Category: Customer Experience

Welcome to the Debt Resolution Funnel: Insights from 20MM Consumers

By on April 11th, 2024 in Customer Experience, Industry Insights, Industry Interviews, User Experience

When it comes to financial and lending services, the customer journey doesn’t drop off once a consumer enters delinquency—in fact, quite the opposite. In the world of debt collection, understanding this unique, and often overlooked, part of the customer journey is critical to securing repayment and debt recovery.

Welcome to the Debt Resolution Funnel. This goes beyond tracking roll rates and primary vs secondary vs tertiary account placements; it instead looks at the debt lifecycle from the consumers’ perspective in well-defined stages with the goal of repayment.

And for TrueAccord, it even goes a step further, with our resolution funnel taking a closer look at how to engage with each consumer in each stage with the optimal messaging, timing, and channel selection specific for that individual. This is possible thanks to our patented machine learning platform, HeartBeat, that automatically improves and optimizes engagement over time, all powered by engagement data from our over 20 million consumer journeys.

While many collection agencies still try to reach consumers through outbound calling (and struggle due to declining right-party-contact rates and tightening regulations), even those using email will typically only develop content based on what bucket the consumer is currently in and use the mass-blast approach for all customers in that particular bucket. Conversely, our patented machine learning engine, HeartBeat, dynamically optimizes the next best touchpoint for every consumer in real-time, including the content, timing, and channel for each customer.

In today’s digital world, one-size-fits-all communication strategies don’t work for any type of consumer engagement—and that has proven especially true in debt collection.

Understanding the Funnel: Tailoring Engagement Strategies for Success

Just as in marketing, where funnels mark the path from awareness to conversion, in debt collection it details the journey from debt placement to resolution. At TrueAccord, we’ve honed our strategies to optimize outreach at every stage of this journey, powered by our intelligent decision engine HeartBeat, delivering an effective resolution process for both our clients and their customers in delinquency.

Let’s take a high-level look at the distinct stages of the TrueAccord funnel and how successful engagement relies on our content, message timing, and communication channels.

Top of the Funnel: Debt Placement, Reachability, and Acknowledgement

  • Debt Placement: The journey begins with debts placed with TrueAccord for collection
  • Reachability: We strive to reach debtors through various channels, ensuring they are aware of their debts
  • Acknowledgement: The consumer acknowledges their debts through interactions with our communications or with agents through inbound calling

Strategies at this stage focus on contact coverage, leveraging and learning through use of diverse channels for communication, and optimizing content and messaging to enhance engagement and acknowledgement rates.

Middle of the Funnel: Active Consideration and Commitment

  • Active Consideration: The consumer explores their payment options, visiting payment forms, or interacting with inbound agents
  • Commitment: The consumer commits to payment arrangements, initiating payment plans or settlements

Here, we concentrate on providing flexible payment options (including completely self-serve a payment portal), improving website usability, and employing targeted follow-up communications to facilitate commitment.

Bottom of the Funnel: Progression and Resolution

  • Progression: Significant progress is made by the consumer towards their commitments, paying at least a percentage of their balances
  • Resolution: The consumer successfully resolves their debts through payment or dispute resolution

Strategies in these stages prioritize payment plan management, personalized communications based on HeartBeat’s machine learning insights, and celebrating debtor progress to foster brand affinity.

Driving Success: Strategies for Each Stage

  • Content and Messaging: Crafting compelling content tailored to specific consumer and funnel segments and leveraging HeartBeat’s machine learning for engaging messaging.
  • Channel Optimization: Utilizing diverse communication channels, such as SMS and email, based on consumer preferences and behavior.
  • Payment Offerings: Offering flexible payment options, including settlements and extended payment plans, to accommodate diverse financial situations.
  • Website Usability: Enhancing website design and functionality to facilitate easy navigation and understanding of payment options.
  • Continuous Discovery: Practicing ongoing experimentation and learning from consumer interactions to refine strategies and improve performance continually through HeartBeat.

