Imagine if there were a streaming service that only had one show to watch? Some customers may be happy, but it wouldn’t appeal to most due to not addressing consumer preferences. While debt collection strategies and streaming apps don’t share many similarities, there is an important connection – personalization often delivers better results.
If you’re wondering how to improve recovery rates, personalizing collection communications by honoring preferences is a good place to start. In this blog post, we’re going to highlight how to take a more consumer-centric approach to your debt collection strategies.
Break Away from One-Size-Fits-All
Traditional debt collection strategies tend to exclusively use outbound calling and/or physical mail to reach out to consumers. There are two core issues with this approach. First, consumers often prefer to be contacted through digital channels. Second, the cost of call-to-collect and direct mail strategies continues to rise. So if your strategies do not include digital, then your tactics are more expensive and have a lower likelihood of recovery.
When a business invests in a one-size-fits-all approach, it’s leaving repayments on the table. By having multiple channels in your collection strategies, you are in a better position to connect with consumers. According to McKinsey data, initiating contact through a consumer’s preferred channel can lead to a 10% increase in payments.
Remove Spam Concerns
Consumers are increasingly weary about communications that are not aligned with their expectations, which may give them a reason not to respond. For example, if a consumer prefers text messages, calling them is far less likely to work. By contrast, a text message that outlines their financial obligation that directly links to a self-service portal is likely to improve the recovery rate in this instance.
Personalization in debt collection is all about meeting consumers where they are. Debt collection strategies that favor “integration” over “interruption” tend to have higher performance. By aligning your debt collection communications with a consumer’s established behavior, you’re embracing a higher level of empathy through convenience. The process of honoring consumer preferences helps show that your business values their time and preferences.
Improve Customer Relationships
It’s common for consumers to only owe a debt temporarily, however many businesses like banks and lenders want to retain customers. A debt collection strategy that doesn’t honor consumer preferences will likely feel impersonal, which runs the risk of deteriorating a customer relationship. A personalized approach that reaches out through the right channel, at the right time and with the right message helps preserve the relationship a consumer has with your brand.
In some cases, improving the consumer experience leads to recovery rates following suit. Every consumer has a preferred communication channel and experience they’re looking for. For example, many consumers prefer to make repayments without ever interacting with a human. This is why roughly 98% of delinquent consumers serviced by TrueAccord resolve their debt on their own through our self-service portal.
Tailor Communications At Scale with Machine Learning
How can a business uncover the preferred channel, the best time and content for each consumer? The answer is machine learning. Machine learning algorithms can analyze past and current consumer behavior to personalize the collection experience at the account level across any portfolio of accounts.
TrueAccord has a patented machine learning algorithm called Heartbeat that has been used to upgrade debt collection strategies for years. Heartbeat works around the clock to be there whenever a consumer is ready to take the next step. Unlike other AI tools, Heartbeat reaches out to every account, and never stops working to find the best communication, channel, and message time for each consumer.
Heartbeat is trained on millions of consumer engagement data points to craft a communication strategy for each account. If that strategy doesn’t work, it learns and adjusts and keeps trying until a resolution is reached. Unlike traditional collection strategies, this approach takes into account the personal preferences of every consumer it engages with, and results speak for themselves. Within the first nine months of using a personalized debt collection strategy with TrueAccord, a Fintech client was able to collect $500,000 with 95% of those consumers using self-service options.
Deliver Personalization at Scale with TrueAccord
TrueAccord takes a consumer-centric approach to debt collection by leveraging machine learning to personalize the experience for every account. If your business wants to achieve better recovery results while prioritizing a consumer-friendly experience, TrueAccord can help. Connect with our team today to learn how more personalization could be woven into your collection strategy.