Digital debt collection: Returns without the risk

The benefits of a consumer-centric approach

Debt collection models can no longer rely on a one-size-fits-all approach to manage overdue accounts. Instead, a customer-centric and digital-first approach that creates less stress for consumers and greater benefits for businesses is needed to maximise liquidation rates and improve the collections experience.

Intelligent debt collection gives businesses a better way to support their customers who fall behind. Once a business sends through its collections data, it’s fed directly into Collect, our intelligent debt collection product, where machine learning models determine the best channel, tone, and time to send collections communications to each customer.

“These processes have been continuously refined, so the messages consumers are getting, the channel it’s sent via, and the time it arrives, is matched individually to that individual’s preferences for contact,” Josh Foreman, InDebted’s CEO and Founder says.

Collect gives customers the ability to self-serve, favoured by 4 in 5 referred. This capability lets them manage their debt in a way that suits them, at their convenience - set up a payment plan, resolve in full, or speak to an agent. Customers can also choose to respond to messages using whatever channel they prefer, including email, SMS, phone or live chat.

“Any communication we have with a client’s customer is routed back into our product to produce a unified view that allows us to see what they need,” Foreman says. “The power is going back into the consumer’s hands, both about how to pay and how to resolve their account.”

Empowering consumers to maximise recoveries

Empowering the consumer reduces the reputational risk an organisation may suffer from chasing overdue debts. Organisations constantly undertake risk management exercises, to determine how much they can collect before they could suffer damage to their brand. This risk analysis flows into conversations about churn, including how many customers could leave an organisation after being contacted by a debt collector, and what could be done about re-engaging them.

Foreman says when an organisation is dealing with thousands of overdue accounts, the danger of increased customer turnover becomes more of a challenge when using a traditional debt collection model. This is because, with a traditional model, a business’s risk will increase with every consumer that’s contacted.

“Intelligent debt collection doesn’t have this issue because of its ability to scale,” he says. “Each message sent is checked by our product and approved, so there’s no room for the errors that traditional models are known for. We can also rapidly scale in terms of geography and volume, to accommodate our clients’ evolving needs.”

How InDebted’s digital-first model outperforms traditional collectors

InDebted’s results show a 40%-plus 12-month outperformance against traditional agencies on a head-to-head basis. This has been achieved through the personalised customer journey Collect creates using machine learning models. As Collect is constantly learning from new customer insights, it becomes smarter with every interaction a customer takes and is intuitive to how an individual wants to manage their debt. This has resulted in InDebted becoming the world’s highest rated collecto for customer experiences, with over 2,250 5-star Google reviews – an unheard of scenario in the debt collection industry.

One product to simplify everything

The key advantage of a product-led approach to collections is that no matter where an organisation’s customers are based, Collect can build-in all the debt collection elements required to carry out collections in that region. “For example, our product automatically recognises whether you’re allowed to send SMS or emails in a particular region and at what hours it can be done,” Foreman says. “It also instantly knows what a message is allowed to say as it takes care of all of the compliance and regulatory requirements. Even the different payment processes and payment options for each geography are built into our platform.”

Referring customers from multiple geographies into one product is a key driver for our clients, especially ambitious scaling businesses like Klarna. “If you consider a global fintech, for example, they could have customers in multiple countries and regions, but with us, they only need to deal with one product,” Foreman says. “That’s not something that’s ever existed in collections before.”

Why RPC is no longer the best metric for debt collection

RPC (Right Party Connect) is one of the most commonly used metrics in debt collections. It’s an outbound call metric that measures how many times an agent connects with the right person. According to Foreman, the RPC rate for traditional debt collectors has plummeted over recent years to around 2-1.3%. Not connecting with the right person could be due to many reasons such as they don’t answer, you get a voice message, the line is engaged, or you speak to someone but they’re not the person you want.

InDebted tracks effectiveness using ways that are more reflective of recovery performance, such as email delivery rate, open rate, click rate, and conversion rate. This allows us to track granular detail for example, what the open rate of a particular email template is that it sends.

“You could think of that as being like an RPC but we then look at how many people open that email and then click on the link,” Foreman says. “And then how many people who clicked on the link, went on to set up a payment plan. The RPC metric doesn’t provide us with the holistic view we need to better engage with our clients’ customers.”

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