitation and technical assistance from Prosperity Now.

Credit Counseling of Arkansas

Geographic Area Served: Northwest Arkansas, Central Arkansas, Southern Missouri, Eastern Oklahoma Number of New Clients Served Per Year: 6,000 between counseling and education Existing Approach to Marketing Outreach: Search engine advertising, social media, outreach programming Approximate Total Annual Paid Media Spent: $10,000-$15,000

Consumer Credit Counseling Service of Rochester

Geographic Area Served: Rochester, NY, region Number of New Clients Served Per Year: 10,000 between counseling and education Existing Approach to Marketing Outreach: TV and radio ads, social media, outreach programming Approximate Total Annual Paid Media Spent: $165,000

Consumer Credit Counseling Services of the Savannah Area, Inc.

Geographic Area Served: Southeast Georgia and South Carolina Number of New Clients Served Per Year: 6,000 between counseling and education Existing Approach to Marketing Outreach: Outreach events, financial education workshops, community partnerships, signage, social service/local referrals, website, social media, media interviews Approximate Total Annual Paid Media Spent: From $0 to $5,000

OnTrack WNC Financial Education & Counseling

Geographic Area Served: Western North Carolina Number of Clients Served Per Year: 6,500 Existing Approach to Marketing Outreach: Social media, agency referrals and partnerships, press, website to reach potential clients; eNews and email blasts facilitate word-of-mouth referrals from existing and former clients Approximate Total Annual Paid Media Spent: $0.00

The Process

The Smart Growth Innovation Cohort, along with Prosperity Now, engaged in a three-phase human insights approach of discover, design and test.

The agencies started with the initial design challenge of “How might we help consumers identify warning signs of troublesome debt before it’s too late?” (e.g. when consumers are deeply in trouble with debt, like debt in collections, leaving credit counselors with few options

Discover to provide support) and went through several rounds of refinement during the discovery phase.

n The agencies then developed a client-centered marketing campaign, diagnostic quiz and referral tool to encourage more community members with sustained debt to reach out to credit

Desig counselors when their balances are not going down.

The agencies went through several rounds of concept testing to design a marketing campaign

that would provide context about where they are in their debt journey without imposing any judgment. The agencies ultimately tested the campaign, along with the quiz and referral tool, Test to see if it met the needs of the target audience through user tests and a pilot conducted in the summer and fall of 2019.

Throughout the project, the agencies drew on the human insights approach as a framework to discover, design and test solutions. These solutions are grounded in an understanding of the realities and nuances of a challenge that community members and the organizations that provide them services face every day. Prosperity Now’s human insights approach involves three iterative phases (as seen in the figure below). This process is iterative, which means that as all project partners engaged with Prosperity Now, each other and their clients, they discovered new insights that led to a revised design and new ways of testing. See the Prosperity Now Human Insights portal for more details.xiv

FIGURE 1: The Human Insights Approach

April – Aug. 2018 Aug. 2018 – Dec. 2019 Jan. 2019 – Feb. 2020

Discover

In the Human Insights Discover phase, we identified and refined a real, addressable How might we encourage people challenge facing an organization’s clients, along with the barriers that helped create that problem. to reach out for credit counseling Through this process, the agencies revised the when their debt balances aren’t initial challenge by exploring the experiences of clients and the barriers that might prevent them going down? from reaching out to credit counseling agencies.

The Design Challenge

The agencies wrote a rationale for this challenge to explain it to stakeholders: “In credit counseling, people often call when they are deeply in trouble with debt. They may have debt in collections, missing minimum payments or face eviction, closed lines of credit or utilities shut off. At this point, credit counselors have few options to leverage and support clients. A better time for people to call into credit counseling is when they are making payments, but those payments are not substantially bringing down their balances. This might be because they are only making minimum payments, or their payment plan is structured to cover interest (but not the principal) for a long time frame, or, they have been carrying a lot of debt or note their debt just hasn’t gone down.”