Empowering Resolution Through Better Engagement Every Step of the Way

Shifting the mindset of the debt resolution journey only being defined through roll rates and placements to a consumer-centric resolution funnel instead can be a significant overhaul for any organization’s collection strategy. Whether communicating in-house, using a call center, or partnering with a third-party collection agency, adopting the nuanced approach we outlined above for better results takes time, a robust content library, advanced machine learning, and a platform able to scale to meet both your business’s and customers’ needs.

TrueAccord’s machine learning engine, HeartBeat, doesn’t just optimize our strategies for engagement and commitment. It leverages interaction signals to identify consumers at risk of breaking plans and automatically adapts to keep them successful until resolution. Our approach aims to engage and empower every step—and every funnel stage—along the way.

As we continue to listen, learn, and innovate, we remain committed to delivering exceptional debt collection experiences that prioritize consumer well-being paired equally with debt recovery. At TrueAccord, we’re not just collecting debts; we’re fostering resolutions and helping consumers build brighter financial futures.

Ready to get started? Schedule a consultation today»»

How Consumer Credit Trends Impact Debt Collection in 2024

By on March 5th, 2024 in Customer Experience, Industry Insights, Industry Interviews, User Experience

Today’s current economic climate is already influencing consumer spending and credit in 2024, and is becoming a hot topic for businesses seeking to engage past-due customers.

Economic Growth in 2023, But Slowdown Expected in 2024

Last year proved that the US consumer has been very resilient to the rumblings of a potential recession and continued to spend with surprising growth all the way through the end of 2023.
Despite inflation and high interest rates, consumers helped the economy end the year in a far better position than most predicted.

And consumers reported an uptick in optimism about the financial state, according to Deloitte’s ConsumerSignals financial well-being index, which captures changes in how consumers are feeling about their present-day financial health and future financial security based on the consumer’s own financial experience. We saw an increase to 101.4 in November 2023, up from 97.6 a year ago. Additionally, WalletHub’s Economic Index, which measures consumer satisfaction, rose by about 4% between January 2023 and January 2024.

But even as economic experts adjusted their outlook towards a soft landing and consumers reported a more positive financial outlook, 2024 is still expecting a slow down in consumer spending.

“Growing debt balances, stubborn interest rates and elevated prices are still a thorn for consumers, and contribute to their overall financial stability,” explains TrueAccord CEO Mark Ravanesi in his Q4 Industry Insights: Cautious Optimism with a Side of Holiday Hangover. “For lenders, service providers and debt collectors, guaranteeing repayment will still be a challenge [in] 2024.”

As Consumer Delinquency Rises, So Does Consumer Confusion

That financial holiday hangover Ravanesi described is a harsh reality for consumers: approximately one-third of American adults go into debt to pay for holiday expenses, contributing to their overall financial stability year-round. Credit card balances hit a trillion dollars in 2023, but that unprecedented milestone proved to just be another number as credit card balances continue to grow—by the fourth quarter balances increased to $1.13 trillion and the share of those balances that were at least 90 days delinquent approached 10%, an increase of more than two percentage points in a year.

In January, overall delinquency grew with a 2.31% increase in delinquent accounts and 10.49% in delinquent balances month-over-month. Today, about 61% of American households have credit card debt and the average credit card debt balance sits at $5,875.

Bottom line: households took on more debt at the end of last year and we’re seeing loans increasingly going bad, according to data from the Federal Reserve Bank of New York, leading to a shift in consumer spending for 2024.

On top of historic credit card balances, delinquencies continue to climb across the board: automotive, mortgage, bank cards, and unsecured personal loans.

The rising popularity of the Buy Now, Pay Later (BNPL) options and their corresponding delinquencies are also a piece of the puzzle, but one that is not currently captured by the Bureau of Economics and falls into a category known as “phantom debt.”

“Today’s consumer is using more and different financial products,” shares Ravanesi. “Buy Now, Pay Later was a big driver of purchasing power [in 2023] amidst elevated interest rates. While a helpful product for consumers, BNPL can be tricky as it doesn’t show up on most credit reports and can be an invisible and unaccounted-for debt burden.”

