The financier’s collections department keeps contacting Daniel, all the while realising that the more prolonged the collection cycle, the more it will cost them to achieve a resolution. 

Daniel is frustrated and wishes they would call him at a time he’s not so busy. Better still, send him an email or SMS so he could call back when it’s convenient.

If only the financier’s collections team realised that the best time of day to call Daniel was after midday and that his preferred channel was digital. With this kind of consideration of their customers’ contact preferences, the financier may have more chance of engaging their debtors and improving collection outcomes.  

A McKinsey & Company study of delinquent credit card customers asked respondents about their lenders’ debt collection approaches and how they responded by channel. It was discovered that customers are more motivated to take action on repaying their debt when contacted through their preferred channels. 

The study also found that customer preferences for digital contact like emails and SMS were evident throughout the debt lifecycle. This engagement with digital channels reflects the broader consumer demand for digital experiences.

Channels like SMS, email or voice message can be an attractive option for customers keen to avoid the embarrassment or confrontation of talking to a stranger about their debt. The McKinsey research showed that the lowest number of respondents (48%) made a payment when contacted by phone compared to the digital channels: 58% for email, 77% for SMS and 92% for a mobile-app pop-up.

Debt collection goes digital

The introduction of digital debt collection now makes it possible for collections to evolve beyond a one-size-fits-all approach. There’s growing recognition that not all collection scenarios are alike. Tactics and messaging that works for one customer may prove ineffective for the next. 

With the application of machine learning and artificial intelligence, you can match the right customer to the right channel. Different customer segments can receive tailored messages at the time of day that elicits the highest respond.

James Stewart, Executive Consultant, uses the scenario of ‘Daniel’ to explain how a digital debt collection platform operates. “CrediBot’s decision-engine uses machine learning to determine the optimal channel and time of day to contact Daniel. So, if he had been contacted several times through the platform, the decision-engine would quickly learn that he only engages after midday,” he says.

“Likewise, if several emails and SMS messages had been sent to Daniel, the system would pinpoint the best performing channel. Future messages would be directed at the optimal time of day for Daniel using the channel he most responds to.” 

James explains that another benefit of going digital is the ability to engage customers with best-practice messaging. “Automated messaging templates give you the peace of mind that you’re using language that customers are likely to respond to. Also that you’re complying within the letter of the law”, he says. 

“Even better if you have the option to customise these message templates, as this enables you to tailor your tone of voice for different customer segments.”

Approaching debtors via digital channels creates the opportunity to set up a seamless payment process. “When a payment link is included within the communication, the debtor can settle their debts within just a few clicks,” says James.

Faster workflows with digital debt collection

A digital experience can not only improve customer satisfaction metrics but also translate into higher success rates for debt collection. 

“The operating efficiencies can be quite significant, as workflows are carried out faster and with fewer employees,” says James.

For collections agency, Panthera Finance Group, a significant benefit of introducing a digital debt collection platform was an improvement in dollars collected and a reduction in operational costs. When Panthera replaced their traditional payment portal with CrediBot, there was a reduction in inbound call centre traffic and a 35% increase in average repayment amounts. They improved customer satisfaction and substantially reduced staffing costs. 

Toll-road operator, Transurban were offering their debtors the use of a digital portal to make repayments. Still, only 22% of their customers were using it. When they integrated the self-service CrediBot platform into their processes and sent out customised digital messages, the number of debtors that logged into their payment portal increased to 71%. 
 
The potential payoff for embracing multi-channel collection strategies and personalised communication is more effective recoveries and happier customers. Debt is not going away; it remains a constant in the lives of many Australians. For small business operators through to large enterprises, there is real value to be gained from an approach that leverages technology to balance efficiency with customer experience.

Contact us for a discussion and demo on how CrediBot can help streamline your collections processes.

 

 

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