The challenge was initially identified by conversations with credit counselors during which Prosperity Now often heard the refrain, “I wish they had reached out sooner; we could have done more to help them.” The agency partners were able to confirm that this sentiment is also often expressed by clients once they reach out for assistance. The agencies refined the challenge throughout the discovery and design phases of the project. The major takeaways from this process were to:

• Remove phrase like “too late” since it’s never too late for counselors to help. • Include “when debt balances aren’t doing down” to better specify the point at which clients should contact an agency for support. To help narrow this point of intervention, the agencies developed the idea for a “Debt Slope,” a tool to identify when credit counseling agencies would ideally be reaching out to potential clients. A visual of the “Debt Slope” is in Appendix A.

The agencies used a variety of methods to establish and refine the design challenge, identify a target audience and find a recognizable point of intervention. Through client interviews, the agencies were able to revise the design challenge to remove ambiguity and identify specific actions the agencies

wanted people to take and to bring clarity to the challenge statement. Client journey mapping helped the agencies visualize a client’s debt journey to identify coming warning signs of troublesome debt and recognition points for when credit counseling agencies would ideally be reaching potential clients. The agencies leveraged the learnings from these methods to ensure that they were solving for the right problem and identifying the right audience.

FIGURE 2: Cohort members work on an early version of a client journey map.

The Target Audience

As a first step in identifying the target audience—the Table 1: Target Audience At a Glance population that the partner agencies are trying to reach—Prosperity Now asked the four agencies to Gender 71% Female develop “personas” based on clients they and their 29% Male staff wished had reached out sooner. Each agency drafted between three and seven personas based on Race 50% White Americans the clients who have contacted them for help with 24% African Americans debt. They identified nine common client personas 18% Latinx Americans largely defined by life situations. To affirm the 6% Asian Americans personas, the agencies conducted interviews with 2% Other races/ethnicities community members to better understand their experiences of the design challenge and to identify Age Wide range of ages what differences mattered. Based on these interviews, the agencies prioritized four of the Education Slightly higher than average nine personas to focus on in the next round of education discovery interviews and journey mapping. For a detailed look at these four personas, see Appendix B.

What is a persona?

A persona characterizes an archetypal user that provides an example of the type of person who might interact with a program, service or product. Personas help identify potential audiences for different programs, services or products and note gaps in experience or perception where innovation is needed. These are personas of fictional people, but they are based on combinations of real people we met during our interviews and those identified by agencies in advance of the site visit.

After fielding a national survey of community members with debt, Prosperity Now further refined these four personas into one that included survey demographics of the potential target audience. The agencies and Prosperity Now crafted a description of this persona to share with the pilot’s marketing partners:

FIGURE 3: The Target Audience Persona: “Alex”

Barriers to Address

To identify the barriers potential clients might experience in reaching out for assistance, the agencies reviewed interviews and journey maps and identified five major obstacles. The target audience:

1. Lacked knowledge to identify when their debt was problematic - These clients did not have sufficient financial knowledge to know that their debt was getting to be an issue. Prosperity Now noted that rather than consider this a “lack of knowledge,” there may instead be insufficient signaling from financial institutions to alert individuals to problematic debt. 2. Felt the situation was not painful enough - These clients felt like they were getting cues that the debt was not ‘bad.’ For example, some stated things like, “I’m treading water but not in panic mode.” 3. Felt a sense of pride/shame and preferred self-reliance - Reasons these clients did not want to ask for help included default or self-reliance, believing they could handle it on their own, and/or had a fear of being judged. 4. Dismissed credit counseling agencies as an option with a misunderstanding - These clients dismissed credit counseling because they either had erroneous information about the services or conflated them with debt settlement. 5. Didn’t know credit counseling was an option in the world - These clients did not know credit counseling services could help them/or that it existed.