With so many different BNPLs offered, consumers can be borrowing from a variety of different lenders all at the same time and it is becoming more difficult for them to keep track of the different payments—and easily slip into delinquency. This confusion can be especially detrimental considering consumers using BNPL as more likely to be “financially fragile,” as reported by the NY Fed, having credit scores below 620, being delinquent on a loan, or having been rejected for a credit application over the past year.

“It’s becoming more and more confusing for consumers,” TrueAccord founder Ohad Samet explained in a recent webinar. “And we’re seeing consumers often need help to organize the different debts.”

And then we add student loans back into consumers’ repayment mix…

The Impact of Resumed Student Loan Repayments

Millions of people are resuming another financial obligation every month: their student loan payments. This introduces one of the defining questions of 2024 for lenders and debt collectors:

How will student loans be prioritized among other payments and debts?

It’s a legitimate concern considering surveys found 45% of respondents used the student loan forbearance period to tackle other debts, including paying down mortgage/rent expenses (27%), credit cards (26%) and other past-due bills (24%)—and even before forbearance was lifted, 85% of borrowers already anticipated facing financial hardship due to student loan repayment, with 49% saying they’ll have a hard time paying other bills. In fact, 28% of student loan borrowers say the resumption of federal student loan payments will likely require them to take on new debt to manage their personal finances.

Only time will tell, but so far student loan repayment rates have been low amongst the 22 million Americans affected—in the first month of resumed payments, 8.8 million borrowers missed their student loan payment, equating to 40% of loan holders.

Whether they missed that first payment or not, student loan repayments resuming again are having a significant impact for those who borrowed—91% say financial stress is impacting their mental, physical wellness and student loan debt is a key driver of this financial stress.

So how can lenders and collectors effectively recover debts in 2024 given the rising delinquencies and rising financial stress for consumers?

Right Message, Right Channel, Right Time for Better Consumer Engagement and Debt Recovery

Consumers have more stress and demands on their attention than ever before so it should make clear sense that consumer experience is critical for an organization’s reputation, long-term success with customers, and how effectively you can collect even in late-stage delinquency.

Research shows that contacting first through a customer’s preferred channel can lead to a more than 10% increase in payments and that 14% of bill-payers prioritize payments to billers that offer lower-friction payment experiences. Plus, 71% of consumers expect personalized experiences, which means one-size-fits-all outreach isn’t going to cut it in collections. Your business must be able to engage with the right message, the right channel, and the right time to recover the most funds possible.

“If there’s one thing we’ve learned from our consumer interactions, including the 16.5 million we added in 2023, it’s that no two consumers are the same, and what works for one may not work for the next,” explains Ravanesi. “That’s why options are so important—in communication channel, customer support method, and perhaps most importantly, in repayment.”

Personalization of the collections experience—from channel to time of day to specific message—is critical in cutting through the noise and driving engagement and commitment, especially in today’s increasingly digital world.

“Digital is deeply, deeply ingrained in every group of the population,” Samet observes.

And consumers are engaging on more digital channels than ever before:

  • 65% of American consumers have paid a bill by mobile device in the past twelve months
  • 54% have used an online portal supplied by a biller
  • 85% of consumers are already using digital bill pay
  • 41% of consumers cite ease and convenience and 23% cite faster and instant payments as the most important reason to choose a digital channel
  • 59% of consumers stating email as their first preference for debt collection, according to a FICO survey (versus only 16% want to receive a phone call)

Research from McKinsey concludes that consumers who digitally self-serve resolve their debts at higher rates, are significantly more likely to pay in full, and report higher levels of customer satisfaction than consumers who pay via a collection call.

Providing multiple repayment options, communicating through a variety of channels, reaching out at the optimal time of day, delivering the message in a way that best resonates with the consumer—all of these factors play a role in how effective your debt recovery strategy will be.

The TrueAccord Difference

Partnering with a debt collection agency for late stage debt recovery provides a number of advantages, including improving debt recovery rates, reducing the workload for lenders, offering access to specialized resources, and providing flexibility and customization. Every business is different, just like every customer’s situation is different, but TrueAccord has proven for over a decade that our digital-first, omnichannel approach drives improvements in liquidation rates by engaging consumers with the right message, through the right channel, at the right time.

