Why traditional debt collection doesn’t work
Consumer behaviour has evolved
Today’s customers are unrecognisable from those of even a decade ago. As technology has evolved, so have customer preferences and behaviour. Now, the average customer:
Prefers to engage digitally Expects highly personalised and timely communication Wants to self-serve at their own convenience Blocks and filters unwanted content Speaks out if they experience poor customer service
Most organisations understand these changing expectations, and have implemented digital solutions for the products and services they offer. But this evolution needs to flow into an organisation’s debt collection practices.
Debt collection is a necessary part of business and the way it’s carried out can affect an organisation’s brand and reputation. The development of consumer behaviour, preferences and expectations means that using traditional debt collection agencies is no longer a viable, or advisable option. Outdated practices such as calling customers at inconvenient times results in poor response rates, customer experiences and outcomes.
Missed calls equals missed recoveries
One particular issue for traditional collection agencies is their points of friction. For example, they may find the customer they’re calling isn’t available, it’s the wrong phone number, they’re busy, or they just don’t have time to talk. If a traditional collector can’t contact the customer on the first try, their only option is to keep calling until they do. This requires multiple agents to make repeated phone calls, daily.
This has obvious downsides, like high salary costs to maintain large customer service agents. Compare this to an intelligent model where thousands of messages can be sent out to customers within a matter of minutes.
Limited control over compliance
Traditional collectors mostly rely on agents to carry out activities, either making outbound calls or sending mail. Using these methods gives businesses who partner with these agencies little control over maintain compliance, as there’s much greater potential for human error:
Agents can provide incorrect information over the phone If incentivised on amounts collected, agents may be more likely to use pressuring tactics When regulations change in any location, it’s more challenging to uphold new requirements as additional customer service training is needed
A digital-first agency mitigates these risks by building in failsafe practices directly into the product. InDebted’s product, Collect, ensures that every communication sent to customers meets the compliance requirements for where that customer is located - and these regulations are updated in the product in real-time if they change. This gives businesses peace of mind that regardless of where customers are located, all collections activity is compliant.
Increased reputational risk
When it comes to debt collection, customers want to self-serve using the channels they regularly use, on their own time. They want to be able to set up their payment plans, resolve their debt, check on their account and more. This not only creates less stress for them but ultimately benefits the organisation as it means fewer unhappy customers, and more positive experiences.
Using channels like social media, unhappy customers share negative reviews and post complaints. This causes reputational damage that may take months or years for an organisation to recover from. Therefore, it’s in an organisation’s interests to work with customers to resolve unpaid accounts. Not only does it help protect brand reputation but if customers receive a positive experience from these organisations, they’re more likely to continue to do business with them.
The way to help customers resolve their overdue accounts easily without causing brand damage is very difficult if using a traditional collection agency. However, a digital-first collection agency like InDebted gives customers all the information they need to self-serve through the channel of their choice, 24/7, every day of the year.Speak with sales