There were slight differences in the demographics of the target audience drawn from a national survey of community members with debt. The target audience was comprised of more Black respondents and is slightly more female than non-target audience respondents. Additionally, the target audience has a slightly higher level of educational attainment than the other groups. Specifically, there were more people with master’s degrees in the target audience. In terms of age, the target audience is more evenly distributed. Marital status was relatively similar, however the target audience tended to be comprised of slightly more married respondents.

FIGURE 4: Four cohort members brainstorm ideas on how to address each identified barrier during an in-person convening in August 2018.

Design

In the design phase, we generated potential solutions to address the challenge and solicited feedback to refine them. We used barriers, like those highlighted above, as invitations to brainstorm ideas. To address the challenge and encourage clients to reach out when their debt balances were no longer going down, the agencies developed the following intervention: a client-centered marketing campaign, diagnostic quiz and referral tool. The intervention included the following components:

• A fun, non-judgmental web-based diagnostic quiz that helps people identify their “debt monster” (a measure of how serious their debt problems are) and directs them to clear, easy next steps. • A referral tool on the website to direct the target audience and others with urgent debt challenges to reach out to one of the four credit counseling agencies or to NFCC outside these regions. • A marketing message that encourages people to better understand their debt by visiting the website. • A marketing plan with paid programmatic advertising and social media, along with local outreach, to get the message in front of the target audience.

FIGURE 5: Refining the debt monster

Website FIGURE 6: DebtMonsters.org landing page

The website is home to the diagnostics quiz and referral tool. Once a user reaches the site, they will find the landing page seen in Figure 6. Users begin the quiz and answer the six quiz questions with three possible results—a green, yellow or red debt monster (see the full quiz questions and results in Appendix C). The agencies were aiming to reach the target audience–people with sustained debt balances–who would receive a yellow monster result with a recommendation to FIGURE 7: Yellow Monster Results Page reach out to a credit counseling agency. The yellow monster results page can be seen in Figure 7.

The agency locator (found in the results page of the debt monster quiz) allows users to input their zip code to search for a nearby credit counseling agency. If the locator does not identify an agency in that zip code, it will prompt users to visit the National Foundation for Credit Counseling (NFCC) agency locator site.xv

Marketing and Outreach

FIGURE 8: Social Media Debt Monster Ad The agencies and Prosperity Now developed two main approaches for encouraging potential clients to visit the DebtMonsters.org website:

1. Local outreach, including asking partner organizations to help spread the word, promoting during local outreach events and workshops, posting on the agencies’ social media channels and issuing press releases; and 2. Paid media, including digital display ads through a programmatic media partner--an agency that uses data-driven insights to buy and place digital display ads--and a boosted social media post through agency profiles (this was added mid-way through the campaign).

Potential Sustainability Strategy

While the agencies awaited the results of the mini-pilot, they began to consider ways that they might sustain the marketing campaign and diagnostic tool and scale its impact, if

successful. They developed a concept of a “strategic alliance” that would deliver marketing and lead generation through the diagnostic quiz and agency locator. Interested agencies would buy into the service and receive support in implementing the campaign in their own market. The cohort agencies shared the concept with staff and leadership at other small and mid-size, regionally-based agencies and received feedback on how to refine the service. Test

In the testing phase, we explored whether the intervention envisioned in design was potentially appealing and easy to use. Our testing strategy to evaluate the proposed intervention used three approaches:

1. Concept and message tests to understand overall appeal among consumers of the proposed intervention. 2. User tests to determine how well the diagnostic quiz and locator work for potential clients and identify potential improvements. 3. Mini-pilot of the campaign and website implemented by all four agencies to determine if the intervention brings in a greater proportion of the target audience.

FIGURE 9: A user tester provides feedback on the debt monster quiz prototype with staff from CCOA.

