70% of consumers say they’ve experienced having an account in collections. Current estimates show that number increasing with the existing cost-of-living crisis. So, if you deliver a bad collections experience, you risk losing customer loyalty and value across a significant share of your customer base. Alternatively, providing a positive experience when your customers need you most can increase loyalty, deepen the value of relationships and result in prompter payment.
In a recent study by Lexop, 71% of customers have considered switching to the competition as a result of poor experience in collections. Whereas according to Experian, one in three would pay more promptly if the experience were better.
Bridgeforce estimates the cost of acquiring customers to be five to 25 times the cost of retention. So, a poor collections experience that causes your customers to lose faith in your brand can be very costly to your business.
Instead, consider collections interactions your opportunity to build deeper relationships. You generate loyalty when creating an emotional attachment during moments of vulnerability.
In addition, the success of collections efforts is significantly impacted by the level of service provided. Meeting customers’ expectations and treating them with dignity, respect and care in their time of need can also result in prompt payment, both now and in the future.
Many of your customers in default never expected to be there. It may be the first time they’ve experienced financial difficulty and they may feel embarrassed or even scared. A positive collections experience should make your customers feel like you understand their position, and that you’re there to help and willing to work with them to come to an affordable means of repayment.
In today’s world, you need a mix of contact strategies and channels that are tailored to your customer’s habits and will work together to provide viable options for open communication and repayment. By using the wealth of customer data you maintain, you can create personas or customer segments that include data points such as credit usage, payment behaviors and how your customer wants to interact with you. These personas can inform your outreach channel, timing, tone and frequency to maximize response and payment rates. Channels should interact with one another and enable customers to switch communication or payment in their channel of choice seamlessly.
An all-channel approach has never been more important, with recent data suggesting that 69% of consumers expected digital outreach via email and SMS in 2022, while only 27% were contacted that way. You can put customers at ease by matching their preferred channel and interconnecting all channels so that an email or SMS repayment offer is also clickable in their app. Alignment here also helps to ensure prompt payment.
Where customer habits indicate they are digitally savvy, a digital-first strategy should be applied. Plenty of digital friendly examples exist: app/web portal banners, app notifications, interactive messaging in app or via SMS, webchat, interactive voice and email. Your customer chooses their method of choice, and they should be able to transfer to that channel of choice easily.
A conversation with a customer, however, remains critical. You can avoid customer frustration by ensuring easy connection to a highly trained and empathetic agent quickly from any channel. Inbound calls should be treated as a golden opportunity to create sustainable solutions with willing customers and build long-term relationships of trust.
Getting your contact strategies right should mean your agents speak to customers who really need them. For example, if customer behaviors indicate that they forgot to make a payment, they are likely to respond best to a friendly digital reminder and may not need a conversation. However, in my experience, a customer who demonstrates consistent or significant signs of financial distress needs to know you are there to help before they engage. Depending on their digital habits, this could be an empathetic digital notification with useful links for support organizations and the offer of speaking to a specialist team highly trained in supporting financially distressed customers.
I had one of my most fulfilling experiences on a recent project. We built a specialist team to truly help and support customers through life events that resulted in financial hardships. The customer reaction was simply amazing, including one customer stating, “Very professional, understanding, very kind woman…Thank God for her.” I documented the project in a video about this highly successful Customer Care Team.
Train all agents to provide empathy and care in their approach. A Lexop survey indicates that 32% of respondents attributed their negative past-due experience to poor service from unsympathetic and rude agents. Empathy training and ongoing coaching to match customer needs with available solutions is imperative to ensure customers remain engaged.
In a recent blog based on a client experience, I shared how to achieve a lift in collection rates, and it really comes down to how you make the customer feel. You can achieve an uplift of 40-50% in dollars collected and 25-35% in arrangements secured if your customer “feels good” about their collections experience. I explained in the blog that you should use the data and tools you have to make customers feel valued and demonstrate that you understand their needs.
Customer feedback such as “I appreciate all that your organization has done to help me and my family” demonstrates the deep relationship of trust that a strong collections customer journey provides. This in turn leads to brand loyalty, referrals and increased long term value from customers.
The likelihood is that most of us will interact with collections at some stage in our life (whether through oversight or financial distress) and the experience is likely to either make or break the loyalty we feel towards that organization. Set your organization up for success, both financially and reputationally by ensuring your collections experience is a positive one.
We recommend a thorough analysis of your current collections experience to determine whether you have critical components covered and address any gaps that you find. Here’s a preview of the areas we would assess to ensure that you are providing an experience that will improve cure rates and develop long lasting, loyal customers.
Contact us if you’re ready to identify how you can improve your customers’ experience and increase dollars collected.