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Proactive Customer Communications Key in Collections

Call Center Services Featured Article

Proactive Customer Communications Key in Collections

February 19, 2009
By Brendan B. Read
Senior Contributing Editor
There has rarely been greater demand for effective collection of delinquent accounts. Firms urgently need cash from debtors to pay their bills and keep their operations afloat, yet the downturn has in turn squeezed the resources available from them.

 
A new white paper from Edgar, Dunn, and Company and SoundBite Communications, entitled, “Collections in Turbulent Times: Survival Strategies for Financial Services Organizations,” offers a way forward. It recommends using proactive customer communications through a variety of channels to competing for shares of customers’/debtors’ finite resources.
 
The customer communications methods include:
 
-- Analyzing and knowing your payers and devising the appropriate strategies for them
 
The paper separates debtors between ‘sloppy’ and ‘struggling’ payers. Sloppy payers are those that more resources than obligations. They must be reminded to pay, such as by e-mail or text messaging, before payment is due. Struggling payers are those that do not have less money than bills. These individuals need to be contacted by live agent collectors who can persuade them to pay a larger share of limited resources.
 
“We recommend that an account identified as a Sloppy Payer be treated with a softer approach that will maintain the customer relationship,” advises the report. “We believe Sloppy Payers do not associate themselves with accounts typically sent to collections; they may take offense and move their business elsewhere if they feel that they are being treated in such a manner.”
 
-- Using welcome calls when customer relationships are first established to head off sloppy and delinquent payers down the road, and to enable collections if necessary. Welcome calls typically cover product details, questions customers have, payment amount and due dates, interest rates, and how to contact the firms, and verification of customers’ contact information.
 
“Many mortgage lenders find that welcome calls cut down on first payment default rates and corresponding collections costs,” says the paper.
 
-- Utilizing text messaging
 
SoundBite Communications’ (News - Alert) research has shown that when customers get a text message, they read it. The method is obtaining excellent results. For example, one bank reported more than a 400 percent improvement in collections efficiency by adding text messages on a limited basis to its collections strategy.
 
-- Enable easy communications and payment
 
Collectors should be open to be contacted by debtors through every available channel. They should make payment convenient, straightforward, and dignified by giving debtors as many methods as possible.
 
-- Using multiple channels to maximize contact
 
There are a wide variety of customer contact means at collectors’ disposal and the right ones have to be used at the appropriate stages of collection. The paper recommends e-mail, text, website, and automated calls for early stage collections because they are effective and inexpensive. These are attractive tools to prompt sloppy payers. For late stage calls, to contact struggling payers and to elicit payment from them it advises inbound and outbound IVR and live collectors, with escalation procedures to more senior staff.
 
-- Being nimble: acknowledge debtors’ situations and responding with excellent scripts
 
The paper reports that consumers respond better to organizations that acknowledge the difficult environment, and are willing to work out arrangements with customers to help them cope with their financial troubles. It also recommends testing and reassessing collections scripts for effectiveness and consumer understanding.
 
“Companies that make the best choices regarding collections resource-allocation, policies, scripts, channels and techniques will recover the largest share of collectable receivables, “ says the paper. “Further, those who handle customer communications the best will achieve the highest rates in customer satisfaction and retention.”
 
Don’t forget to check out TMCnet’s White Paper Library, which provides a selection of in-depth information on relevant topics affecting the IP Communications industry. The library offers white papers, case studies and other documents which are free to registered users. Today’s featured white paper is Fixed Service Strategies for Mobile Network Operators, brought to you by Comverse (News - Alert).

Brendan B. Read is TMCnet’s Senior Contributing Editor. To read more of Brendan’s articles, please visit his columnist page.

Edited by Michelle Robart
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