Concept and User Test Findings

The findings and recommendations from the concept vetting, qualitative message test and quantitative message test are in the table below:

Concept Testing

Method Key Findings Recommendations

Initial Concept Vetting • Monster theme is • Further refinement of the Fall 2018 lighthearted and non- monster theme to capture a threatening broader audience Gathered initial feedback from • The quiz itself is easy and • Consider how the debt clients and stakeholders on the simple monster quiz will reach the monster theme and debt quiz • Concerns regarding the target audience through a focus group of past monster theme; "It's too • Add agency branding to clients and interviews with cutesy. It looks like it's associate quiz with nonprofit partners and making fun of [debt]" reputable organizations stakeholders • Concern for how it would reach potential clients • The importance of associating the quiz with legitimate organizations

Qualitative message tests • Monster imagery was not • Further refinement of the Winter 2019 well received, but still worth monster campaign with exploring further because of graphics that lead with less Conducted message testing of its relatability threatening monsters the debt monster campaign • Participants who disliked the • Light refinements to the along two comparison messages debt monster theme did so monster campaign language (“debt free” and “debt shame”) because they found it scary to make the call to action to ensure the campaign • Participants were clearer message is likely to motivate the not associating a clear target audience action with the monster campaign message

Concept Testing

Method and Strategy Key Findings Recommendations

Quantitative message test • There were no statistically • Move forward with the Spring 2019 significant differences “revised debt monster” between the performance design as it may perform Administered a survey to assess (i.e., the self-reported well enough to reach the the potential of three campaign likeliness to click the ad and target audience (yellow messages (“initial debt monster”, to seek more information monster recipients) “revised debt monster”, “debt after seeing the ad) of the free”) three campaigns for the target audience – the yellow monster recipients • All campaigns performed similarly for the target audience (i.e., the self- reported interest to seek more information about the campaign); “New Monster”: 29%, “Initial Monster”: 23%, “Debt Free”: 24% • The “Debt Free” campaign resonated with both red and green monster recipients more than the others • The “Initial Monster” campaign strongly resonated with red monster recipients

User tests • The quiz usability was high • Light revisions to Spring 2019 as noted by the 11 out of 17 aesthetics and quiz participants who were able questions to make the quiz User tests conducted by cohort to complete the quiz with more user friendly agencies in their communities no issues and three who to test the quiz’s usability and completed the quiz to identify needed fixes to somewhat easily. As they finalize the quiz tool completed the quiz, participants recommended light aesthetic fixes and noted few questions that needed to be adjusted to improve ease of understanding.

Mini-Pilot Design

The mini-pilot began August 13, and concluded December 31, 2019, with some variation in dates among the agencies. Evaluation of the mini-pilot drew from external data sources as well as agency data collection efforts. Throughout the pilot, Prosperity Now and the agencies collected data to evaluate the performance of the paid media, outreach and website and give insight into their four main questions.

TABLE 2: Evaluation of the Mini-Pilot

Question Data Sources

1. Does the website and diagnostic tool (“the • Agencies administered the diagnostic quiz intervention”) increase the proportion of to all new clients before the pilot to establish target audience members (“yellow monster” a baseline and then throughout the pilot to result receivers) contacting a credit gauge the effect. Prosperity Now and the counseling agency for support? agencies used Typeform to collect the quiz data throughout the pilot. At the end of the pilot, the data was extracted and then scored and analyzed using Excel and STATA.

2. How does the marketing and outreach • The number of sessions booked throughout campaign affect the number of people the pilot and during the same time in the contacting credit counseling agencies prior year was provided by the four overall? agencies through their internal administrative data systems.

3. How effective is the marketing and outreach • Through MIQ, we were able to collect and campaign at driving the target audience to analyze data to measure the performance of the website and diagnostic tool (“the the paid media marketing campaign, such as intervention”)? impressions, clicks and conversions. • Each agency provided records of their local outreach activities. • Agencies submitted reports on their boosted social media posts’ performance.

