5 Steps for Effective Debt Collection Data Analysis

How a methodological approach to debt collection data analysis can enhance existing collections strategies and customer experience.

In the first blog of this series (Unlock the Power of Data: The Key to Successful Digital Debt Collection), we discussed why setting up a robust data collection process is the foundation for an effective digital collections strategy. Even with a good dataset on file, your data is worthless if you aren’t able to extract the proper insights from thorough and meaningful data interpretation and analysis. Because these insights drive how you engage with your customers on an ongoing basis, they can make or break the quality of those interactions. Thorough and meaningful data interpretation and analysis are areas in collections, in which many organizations can fall short.

This blog, the second in this series, explains the importance of taking a methodical approach to debt collection data analysis to validate findings that will enhance your existing contact strategies and enable a positive customer experience.

Steps to improve how you interpret customer profile and activity data for operations

1. Define the question or use case being solved to determine your data sources.

Your understanding of the business goal and objective allows you to identify which data sources to include or exclude. You’ll also need to establish Key Performance Indicators (KPIs). Once you have those business goals, objectives and KPIs, measure your results back to the source to ensure that you have the right data to report on and can effectively track results.

2. Practice good data hygiene by removing bad data.

As the saying goes, “bad data in, bad data out.” Inaccurate debt collection data analysis will deliver flawed insights that can both harm the customer experience and invite unwanted regulatory exposure on you, the lender. To avoid this pitfall and create an accurate analysis framework, ensure that you have a structured data set and remove:

• Irrelevant data points
• Invalid fields (e.g., a date where a dollar amount should be)
• Duplicates
• Data that cannot be tracked back to the SOR (e.g., calculated fields).

3. Analyze trends and patterns closely to find customer behavior patterns.

Try overlaying customer profile data points with digital response rates to help you determine critical customer behavior patterns. You might find that certain risk segments and demographics have a higher response rate to SMS versus email, or that younger customers may prefer to pay via mobile. As an example, for one UK lender’s early-stage credit card and portfolio strategy, I saw that SMS yielded a higher click-to-payment rate versus email.  Of the customers who opened the SMS, 90% logged into the self-service option and an additional 50% scheduled a payment. In another test conducted for that same lender using a US charged-off credit card portfolio, three quarters of customers who did not answer a phone call did choose to open an email.

4. Act on the new information that you’ve learned.

Combining updated information from your customers with the data you have on file is a very powerful part of your contact strategy. Pre-emptive contact strategies are a natural way to retain customers, build loyalty and verify demographic information before a customer falls past due. Do this by proactively soliciting key information from a customer before they are in collections. You can gain information during the application/originations process, during servicing and part of your ongoing strategy.

Having an interactive SMS, E-mail, WhatsApp, or other digital mechanism not only makes it easy for the consumer to communicate, but also will reduce inbound call volumes.  If a two-way contact strategy foundation exists within your company’s infrastructure, then it is most critical to store and track that information correctly in your pre-defined data structure. In an SMS message, you have 160 characters to convey the call to action to the customer, such as Thank you for being a loyal customer, we would like to offer a promotional interest rate of X for the next Y months. Please click the link to opt in or Thank you for being a valued customer, please confirm if text is still your preferred contact message. Reply STOP to opt-out. The continuous updates that you collect will allow you to effectively refine your contact strategy.

5. Align your strategy across platforms to simplify the customer journey.

Another critical component that is often overlooked is whether the lender has the operational readiness to complement the desired digital strategy outcome. Often, I find that the tools (offers) agents have to discuss with the customer are not aligned with the digital channel tools. As a result, the customer may receive different offers from different platforms (for example, call center versus email). Misalignment here creates a confusing journey for your customer AND your agents.

Maintain Focus on the Customer Throughout your Digital Collections Strategy

At the end of the day, while these five actions cover a diverse range of areas, they all have something in common: They each require that you employ a customer-centric view to your contact strategy to successfully execute in each channel.

Keep the customer-centric mindset throughout planning and executing your digital collections strategy.  And, at a minimum, clearly communicate all contact strategy changes to the operations team in advance, including your agents. In fact, if it’s possible, train your agents on the changes to your strategy to ensure that they can effectively support it in their customer interactions.

[Editor’s note: this article was written by Jackie Sullivan, former Bridgeforce Senior Program Manager]