At TrueAccord, our mission to help organizations recover more (from happier consumers) is comprehensive and tailored to each business’s specific goals and individual customer expectations. Since 2013, we have provided win-win solutions between businesses and consumers in debt. By using our patented machine learning engine, HeartBeat, we create a personalized journey for each consumer and keep optimizing for the ideal message, outreach time, and communication cadence to elevate performance.

Ready to get started? Schedule a consultation today»»

Declining RPC Rates, Rising Consumer Complaints: Why Outbound Calling for Debt Collection Won’t Work in 2024

By on January 31st, 2024 in Customer Experience, Industry Insights, Product and Technology, User Experience

If your business plans to use outbound calling as the main mode of engaging past-due customers in 2024…good luck.

Good luck reaching the right number for the target customer.
Good luck getting them to commit to repayment over the phone.
Good luck not getting complaints.

And if the plan is only to use outbound calling…be prepared to start accepting more losses in 2024. Even if you can get the right customer on the phone, studies show 49.5% of consumers take no action after a collection call.

Let’s look at the challenges around right-party contact rates, consumer complaints, and the timely factors that make the challenges more detrimental to your business’s late-stage debt recovery.

Declining RPC Rates

The decline of right-party contact rates (RPC)—the percentage of calls in which an agent is able to connect with the target consumer—isn’t new for 2024, but its impact on debt collection is reaching new heights in the new year. RPC is considered one of the most accurate measurements for the effectiveness of an organization’s outbound calling efforts, whether internally or through a third party.

Surveys from the Association of Credit and Collections Professionals (ACA International) found that 62% of the respondents reported seeing a decrease in right-party contacts, with 78% of the respondents experiencing call-blocking and 74% having their calls mislabeled.

Call-blocking and spam-mislabeling are only part of the issue for RPC rates: government regulations, robocalls, lack of consumer trust in answering calls, and inaccurate phone data all contribute to the drop in RPC rates.

The bottom line is the declining RPC rates are negatively affecting your business’s bottom line—but that’s not the only challenge outbound dialing for debt collection faces in 2024.

Rising Consumer Complaints

As almost all other forms of financial transactions have evolved, so have consumers’ communication preferences in that arena. Nearly nine in ten Americans are now using some form of digital payments and 59.5% of consumers prefer email as their first choice for communication, but traditional call-and-collect methods still dominate in late-stage recovery efforts.

And with that in mind, it shouldn’t be surprising that consumers complain about debt collectors’ and creditors’ communication tactics used when collecting debts.

But beyond ignoring communication preferences, many consumer complaints actually equate to compliance violations.

According to the 2022 Annual Report on the Fair Debt Collection Practices Act (FDCPA), 51% of communication-related complaints were because of repeated calls. Despite the 7-in-7 Rule (debt collectors are prohibited from calling the same consumer more than seven times within seven consecutive days, unless the consumer directly gives consent to receive any additional calls), 17% of respondents of a Consumer Financial Protection Bureau (CFPB) survey said a creditor or debt collector tried contacting them eight or more times per week. Similarly, other common complaints revolve around the collector or creditor calling at inconvenient hours outside of the FDCPA presumed convenient calling hours from 8:00 a.m. to 9:00 p.m. at the consumer’s location.

But again, even if you are following the letter of the law, it doesn’t protect your brand’s reputation from consumer complaints.

Minimize These Collection Challenges with a Digital-First Approach

Between declining RPC rates, shifting consumer preferences, rising consumer complaints, and increasingly stricter compliance regulations, the once tried-and-true outbound calling methods are no longer viable in 2024.

But your business doesn’t have to resign to accepting losses once accounts hit late-stage delinquency—taking a digital-first approach negates concerns over RPC rates, catches up with evolving consumer preferences, neutralizes the cause of common consumer complaints, and smoothly navigates compliance requirements.