4. How effective is the intervention at • Website performance was measured via increasing the target audiences’ awareness Google Analytics and captured several of potential actions to address their debt indicators, like site visitors, bounce rate and and likelihood to take one of the percentage of site visitors that completed recommended steps? the quiz.

FIGURE 10: Mini-Pilot Timeline

Mini-Pilot Findings

The results of the mini pilot indicated the following:

• The intervention did not increase the proportion of target audience members (those receiving yellow monster results) contacting a credit counseling agency within the pilot period. Only Rochester saw an increase in the target audience, as seen in Table 3. • The agencies did not see an increase in the total number of people contacting them compared to the same time last year, although they did observe an increase in agency website visits. • It was difficult to get people to visit the website and start the quiz. This may point to message failure or may confirm that the scope of the challenge is outsized for the intervention. Table 4 shows the number of display and social impressions it took during the pilot for the website to receive 3,900 users and for the quiz to be completed 907 times. • The campaign still attracted more “red monster” recipients than “yellow monster” recipients. Only 211 target audience members completed the quiz and received information, tips and a call to action to contact an agency. • The locators and resources were used by many of the yellow and red result recipients, which indicates the quiz was at least somewhat effective at providing actionable resources to those with debt challenges.

TABLE 3: Proportion of Yellow Monster Recipients

Pre-Intervention Post-Intervention (August 5-October 27) (October 28- December 31)

Rochester 136 18% 172 28%xvi

Savannah 33 18% 22 18%

CCOA 21 13% 9 13%

OnTrack WNC 68 18% 8 7%

TABLE 4. Marketing Impressions and Quiz Completions

Total Display Impressions 1,595,193

Total Social Impressions 368,478 Marketing Marketing Impressions Site Session 3,900

# Completed Quizzes 907

Quiz Quiz # Yellow Monster Recipients 211 Completions

Potential Limitations

Upon exploring the results of the mini-pilot, the partner agencies noted a few hypotheses on potential limitations. According to the agencies, some of the factors that may have contributed to the limited success of the mini-pilot include:

1. Seasonality as a confounding factor: after reviewing the mini-pilot results, some agency staff wondered if there might be times of the year when people with different levels of debt challenges choose to reach out because of factors like back-to-school and holiday spending pressure. Additional research would be needed to investigate this hypothesis. 2. Implementation timeframe: there may not have been enough time to tell if the advertising had an effect. Marketing campaigns strive to achieve a certain number of impressions within a timeframe. The short timeframe of this campaign was likely not enough to reach that impression threshold. In addition, advertising rarely leads to immediate pay-off, so we may not have captured the impact. Implications and Recommendations

To reach those with sustained balances, Prosperity Now recommends conducting future discovery research focused on environmental barriers and that considers placing the onus of action on institutions rather than on individuals, who are often facing personal upheaval. For example, the Credit Card Project worked with financial institutions to test early intervention systems. Their efforts, however, appeared constrained by institutional financial pressure and priorities.xvii In other countries, financial institutions have implemented early warning alerts and supports for consumers on track to accrue costly debt.xviii

Prosperity Now sees continued value in introducing and practicing human-insights principles and the human-centered design process at financial capability and social service organizations. Centering clients, testing new ideas and continually iterating can lead to more effective program design.

Prosperity Now also sees opportunities for more exchange and collaboration among small to mid-size agencies on outreach and marketing strategies. A large portion of credit counseling agencies nationwide are small to mid-size, with little or no staff dedicated to marketing and outreach. If agencies were able to access marketing or advertising services through large entities like NFCC or other collaborative opportunities, it could serve them well in creating more effective and sustainable marketing efforts. For example, one of our agency partners taught others about Google AdWords (Google’s advertising system). More mechanisms to share ideas and expertise would be beneficial for the field.

