Am I too late to wish you a Happy New Year? I hope not.
However you feel about New Year’s resolutions, there’s no denying that a new year presents a great opportunity to take stock of where you’re at, to recalibrate what matters most, and to decide how to do things differently.
There’s so much we can do to improve debt collection. To make it easier and better for our customers and employees while maximizing returns. Here are five areas I’m planning to focus on in 2023. I’d love to hear yours.
1.Helping rather than hassling customers in debt
We all owe something to someone. Be it a debt of gratitude to loved ones, or money to a service provider. It’s time to remove the stigma around debt, and to extend the ‘cup of kindness’ beyond the popular New Year’s Eve Song, Auld Lang Syne, and into all our customer interactions for 2023.
The current economic tailwinds make balancing finances ever more challenging, and delinquency rates seem set to rise as the year progresses. As debt spirals, people feel out of control. A truly empathetic approach to debt collection is one that empowers customers by enabling them to play an active role in shaping realistic repayment plans. Plans they’re motivated to deliver on.
A digital debt collections strategy is less intrusive and more interactive than one that relies on outbound calling. Customers can engage with you when, where, and how works best for them. And you can use behavioral data and automation to present customized payment plans and personalized communications in a customer’s preferred channel.
When developed with expertise, digital debt collections maximize the efficiency and effectiveness of collections while ensuring that you adhere to all the necessary legislative requirements. You deliver a better customer experience and recoup more debt.
2.Building trust and loyalty with debt collections
The most pressing effectiveness measure of any debt collecting activity is, of course, the sum of the debt recovered minus the cost of collecting. But intelligent debt collection services go beyond getting back what you’re owed today.
How we engage with our customers during the collection lifecycle speaks volumes about the values of our business. We need to treat every interaction — regardless of where it falls in the customer journey—as an opportunity not just to recoup what is owed but to strengthen reputation.
Done well, a digital approach to collecting gives you the vital data you need to understand customers better and real-time visibility into what’s working and what’s not. Armed with these critical insights you can flex your approach, optimize experience, and grow your bottom line.
3.Demonstrating value, faster
The cost of collections is a key pain point for receivables management heads. In 2023, businesses are under increased pressure to realize and demonstrate the value of investments.
Call-led strategies munch through collection budgets with poor results. Smartphones make it easy for customers to avoid calls, wasting associates time and reducing morale. Digitally powered self-service takes a significant chunk of traffic away from the phones. This frees up employees to add value where it matters most.
Automated communications also bring new efficiencies to collections. Automated roll-rate management is just one example. It calculates the amount of time left until payment due dates and proactively sends reminder emails and SMS with helpful links to ease payment admin for customers and prevent further delinquencies. With this type of task off their ‘to do’ lists, associates can focus on giving valuable advice to the customers that want to talk to them.
A digital-first approach not only delivers a better customer experience, it delivers the results you need, faster. I’ve seen digital debt collections improve engagement rates by 70% while reducing the cost to collect by 80% within months. A digital solution also provides the data you need to demonstrate to your board and shareholders that your approach is working.
4.Extending the benefits and opportunities of white labelling to more creditors
Debt collection is a competitive business. The customers that owe you money are likely to be in debt to other organizations too.
There’s a natural hierarchy when it comes to prioritizing repayments—we tend to protect what matters most. But an innovative and empathetic digital-first approach to managing debt helps you stand out from the calling crowd. It encourages customers to prioritize paying you.
A digitally rooted approach to debt collection opens up the opportunities of advanced analytics. You’ll benefit from real-time customer insights and be able to adapt dynamically and at scale to changing needs.
White label digital debt recovery solutions (where self-service portals and communications templates are created and managed by a partner, but look and feel like they were generated by the creditor) give you two clear advantages over those using third-party digital approaches (portals and communications that carry your partner’s branding):
- Better results: Portals and communications branded by a trusted creditor get noticed, used, opened, and actioned.
- Simplified compliance: Leverage existing consent for communications, so you can message in the appropriate way without needing to start the approval process from scratch.
I expect increased interest in white label debt collection solutions in 2023. And I’m looking forward to helping organizations of all shapes and sizes to devise and implement them.
5.Sharing effective debt collection practices beyond financial services
Debt collection is typically associated with the financial services sector, but things are changing.
The growth of subscription services, and the popularity of Buy Now Pay Later (BNPL) options embedded into the checkouts of online retailers, means that the need for debt collection is expanding into new sectors.
New credit models are transforming customer experience at the acquisition and onboarding stage, but in 2023 these providers will need to focus on ensuring that their debt collection processes don’t let them down. Many newer businesses lack the volume of data or experience necessary to deliver a top-notch debt collections experience. By working with a proven debt-collection partner, they can develop and implement white label, digital-first approaches that match and reinforce their positioning as trail-blazing, digital-savvy innovators.
Onwards, and upwards
I firmly believe that putting the customer front and center is key to a happy new year for your business. If you agree, then a digital debt collections strategy will make it easier for you to deliver on that resolution and reap the rewards throughout 2023 and beyond. I’m here if you’d like to discuss.