Kick start your 2024 recovery efforts with a digital-first consumer communication approach—learn more and get started now»»

Why Q4 is the Time to Evaluate Your Collection Partners

By on November 1st, 2023 in Customer Experience, Industry Insights, User Experience

It’s hard to believe that the year is already winding down, but consumer debt certainly isn’t. And not having the right collection partner today can equate to missed recovery opportunities tomorrow.

So what makes the end of the year such an important time to evaluate your current collections partner? Let’s take a look at some of the timely factors.

Why Evaluate Your Collection Partner in Q4? To be Better Prepared for 2024

Be Ready for the Aftermath of Holiday Spending

It should come as no surprise that consumer spending typically increases in the last few months of the year—Black Friday, Cyber Monday, Super Saturday, Boxing Day, not to mention the expenses around holiday travel too.

But last year marked a particular surge in consumers putting a lot of that spending on credit, with 41% of Americans putting more than 90% of their holiday expenses on their credit cards, and one-third using credit cards for all their holiday expenses.

With this heavy reliance on credit, nearly 42% anticipate going into debt to pay for the holidays—especially when considering that US shoppers took on over $1,500 in holiday debt in 2022.

It feels almost inevitable that by the end of Q1 in 2024 some consumers will already be rolling over past the 90-day delinquency mark. To be ready, your debt collection should be preparing for Q1 late-stage collections now.

Get a Jump on Engagement Before Tax Season

Even though tax season may feel far off today, now is the time to start preparing engagement strategies to reach and remind consumers to prioritize repayments when tax refunds come around.

And this shouldn’t be a novel concept to customers already dealing with debt: surveys find one in five respondents intend to pay off their holiday spending bills with federal tax refunds. In 2023, 44% of Americans reported earmarking their refunds to pay off their debt overall, according to the CNBC Your Money Financial Confidence Survey.

Although paying off debt is a priority, 34% of those surveyed said they were worried their refunds wouldn’t make as big of an impact due to inflation/rising costs while still reporting that their tax refund would be critical to their household finances—don’t let your collection partner show up late to the competition when consumers are allocating those tax refund dollars.

Bottom line: many consumers will likely fall into debt in Q4 due to holiday expenses, but being prepared to engage them come tax season can help influence opportunities to secure repayment as we roll into 2024.

Why Opt for Digital Outreach? To Meet Consumers Where They Already Are

Your collection partner needs to be prepared for when and where your customers are ready to engage. And after the holidays and gearing up for tax season, many consumers are already active online—so don’t miss the chance to engage them through digital outreach.

By the numbers, consumers are primed for digital communications in Q4 and Q1 considering:

  • In 2022 online holiday sales rose 3.5% year over year, marking the largest ever online holiday season
  • 68% of Americans report they pay more attention to emails from companies during the holidays
  • 93.8% of individual tax returns were filed electronically
  • Convenience was one of the top six reasons Americans prefer filing taxes online

Given that consumers will be spending a lot of time online through Q4 and into Q1, digital communications is crucial to stay top of mind as holiday spending rolls into delinquency and competition for tax refund dollars ramps up. Your collection strategy should not only include email but also be ready with the right message at the right time to secure repayment—it takes more than just generic mass blast emails to get consumers to engage.

Does your collection partner have a plan to capture delinquent customers’ attention at just the right time with the right message? And not just looking ahead for Q1 engagement, but all year round.

Consumers Prefer Digital for Financial Services—Any Time of Year

While we see spikes in online shopping during the holiday season and more consumers choose to file taxes electronically, these aren’t the only times of year that financial transactions happen digitally.

During any given month, surveys find that 73% of people worldwide turn to online banking at least once a month, with 59% specifically using mobile banking apps. This marks an increasing adoption rate of digital channels by customers to get their banking done, jumping to 83% in 2023 up from 77% in 2020.

Globally, the number of online banking users is expected to reach 3.6 billion by 2024.