Based on these recommendations, Prosperity Now and the agencies explored alternatives to the initial sustainability concept. The options included revising the marketing campaign and repeating the pilot with additional agencies or engaging the credit counseling industry to explore marketing and outreach and to identify more effective approaches together. The COVID-19 crisis beginning in early 2020 interrupted this process, adding uncertainty to the agencies’ capacity and to the relevance of the design challenge in the face of widespread unemployment and financial instability.

Whether simply sharing advice or even banding together to gain efficiency in paid media, there are ways to leverage these agencies’ experience for the benefit of the industry. This potential for more marketing and outreach collaboration is especially needed since awareness of debt settlement rivals credit counseling, at least among some populations.xix Reflections from Cohort on Human Insights Approaches

Throughout their participation in the Smart Growth Innovation Program, the agencies had several opportunities to reflect on their engagement and work with Human Insights.

“We have learned to start any new program, product, or service by interviewing the people we want to serve first. We have learned that prototyping new ideas does not require for us to be designers or engineers. Also, we have learned to test our new programs before releasing them to market. Testing increased the likeliness of their future effectiveness. We have and will incorporate human-centered design principles into our agency’s other practices.” Richard Reeve, Director of Financial Education, CCCS of the Savannah Area, Inc.

“Through the work of the project we have gained new insights into the human centered design process and have addressed crucial industry-wide challenges. Through the cohort model undertaken, we have established relationships and connections with similar agencies and leveraged shared knowledge that we would not have been able to previously. Now, we use human insights to understand our clients’ challenges and design solutions accordingly. Thanks to higher levels of client satisfaction and improved service engagement, we are seeing an overall uptick in demand and client success.” Chad Rieflin, Director of Programs & Grants, CCCS of Rochester

“The exposure to and practice with human centered design will certainly influence how we do our work at OnTrack WNC from here forward . . . We are also learning a lot from our peer agencies. Consumer credit counseling agencies are typically quite isolated. We are geographically spread out and sometimes in competition with one another, so there isn’t much opportunity or comfort with sharing best practices. In contrast, the strong working relationships we have built with other credit counseling agencies through the Smart Growth collaboration has been a breath of fresh air.” Sarah Brown, Deputy Director, OnTrack WNC Financial Education & Counseling

“All of us are relatively small agencies. All have dedicated, talented employees, but none have a deep pool of staff that can devote focused effort on the sort of task we undertook in this project. Putting us together has really brought out the best talent in areas like marketing, project management, creative design, and such. . . The project has modeled how to facilitate partnerships designed to increase agency capacity, and yet remain customer-focused.” Joel Doelger, Director of Community Relations & Housing Counseling, CCOA

Appendices

Appendix A: Debt Slope FIGURE A1: The Debt Slope The “Debt Slope.” A tool developed by the cohort to identify when credit counseling agencies would ideally be reaching out to potential clients. The debt slope does not represent a truly linear path that all community members with challenging debt face but rather a set of experiences that often happen earlier or later in a journey.

The visual is based on both counselor experience and perspective as well as those journeys shared by clients. The visual helped the staff identify where they are usually reaching community members: when they are missing minimum payments, taking out high interest loans and finally feeling the need for outside help.

Ideally, community members would reach out when their payments are not meaningfully reducing their balances. At this point, a person may be making payments, but the payment is often only covering interest rather than the principle. This realization helped the staff refine the challenge with the specific triggering experience they hoped to encourage people to act on by contacting their agency.

Appendix B: Persona Development

The agencies prioritized four personas to focus on in the next round of discovery interviews and journey mapping. Noted below are short overviews of these target audiences followed by more detailed persona descriptions.

1. Overstretched by Choice–These community members have sufficient income but, for other reasons, they are taking on debt. This persona group has been a good candidate for a DMP. 2. Chronic Expense Volatility–These community members are struggling with debt as they try to smooth expenses and income. 2. Income Strapped and Normal Life Expenses–Included two interviewees and represented a new persona group. These community members have limited incomes and are struggling to make ends meet. 3. Unexpected Income Loss–These community members have experienced a change in circumstances such as a divorce, birth of a child, or job loss that is affecting their debt.

