Winning the post-holiday retention race

How to keep customers engaged and paying after holiday spending sprees

Published: November 21, 2023 Author: Symend Reading time: 6 minutes

Key Takeaways

January and February see the highest delinquency rates as holiday bills come due
BNPL (Buy Now, Pay Later) services compound post-holiday payment challenges
Proactive engagement in December prevents February delinquencies
Flexible payment options and empathetic communication improve retention during financial stress

The holiday season brings a predictable challenge for businesses across industries: the post-holiday retention crunch. As consumers recover from holiday spending—often amplified by Buy Now, Pay Later services—January and February become critical months for customer retention and payment recovery.

The Post-Holiday Payment Cliff

Data consistently shows that delinquency rates spike in the first quarter of the year. This isn't coincidental—it's the mathematical result of holiday spending patterns:

November-December: Increased spending on gifts, travel, and entertainment
Late December-January: Credit card bills arrive, often larger than expected
January-February: Consumers struggle to pay regular bills while managing holiday debt
March: Recovery begins as tax refunds arrive and consumers adjust spending

For businesses with subscription or recurring billing models, this creates a retention crisis. Customers who have been reliably paying all year suddenly can't afford their monthly obligations.

The BNPL Factor

Buy Now, Pay Later services have dramatically changed the post-holiday landscape. While BNPL makes holiday shopping more accessible, it creates a payment burden that many consumers underestimate.

Why BNPL Compounds the Problem

Multiple Payments Due Simultaneously: A customer might have 4-6 different BNPL payments scheduled for January, each from different purchases
Mental Accounting Errors: Consumers often don't fully account for BNPL obligations when budgeting for regular bills
Cascading Defaults: Missing one BNPL payment can trigger overdraft fees, creating a domino effect that impacts other bills
Limited Flexibility: BNPL services typically offer less flexibility than traditional credit, making it harder to adjust when finances get tight

The Data on BNPL Impact

Recent research reveals concerning trends:

43% of BNPL users have missed at least one payment
BNPL delinquencies are highest among 18-24 year olds (52%)
72% of BNPL users report having less money available for regular bills
Post-holiday BNPL defaults increased 34% year-over-year in 2023

Proactive Strategies for Post-Holiday Retention

The key to winning the post-holiday retention race is starting early. Here's a timeline-based approach:

Mid-December: Early Warning and Planning

Before holiday bills arrive, reach out to customers with:

Budget Planning Tools: Help customers anticipate their January obligations
Flexible Payment Options: Proactively offer payment plans or skip-a-payment programs
Usage Optimization: For utilities and services, provide tips to reduce January bills

Early January: Empathetic Engagement

As bills come due, shift to empathetic, supportive communication:

Acknowledge the Situation: "We know January can be financially challenging after the holidays"
Simplify Payment: One-click payment options, pre-filled amounts, saved payment methods
Offer Alternatives: Payment plans, extensions, or temporary reductions

Late January-February: Retention Focus

For customers who miss payments, prioritize retention over collection:

Preserve Service: Avoid service interruptions that push customers to competitors
Flexible Terms: Work with customers to find sustainable payment arrangements
Long-term Value: Remember that a good customer having a bad month is worth keeping

Segmenting for Success

Not all customers face the same post-holiday challenges. Effective segmentation allows for targeted strategies:

The BNPL-Heavy Segment

Characteristics: Younger customers, multiple recent small purchases, new BNPL accounts

Strategy: Early outreach, payment flexibility, education about managing multiple obligations

The Holiday Overspender Segment

Characteristics: Credit card balances increased 20%+ in November-December

Strategy: Extend payment terms, offer skip-a-payment, emphasize maintaining good standing

The Consistent Good Customer

Characteristics: Perfect payment history, first-time late payment

Strategy: Immediate courtesy extension, waive late fees, preserve relationship

The Financially Stressed Segment

Characteristics: Already struggling pre-holidays, multiple missed payments

Strategy: Hardship programs, long-term payment plans, connection to financial assistance resources

Communication Best Practices

How you communicate during this sensitive period significantly impacts retention:

Tone and Messaging

Empathetic not Aggressive: "We're here to help you through this" vs "Immediate payment required"
Supportive not Judgmental: Acknowledge that January is challenging for many people
Solution-Focused: Lead with options and flexibility, not consequences and penalties

Channel Strategy

SMS for Convenience: Quick reminders with one-click payment links
Email for Details: Comprehensive information about payment options
Phone for Complex Situations: When customers need personalized assistance
Self-Service for Control: Many customers prefer managing on their own terms

Timing Considerations

Avoid Monday mornings when stress is highest
Mid-week (Tuesday-Thursday) sees better engagement
Early afternoon (1-3 PM) optimizes for consideration time
Space messages appropriately—daily contact creates pressure, not motivation

Flexible Payment Solutions

Offering the right flexibility at the right time prevents churn and protects long-term value:

Payment Extensions

Allow customers to push payment due dates by 1-2 weeks, providing breathing room to organize finances.

Split Payments

Break larger bills into 2-3 smaller payments over several weeks, making amounts more manageable.

Reduced Minimum Payments

For credit accounts, temporarily lower minimum payment requirements.

Skip-a-Payment Programs

Allow good customers to skip one payment, adding it to the end of their contract or loan term.

Partial Payment Acceptance

Accept and acknowledge partial payments, maintaining goodwill even if full amount isn't paid.

Measuring Success

Track these metrics to evaluate your post-holiday retention strategy:

January-February Churn Rate: Compare to previous years and industry benchmarks
Payment Plan Enrollment: How many customers proactively accept flexible options
Recovery Rate: Percentage of January-February delinquents who return to good standing by April
Customer Satisfaction: Survey customers about their experience during this period
Long-term Value: Track 12-month retention of customers who received post-holiday support

The Long-Term Perspective

Winning the post-holiday retention race isn't just about recovering January payments—it's about building relationships that last throughout the year. Customers remember how businesses treat them during difficult times. Those who feel supported rather than pressured during the post-holiday crunch become more loyal, engaged, and valuable over time.

Conclusion

The post-holiday period presents a significant challenge, but also an opportunity. Organizations that approach this time with empathy, flexibility, and proactive communication don't just retain more customers—they strengthen relationships that drive long-term value. In the race for post-holiday retention, the winners are those who treat customers as partners in financial health, not just sources of payment.