Overall, consumers are opting for a digital experience when it comes to their finances, so using digital channels needs to be an integral part of your collection strategy year-round when you consider:

  • 59.5% of consumers prefer email as their first choice for communication
  • Contacting first through a customer’s preferred channel can lead to a more than 10% increase in payments
  • 14% of bill-payers prioritize payments to billers that offer lower-friction payment experiences

Is your collection partner set to deliver personalized digital communications at scale any time of year?

How to Evaluate a Debt Collection Partner

Selecting a debt collection partner makes an impact regardless of season, but Q4 offers businesses the opportunity to set their recovery efforts up for better success leading into tax season.

But what are the questions to ask and qualities to look for in a partner? Whether your business is looking to work with a collection agency for the first time or want to reassess how effective your current provider may actually be, our latest eBook provides the Top 10 Questions to Ask along with explanations of why each specific question matters and what to look for when evaluating—available for download here»»

Ready to get a jump on your debt collection strategy for 2024? Schedule a consultation with TrueAccord’s experts to get started»»

Email Deliverability: Six Key Questions to Ask Your Debt Collection Provider (and How TrueAccord Measures Up)

By on October 23rd, 2023 in Customer Experience, Industry Insights, Product and Technology, User Experience

Did you know one of the most common reasons for missing a payment is because delinquent customers simply forget to pay their bill?

But staying top of mind for consumers is harder than ever using traditional call-and-collect methods considering stricter compliance regulations and the fact that 94% of unidentified calls go unanswered. Plus, surveys have found that when it comes to debt collection, 40% of consumers state email as their first preference of communication, and contacting through a customer’s preferred channel first can lead to a more than 10% increase in payments.

But, even if your collections partner claims to use digital engagement, are you actually getting better recovery rates?

Simply adding email into the communication mix isn’t enough—there’s a lot that goes on between hitting “send” and reaching the inbox. Understanding the core components of a successful email program is helpful, but are your collection emails actually making it to your delinquent accounts? Unopened emails or messages trapped in spam won’t help those liquidation rates.

In today’s digital world, businesses can’t afford to work with collection partners who claim to engage consumers via email but can’t back it up with the metrics to prove that their messages actually reach their intended recipients.

Let’s look at six key questions to ask your collections partners, why each question is important, and how TrueAccord measures up. Want to learn more about email deliverability? Click here»»

1) What is their primary method of consumer engagement in debt collection?

Why It Matters
The success of traditional call-and-collect methods are waning compared to modern digital engagement due to more consumers preferring digital communications, declining right-party contact rates, and increasing compliance restrictions.

How TrueAccord Measures Up
TrueAccord is a digital first, omnichannel debt collection agency—and has been a leader in digital consumer engagement.

2) How long have they used email as a form of consumer engagement in debt collection?

Why It Matters
Many debt collection providers have been slow to adopt digital communication as part of their consumer outreach, and even those who have integrated digital are still refining strategies for optimal outcomes.

How TrueAccord Measures Up
From the very start back in 2013, TrueAccord’s approach to consumer engagement has been digital-first and continues to grow into a robust omnichannel operation through machine learning driven by data from 20 million customer engagements and counting.

3) What is their email delivery rate?

Why It Matters
Email Delivery Rate refers to the successful transmission of an email from the sender to the recipient’s mail server, measured by emails delivered divided by the number of emails sent.

How TrueAccord Measures Up
TrueAccord has a 99% email delivery rate, compared to the average email delivery rate of approximately 90%.

4) What is their deliverability rate?

Why It Matters
Successful email delivery doesn’t mean that it actually makes it into the recipient’s inbox. Deliverability divides how many emails reach the recipient’s inbox, as opposed to their spam folder, by the total number of emails sent.

How TrueAccord Measures Up
TrueAccord has a 95% deliverability rate, compared to the worldwide average of 84.8%

5) Do they measure open rates and/or click rates?

Why It Matters
Measuring open rates (percentage of recipients who opened your email) and click-through rates (percentage of those who clicked on a link in the email) play a dominant role to understand which communications are resonating with recipients and which are not.

How TrueAccord Measures Up
TrueAccord has a total open rate 52% and total click rate 1.77%, compared to the 2023 average industry total open rate of 27.76% and click rate of 1.3%.

