Humans are constantly changing their behaviors based on what’s going on around them. As consumers, many of us have an internal set of rules that businesses need to follow to earn and retain our loyalty. Today, businesses have to work harder for people to take action – the days of guaranteed consumer engagement are gone.
Nowhere is more true than in debt collection. To succeed today, collectors have to consider changes in consumer behavior and prove authenticity to improve recovery rates. What are some of the biggest trends in consumer behavior that debt collection strategies need to address? That’s exactly what we’re going to explore below.
Personalization is King for Debt Collection Strategies
Consumers today expect a hyper-personalized experience from any financial brand they interact with. At a baseline, this means having a firm understanding of each consumer’s challenges and preferences. Collectors need to approach consumers as an empathetic friend who knows them to prompt more engagement.
A common misconception about personalization is that it should only be in the copy. However, there’s more to it than that. Personalization extends to the channel of the message, so debt collectors are increasingly leveraging an omnichannel approach to send a message through each consumer’s preferred communication channel. In fact, 46% of consumers expect brands to communicate through their preferred channels. And an omnichannel approach can increase recoveries by as much as 40%.
Another useful and sometimes forgotten form of personalization is providing consumers with the option to self-serve. In our experience, the majority of consumers (>90% of TrueAccord consumers) prefer to resolve their financial obligations on their own. This empowers them to get around feelings of stress (and even shame) speaking with a human agent, while allowing them to make a repayment on their own time.
Prioritize Creating a Frictionless Experience with Consumers
Whether your business is sending a debt collection email, text message, or calling, the process needs to be easy for consumers. For most accounts, it’s important to limit the number of steps required for someone to take action. As an example, some collectors send a letter or email where the consumer might have to take information and feed it into a website, create an account, or log in prior to completing their payment.
Any hiccup or frustration a consumer experiences through the repayment process can cause them to disengage. So, a longer journey will likely lower repayment rates with consumers. Consumers today have a low tolerance for complicated processes, especially when it comes to financial matters. It’s best practice for every digital communication to have a clear next step that’s easy for consumers to recognize. Emails and text messages are convenient as they can provide a direct link to a payment portal.
Another crucial factor is making sure any information consumers need is not hidden. For example, let’s say a consumer needs their account number to make a repayment. The consumer shouldn’t have to go through multiple steps to get that information. That account number should be included right in the message to make the repayment process as frictionless as possible.
Consumers Prefer Financial Wellness & Collaboration
Over the last few years, consumers overwhelmingly prefer to work with businesses that are invested in their financial wellness. For debt collectors, that means trading in more traditional strategies for empathy. Collectors need to lean into being collaborative with their customers to ease the emotional burden of repayment. Financial stress is often hard to deal with, and a consumer who feels supported is more likely to make a repayment.
The act of reciprocity is a big trend in consumer behavior, with most consumers hoping for a business to extend the olive branch first. However, even with this aspiration, the rise of financial scams has made consumers more hesitant to take the first collaborative step. True personalization can help cut through some unease, so it is important to be easy to work with from first contact. This often means giving the consumer options on how to move forward. In fact, it’s best practice to offer a self-service portal and a contact number as repayment options.
Consumer Engagement is TrueAccord’s Specialty
TrueAccord is a premier debt collection agency that leverages AI technology to deliver a consumer-centric experience. With first and third-party collection services, we take the guesswork out of collections to help consumers find a way forward. If your business is interested in high-performance recovery with consumer-first results, we’re here to help. Contact our team today to learn more.