If a debt collection model isn’t effective it can lead to poor commercial returns for businesses, along with resentment and a reluctance to pay from their customers. One issue businesses need to be particularly aware of when considering which debt collection model to use, is the exponential growth in customer empowerment over the past five to 10 years – a move that coincided with the widespread adoption of the smartphone. Accustomed to being able to control most business interactions when they want, from the palm of their hand, customers today expect to have the option of a digital solution to their problem - and debt collection is no different.
Digital is What Today's Customers Want
Today’s customers are very different to those of even one generation ago. They:
are increasingly tech savvy,
overwhelmingly prefer to be engaged digitally,
respond best to highly personalized and timely communication,
prefer to self-serve when convenient for them,
use readily available technology to block and filter unwanted contact, and
are more vocal and critical than ever about poor customer experiences.
If they need to be contacted by a debt collector, customers prefer it to be over the digital channel of their choice, which could be email, SMS or WhatsApp. They also want to resolve their account the way they want and when they want. This means the organizations they conduct their business with need to offer:
24/7 customer support,
frictionless solutions, and
multiple options that suit their individual needs.
As a digital debt collection agency, we offer an omni-channel approach that not only incorporates digital channels, but customers can also call us if they have any specific questions or issues they’d like help with. This means if customers want to self-serve they have the means, but if they want to speak to a person they also have this option: it’s all about communicating with the customer in the way they prefer.
“We offer an omni-channel approach that not only incorporates digital channels, but customers can also call us if they have specific questions they’d like help with.”
A Personal and Uninterrupted Approach
One of the reasons it’s important to adopt an omni-channel approach to debt collection is because of the number of friction points that traditional debt collection can have. For example, traditional debt collection can be very time-intensive – especially if the person they’re calling doesn’t answer, it’s a wrong number, the customer doesn’t have time to talk, or if letters sent to customers have been addressed incorrectly. Call centers can also be expensive to establish and not just from a phone-call perspective. Staff need to be trained on the compliance issues associated with debt collection, and also need to adhere to these regulations. Compare this to our digital debt collection platform and in-built compliance service which automatically knows which days and times to send communications to customers, as well as the number of times we can contact a customer in a given week or month to fit within compliance restrictions.
Once an organization is integrated into a digital debt collection agency’s platform, the collections process is efficient and frictionless. When a modern debt collection agency like InDebted sends an email or SMS, we know in real time if it was delivered. We also know if, and when, it was opened and if the customer clicked through to a payment portal. These additional data points help us then personalize the next steps to take.
Being digital end-to-end also means customers can self-serve at whatever time they like. (We found more than 35% of all our customer transactions occur outside traditional business hours.) This provides the convenience that a traditional debt collection agency can lack, as if a customer responds by phone, it relies on someone being available to take the call. The need to go through many identification checks on the phone to verify their identity, can also be frustrating to customers and not something that’s required from a digital debt collection agency.
Digital First Drives Better Results
Debt collection has evolved rapidly over the years as technology has advanced. However, those organizations that have relied on the more traditional approach of contacting customers by phone may be hesitant about adopting a digital approach. InDebted chief customer officer Tim Collins warns against this reluctance, citing the book: The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail.
Collins says the book highlights how it can be difficult for organizations to change from what they have always done, especially when it has traditionally been very profitable. “Kodak is one of the best examples,” he says. “Kodak actually invented the digital camera, yet it filed for bankruptcy because it couldn’t let go of the past profits it was generating from its film division.”
Collins adds the same scenario is playing out now with debt collection. “Margins are compressing as customers are less likely to respond to calls and messages from traditional agencies,” he says. “These debt collectors then try calling more often and at different times or they try to get the customer to call them back. When that doesn’t work, they send emails and text messages to drive inbound phone calls instead of providing the means for the customer to self-serve or communicate via their channel of choice.”
“This omni-channel approach complements the more traditional elements of debt collecting by also being able to speak with customers if they so choose.”
Our platform deals with each stage of the collections process – from the initial 30-60 days past-due all the way through to 180 days past-due – in a personalized and uninterrupted manner, including sending the initial communications, allowing customers to self-serve to resolve their account, and the reporting back to the organization. This is all available 24/7, anywhere in the world. This omni-channel approach complements the more traditional elements of debt collecting by also being able to speak with customers if they choose to call us.
When choosing a debt collection agency, it’s important for the onboarding process to be as easy as possible. Organizations have limited time and resources and would prefer to focus their attention on growth strategies rather than sorting out any onboarding issues. Onboarding with a digital agency is very quick and cost-effective because:
Digital requires fewer fields
Compliance is codified and consistent
Reporting is easier because the focus is on digital metrics such as deliverability, open rates, and click-through rates
Collins says it’s important for businesses not to approach a digital agency with the same mindset as it would a traditional agency. “A digital agency doesn’t need the same data points, such as a physical address; we just need the name, email address and the balance owed,” he says.He adds InDebted also views itself a partner to an organization, rather than a product. “We are very much focused on ensuring on-boarding is as easy as possible,” he says. “And that once on-board, the organization can work with us to ensure all compliance and reporting requirements are implemented. This makes the partnership as seamless and successful as possible.”