TABLE A1: Smart Growth Personas

Overstretched Chronic Expense Volatility

Larry does not have enough savings to cover Andrew has enough income to cover his daily large, unexpected expenses. This has led him expenses and can make choices about what he to using credit cards and other loans to cover spends his money on. However, he hasn't payments in the short-term. He may not be able budgeted in the past, wants to take care of the to ask his social network for support as they are people close to him (often spending on their often in the same situation. Sometimes he is behalf) and has found himself in debt and forced to skip paying one bill in order to pay off unable to get out without help. another. This has only increased his debt as late fees build up.

Unexpected Income Drop Leads/Led to Debt Income Strapped and Normal Life Expenses Issues

Julie recently suffered an unexpected drop in Anna feels like she's always just scraping by, income after her divorce or other life event with barely enough income to cover her daily (retirement, death of spouse or job loss). As expenses. This has led her to a debt cycle of such, she is having trouble adjusting to a new, using credit cards and other loans to cover her tighter budget for daily expenses and activities basic needs and other expenses that has only and events for her children. This led her to fall led to larger payments she cannot pay off. She into debt before she had really grasped the full may not be able to ask her social network for extent of the situation. She had felt confident support as they are often in the same situation. she could sort this all out herself but finally realized it had become too much.

Appendix C: Web-based Diagnostic Quiz

The five questions used in the web-based diagnostic quiz, DebtMonsters.org, were:

1. Not including major purchases like a 4. Which of your debts are scary? Select home or car, how has the size of your all that apply. debt monster changed over the last a. [Response options selected in year? Has it become: Q3 are populated a. Much smaller automatically] b. A little smaller c. No change 5. Which best describes how you make d. A little bigger credit card payments? e. Much bigger a. I pay off my credit cards every f. Too scared to look! month b. I pay more than the minimum 2. How often do you need to use credit or every month loans to get through the month? c. I make minimum payments a. Always every month b. Often d. I pay less than the minimum c. Sometimes sometimes d. Rarely e. I have credit card debt that I'm e. Never not paying

3. What is your debt monster made of? 6. [If no credit cards] How often are your Select all that apply. debt payments late? a. Student loans a. Never b. Mortgage b. Rarely c. Credit cards c. Sometimes d. Auto loans d. Often e. Personal loan from a bank or e. Always credit union

f. Medical debt g. Home equity line of credit h. Finance company loan

i. Rent-to-own furniture or appliances j. Payday loan k. Title loan l. Judgement m. Collections n. None o. Other

