Credit, Collections & Insolvency News
Traditional, call centre-focused debt collection practices are becoming a thing of the past, as more and more debt collection agencies (DCA’s) turn to multi-channel communication strategies to improve customer experience and increase engagement.
While customer engagement and experience are most commonly associated with retail businesses, within the credit, collections and insolvency sector, there is a growing appetite for omni-channel communications, especially against the backdrop of a changing collections landscape, that is shifting towards a more “ethical” approach to debt recovery.
Lenders and debt collections agencies that proactively modernise and strengthen their collections capabilities by making the most of the multitude of channels available in the digital era, have an opportunity to significantly increase recoveries, contain costs and sustain returns.
Combining more traditional methods such as print, with new-age digital channels including email and SMS is beginning to gain traction in the sector, however, a lack of clear understanding with aspects such as compliance has hindered its mainstream adoption somewhat. For instance, many debt collection agencies are unaware of checks that should be carried out on data stored on debtors and how it can be utilised as part of a communications strategy, while many are wary of falling foul of the Financial Conduct Authority when it comes to communications.
The value of partnering with an experienced customer communications expert, such as Paragon Customer Communications, therefore, should not be underestimated. Not only can such a partnership help debt collection companies to formulate the most effective end-to-end solution for handling their businesses’ outbound communications, within a cost-effective framework, but also ensure complete compliance in an increasingly complex regulatory environment.
Communications strategies
Communications strategies are now being driven by the shifting demographics of debtors more than ever before. For example, a rise in later life lending has seen homeowners aged 55 and over holding 69% of the UK’s housing equity, with retirees’ mortgage debt set to double by 2030. Diversely, the Financial Conduct Authority’s (FCA) Financial Lives Survey showed that 55% of 18- to 24-year-olds and 63% of 25- to 34-year-olds are in debt, owing on average over £8,000.
With such a wide-ranging and contrasting demographic age group to communicate with, utilising the latest innovations in communications technology has become fundamental to not only improving the rate of collection, but also enhancing customer engagement and experience. This approach, it is hoped, will also lessen the requirement for more robust action, ensuring customers are treated sensitively and empathetically at all stages of the communications process – with individual circumstances considered throughout.
For example, many younger debtors favour digital channels for contact which are seen as less intrusive and more convenient. This experience is backed by recent research figures; which state 41% of millennials prefer to communicate through digital methods rather than face-to-face, phone conversation or print.
However, whilst the demographic age group of debtors should be an important consideration when it comes to selecting the channels to deploy, understanding members’ preferred methods of communication, their needs and expectations and, indeed, the strengths of each form of correspondence and its relevance should ultimately determine the overall strategy. While determining each channels ability to communicate the information at the right time should also be fundamental.
Print is dead, long live print
While much of the talk surrounding debt collection communications has centred on digital communications, and the sector continues to engage with debtors in varied and innovative ways, traditional customer communication channels such as print remain an integral tool in the arsenal of any DCA.
In debt collection, the implied seriousness of a paper communication is a powerful response driver. While it is also more likely to drive customers to channels such as phone, allowing for deeper discussions of repayment plans. But even when debtors have called and negotiated a payment date, many customers will then forget, or otherwise not stick to agreed timelines.
Digital reminders can help to reduce the number of missed payment dates and provide an easy, effective and inexpensive way to improve payment reliability. By integrating a digital channel such as email and SMS into a traditional, offline debt collection process, DCAs can add timely, less formal reminders into their strategies that can result in better payment outcomes.
Adopting the latest technologies for mailing purposes can allow organisations to thrive in the sector by regaining control of print, mailroom and postage costs – in some cases reducing costs by as much as 60 percent – and increasing staff productivity levels when it comes to outbound communications. By using such systems across multiple branches and departments it is possible to deliver a truly multi-channel mailing strategy that combines a multitude of channels, including not just print but also emails and SMS, within a cost-effective framework.
Communications technologies are enabling debt collection agencies to enhance the customer experience by engaging with debtors at every stage of the collection journey, from initial contact to final payment. The aim is to deliver a seamless experience to individuals that demonstrates a good understanding of their individual circumstances.
Simple, secure, desktop mailing platforms for outgoing mail enable staff to generate documents as usual, however, the printing, sorting and despatch processes can be automated through an encrypted channel, to reduce printing and postal costs and eliminate the risks of human error.
The highly secure platform is ideal for processing and circulating confidential documents, making it popular with debt collection agencies eager to avoid any losses of sensitive information. Discrete barcodes can be added to documents to allow each item to be tracked, whether the document is sent via post or email, which ensures DCAs stay on top of what mail has been distributed, to whom and when. In addition, data can be extracted from documents to report on the frequency of communications to certain account numbers or email addresses, facilitating a smarter, more streamlined approach to customer communications.
For debt collection professionals tasked with investing in new state-of-the-art technologies, such crucial insights into each debtor and being able to understand their communication preferences – in what form, when and how they expect to digest information – can be extremely valuable as it can have an impact on both direct costs and increasing the effectiveness and speed of collections. Communications strategies can also be tailored to each individual debtor, with messages and tone of voice adapted for individual debtors.
Streamlined communications platforms enable a supervisor or supervisors to search, preview, cancel or release communications created by staff. In turn, allowing them to check for branding, content, tone of voice and other compliance requirements before circulating. Pre-defined documents can also be uploaded for staff to use, further maintaining company standards and achieving brand consistency across all correspondence.
Communicating with vulnerable customers
Any debt collection communications strategy must also factor in communication with vulnerable customers, be that the financial vulnerable, or those with other needs brought on by disability, mental health problems, old age, literacy issues or learning difficulties. Such circumstances may require communications to be available in accessible formats or priority support to be offered in an emergency, such as a data breach.
In fact, following a 12% rise in the number of people who required its help to resolve energy debt problems in 2018 – with close to half of these dealing with long-term health conditions or disabilities – there has been continued calls to better support vulnerable energy customers who fall behind on their bills.
By using data intelligently, it is possible to identify and support such customers. It is even possible to create a predictive model that can highlight those with difficulties through their data characteristics, so that organisations can approach them with appropriate messages, while at the same time ensuring they are handled sensitively to avoid barriers and denial.
Jeremy Hutchins, Paragon Customer Communications, Development Director
Paragon Customer Communications combines generations of expertise with the latest innovations in technology and smart data. The company is ideally placed to improve all aspects of communications in the debt collection sector, with services developed around the latest in print technology and data use. For more, visit: www.paragon-cc.co.uk