Potential for Compliance Risks Mitigated
Meeting compliance is a key priority for organizations and one where relying solely on a traditional approach for debt collection may present challenges. This is because when you rely on call centre staff reading the same prepared script to customers, mistakes are more likely to be made as people doing this type of work get tired, or have a bad day and may not take as much care over details. Unfortunately, these types of mistakes can have legal consequences.
We provide a true digital platform, which doesn’t require us to talk to customers unless they want to. Our system is built from the ground up to meet compliance standards and to communicate with customers when it’s compliant to do so using the digital channels of their choosing. Removing the manual elements in this way reduces the potential for any compliance errors. Also, if there are legislative changes introduced into any jurisdiction, these can be quickly updated on the platform.
“The right infrastructure and the right way of incentivizing people is what really minimizes risk. Compliance is a very important benchmark for organizations when choosing a debt collection agency.”
Our robust and automated infrastructure is designed to mitigate and minimize any compliance risk. InDebted CEO Josh Foreman says, “The right infrastructure and the right way of incentivizing people is what really minimizes risk. Compliance is a very important benchmark for organizations when choosing a debt collection agency.”
Digital Remuneration Model Puts Customers Front-of-Mind
Foreman’s point about how staff are incentivized is one of the key factors behind the success of InDebted as it plays a big part in how we treat customers. Many traditional debt collectors are still motivated and compensated based on how much of a debt they recover, and this can lead to some making calls that end up being abrasive or harassing to customers at inconvenient times.
Rather than being commission-based, we incentivize our staff based on how they deal with customers and the net promotor scores they gain. Foreman says, “We have a customer service team rather than ‘collectors’. We encourage our staff to spend as much time as possible with customers to help them sort out their accounts and to improve their financial fitness. We operate on traditional customer service metrics and don’t focus on how much we collect as we view this as a by-product of how we service customers.”
Our approach to customer service not only benefits customers by helping them to resolve their accounts, but also benefits the organization with the overdue accounts. We know that customers who feel they are being looked after are more likely to resolve their account and stay loyal to the organization they do business with, rather than take their business elsewhere.
However, if a customer is feeling harassed by a debt collector’s call centre staff, they’re not only less likely to settle their account but are very likely to leave a negative review on social media or lodge a complaint to the regulator.
Data Decisioning Process Improves Volume and Speed of Repayment Delivery
While a digital debt collection platform provides speed, accuracy and simplicity – especially with allowing customers to self-serve – it offers much more than this, including the ability to leverage the data it collects. Through the controls we’ve built into our platform, we can learn how customers interact with us in real time, and then using this knowledge, build behavioral models that help us decide on the next steps that need to be taken on the individual customer’s journey.
Gaining a greater understanding of customers can be more difficult for a traditional agency as they have no insights into when customers will respond to a phone call or open a physical letter. They also don’t provide a way for them to easily pay their account.
“Looking after customers in this way requires an omni-channel approach that incorporates all the benefits of a digital process complemented by the best of the traditional.”
Collins says as customers, we all want the personal touch. “Basic human behavior tells us customers want to be talked to respectfully, professionally and they want to be heard,” he says. “Why would this be any different for collections? Personalized collections mean giving customers more than just the ability to pay when they want. It means providing tailored options for each individual that fits with their financial abilities on a daily, weekly and monthly basis.”
Being treated well is beneficial not only for the customer but also for the organization owed the money, as a positive customer experience results in more money being collected. The customer is also more likely to feel favorably towards the organization and will continue to carry on doing business with them. Looking after customers in this way requires an omni-channel approach that incorporates all the benefits of a digital process complemented by the best of the traditional.
Looking to the Future
As technology improves, so do the features digital debt collection agencies can offer. For example, InDebted is focused on ensuring the future developments for its platform will help resolve existing customer challenges, such as a need for greater automation.
Collins says that currently, every email that comes in is read and responded to by one of the customer service team – and many of these responses are similar as the same questions get asked frequently. “The team has the ability to personalize the responses a little bit but most of the time they are fairly standard, such as telling customers how to make a payment,” he says. “We are now working on automating these standard responses.”
InDebted is also looking at adding simple personalization options to features such as webchat so that instead of needing to go through several questions to get to a person, the first option will be “Do you want to talk to a real person or do you want to self-serve?”.
“With webchat it can often take a while for customers to get to speak to a person because of the number of questions they have to first answer,” Collins says. “Having that option immediately may sound simple but it adds to the frictionless approach InDebted provides. These features are only possible with a digital agency – that’s the power of digital; that’s the power of focusing on the customer.”