Endnotes

i Federal Reserve Bank of New York (February 11, 2020). “Household Debt Tops $14 Trillion as Mortgage Originations Reach Highest Volume Since 2005.” Accessed July 29, 2020, at: https://www.newyorkfed.org/newsevents/news/research/2020/20200211#:~:text=NEW%20YORK%20%E2%80%93%20The%20Feder al%20Reserve,the%20fourth%20quarter%20of%202019. ii Cantor, Guillermo and Stephanie Landry (August 2020). “How Are the Most Vulnerable Households Navigating the Financial Impact of COVID-19?”, Prosperity Now. Accessed November 16, 2020, at: https://prosperitynow.org/sites/default/files/resources/REVISED%20FINAL%20Brief_Prosperity%20Now%20Survey%20of%20Lower- Income%20Households.pdf iii Rick Bugado of the Financial Counseling Association of America (formerly, Association of Independent Consumer Credit Counseling Agencies), in-person interview, February 20, 2015; and Ann Estes, Helene Raynaud, and Susan Keating of the National Foundation for Credit Counseling, in-person interview, February 6, 2015. iv See the Prosperity Now Human Insights portal for more details: “Human Insights Tools and Resources,” Prosperity Now. https://prosperitynow.org/human-insights-tools-resources v Federal Reserve Bank of New York (February 11, 2020). “Household Debt Tops $14 Trillion as Mortgage Originations Reach Highest Volume Since 2005.” Accessed July 29, 2020, at: https://www.newyorkfed.org/newsevents/news/research/2020/20200211#:~:text=NEW%20YORK%20%E2%80%93%20The%20Feder al%20Reserve,the%20fourth%20quarter%20of%202019. vi Survey of Consumer Finances (Washington, DC: Board of Governors of the Federal Reserve System, 2016) https://www.federalreserve.gov/econres/scfindex.htm. vii Erin El Issa, “2016 American Household Credit Card Debt Study," Nerdwallet.com (2016). Accessed August 4, 2020, at: https://www.nerdwallet.com/blog/average-credit-card-debt-household/; The Pew Charitable Trust, Payday Lending in America: Policy Solutions (Washington DC, The Pew Charitable Trust, 2013). viii Cantor, Guillermo and Stephanie Landry (August 2020). “How Are the Most Vulnerable Households Navigating the Financial Impact of COVID-19?”, Prosperity Now. Accessed November 16, 2020, at: https://prosperitynow.org/sites/default/files/resources/REVISED%20FINAL%20Brief_Prosperity%20Now%20Survey%20of%20Lower- Income%20Households.pdf ix Roll, Stephen and Stephanie Moulton (2016). “The Impact of Credit Counseling on Consumer Outcomes: Evidence from a National Demonstration Program,” FDIC. Accessed August 5, 2020, at: https://www.fdic.gov/news/events/consumersymposium/2016/documents/Roll_paper.pdf x Myers, Goughnour, Avila and Haroon (2020). “Addressing Debt in Black Communities: A Comprehensive Report Exploring the Potential and Limitations of Services in the Realm of Financial Coaching,” Prosperity Now. xi For more on the evolution of credit counseling, see Michael E. Staten, “The Evolution of the Credit Counseling Industry in the United States,” in Giuseppe Bertola, et al., The Economics of Consumer Credit (Cambridge, MA: MIT Press, 2006), pp. 275-300; and Richard Burnett, “Credit-Counseling Agencies Scramble to Deal with Own Financial Crunch,” Orlando Sentinel (Orlando, FL), January 12, 2014. Accessed August 5, 2020, at: https://www.orlandosentinel.com/business/os-cfb-cover-credit-counseling-crunch-0113-20140112- story.html xii Rick Bugado of the Financial Counseling Association of America (formerly, Association of Independent Consumer Credit Counseling Agencies), in-person interview, February 20, 2015; and Ann Estes, Helene Raynaud, and Susan Keating of the National Foundation for Credit Counseling, in-person interview, February 6, 2015. xiii Myers, Goughnour, Avila and Haroon (2020). “Addressing Debt in Black Communities: A Comprehensive Report Exploring the Potential and Limitations of Services in the Realm of Financial Coaching,” Prosperity Now. xiv “Human Insights Tools and Resources,” Prosperity Now. https://prosperitynow.org/human-insights-tools-resources xv “NFCC Agency Locator,” NFCC. Accessed June 10, 2020, https://www.nfcc.org/agency-locator/

xvi Rochester continued to collect quiz data until January 16, 2020 xvii Effectiveness of Online “Early Intervention” Financial Education for Credit Cardholders, K. Gartner, July 2005 xviii Financial Conduct Authority (March 2, 2020). “FCA Tells Credit Card Firms to Review their Approach to Persistent Debt Customers.” Accessed December 2, 2020, at: https://www.fca.org.uk/news/press-releases/fca-tells-credit-card-firms-review-their- approach-persistent-debt-customers xix Myers, Goughnour, Avila and Haroon (2020). “Addressing Debt in Black Communities: A Comprehensive Report Exploring the Potential and Limitations of Services in the Realm of Financial Coaching,” Prosperity Now.