The challenge: Mounting debt, and an inefficient approach to collections
Financial debt is, sadly, a reality for an increasing number of people. And, as debt rises, so too does delinquency. More Americans are currently falling behind on their credit card payments than at any other time over the last decade.
A leading credit card provider, and one of the world’s largest global payments network, asked Firstsource to help them strengthen digital debt collection. The client had a rule-based approach to classifying customers based on their propensity to pay which wasn’t delivering the results they needed. They also lacked insight into which communication channels were most likely to encourage and maximize repayments. As a result, they were reliant on outbound voice calls to chase repayments and operational costs were high.
The brief was to accelerate repayments, improve their liquidation rate, reduce the cost of calling around debt collections, and make compliance easier.
The solution: Advanced analytics to transform strategy and accelerate results
With their proven strengths in data analytics, Firstsource gathered, segmented, and evaluated data from 45,000 of the client’s historical accounts. Using their proprietary ‘Analytics First’ framework, which harnesses machine learning capabilities across structured and unstructured data, Firstsource analyzed customer behavior across all possible touchpoints – call, text, email, and website.
This data was used to train an advanced machine learning (ML) model to categorize delinquent customers. Clustering algorithms and demographic data enabled Firstsource to identify more than 20 different personas which were mapped to current activity and potential interaction opportunities.
The Firstsource model accurately predicts propensity to pay and:
- Identifies those customers who are most likely to respond to communications that lead them to web-based, self-serve tools.
- Recommends which communication channels to use to encourage repayments from these customers along with advice on motivating messaging and settlement offers.
- Prioritizes customers with a ‘high’, ‘medium’ or ‘low’ score based on their likelihood to be motivated to pay by an outbound, call-led debt collections strategy.
- Provides persona-driven recommendations for frequency of calls, dates of calls, and the ideal spacing between calls and other outbound communications such as email.
- Advises on keywords and triggers, enabling center agents to prioritize accounts for calling.
When the Consumer Financial Protection Bureau (CFPB) legislation around calling protocols changed, Firstsource fine-tuned the model to ensure and ease compliance. To enhance the efficiency, effectiveness, and compliance of outbound calling, Firstsource designed and implemented an algorithm to further segment the client’s database according to the likely number of contacts necessary to establish right party contact (RPC).
The results: Data-driven insights fuel positive outcomes
Advanced analytics from Firstsource have enabled a more effective and empathetic approach to debt collection.
Data-driven insights, brought to life with clear, actionable Firstsource reports, have made the client less reliant on calling and allowed them to tailor their method of communication to the individual. Customers respond positively to this personalized approach, and customer experience (CX) scores have improved significantly. The bottom-line impact over the last five years has been outstanding, with a two-week reduction in the average time taken to collect debt and a 10% improvement in liquidation rates.
Firstsource reporting includes daily action plans for the client’s call center teams. These reports detail which calls they should prioritize to maximize returns and give advice on what approach is most likely to engender positive repayment outcomes. With RPC verification factoring built-in, this approach accelerates results while ensuring that the client is at all times compliant. And, by reducing the client’s reliance on calling and increasing opportunities for customers to self-serve, Firstsource has enabled the client to reduce operational costs by more than 5%.