6) How do they make adjustments when delivery and/or deliverability rates fluctuate?

Why It Matters
Email delivery and deliverability rates will fluctuate, but how a provider responds and adjusts to these changes is crucial to keeping the rates as high as possible. 

How TrueAccord Measures Up
TrueAccord’s dedicated Email Operations and Deliverability Team proactively monitor and make adjustments, along with using our patented machine learning engine, HeartBeat.

Ready to Reach Optimal Consumer Engagement in Your Debt Collection Operations?

Start by scheduling a consultation to learn more about what influences email delivery and deliverability rates and how TrueAccord consistently performs above the rest. 

Get Start Now»»

Top KPIs for Your Recovery Operations

By on September 27th, 2023 in Customer Experience, Industry Insights

The goal of a recovery operation is to maximize profitability by efficiently recovering money lent to consumers—while maintaining consumer loyalty. This means that measuring the success of a recovery strategy goes beyond just dollars and cents and into consumer-centric metrics as well.

But how do teams measure overall portfolio performance, and what are the most important portfolio-level key performance metrics (KPIs)? Let’s take a look at a few of the top KPIs and how they can be categorized.

Key Collections Metrics

Key performance indicators for debt collection and recovery efforts:

  • Accounts per Employee (APE) or Accounts to Creditor Ratio (ACR): the number of delinquent accounts that can be serviced by an individual recovery agent
  • Net Loss Rate or Net Charge Off Rate: measures the total percent of dollars loaned that ended up getting written off as a loss
  • Delinquency Rate: total dollars that are in delinquency (starting as soon as a borrower misses a payment on a loan) as a percentage of total outstanding loans – often an early warning sign on the total volume of delinquent debt
  • Promise to Pay Rate: the percentage of delinquent accounts that make a verbal or digital commitment to pay
  • Promise to Pay Kept Rate: the percentage of delinquent accounts that maintain a stated commitment to pay
  • Roll Rate: the percentage of delinquent dollars that “roll” from one delinquency bucket to the next over a given period of time – provides visibility into the velocity with which debts are heading into charge off

Metrics like net loss rate are the north star of a recovery program, while metrics like delinquency rate and roll rate are leading indicators of future portfolio performance. But just as critical as these traditional KPIs, today’s collection operations need to focus on implementing and measuring digital engagement.

Digital Engagement Metrics

A range of KPIs that capture how effectively digital channels are reaching and engaging consumers:

  • Coverage: the percentage of users for whom we have digital contact information
  • Deliverability: the percentage of digital messages that are actually reaching consumers
  • Digital Opt-In: the percentage of users who have consented to receive digital communications in a particular channel
  • Open Rate, Clickthrough Rate: the percentage of users who are actually opening and clicking digital communications

Following key collection and digital engagement metrics are all well and good, but how do recovery teams move the needle on those critical KPIs?

Operational metrics are the KPIs that collectively drive overall portfolio-level performance. They represent the “levers” available to change the economics of a recovery model.

Operational Metrics 

Metrics that create simple framework to explain the profitability of a recovery operation: 

  • Profitability of a Collections Operation Formula: R x ResF x E
  • R [Reach]: percentage of consumers in delinquency can you actually reach
  • ResF [Resolution Funnel]: how effectively you can convert initial contact with a consumer into a commitment to pay – and ultimately, a payment promise kept (see Promise to Pay Rate and Promise to Pay Kept Rate)
  • E [Efficiency]: calculation of what the “unit economics” of your collection are and how much it costs, on average, for every account that you rehabilitate

In the hyper-competitive financial services space, consumer experience is a source of competitive advantage. That’s why it stands to reason that alongside the “traditional” metrics of recovery economics, forward-looking businesses have pioneered a new set of KPIs that measure the value of consumer experience.

Consumer-Centric Metrics 

A new set of KPIs that measure the value of consumer experience:

  • Net Promoter Score (NPS): how likely a consumer is to recommend a given brand after an experience with a brand’s collection organization
  • Customer Retention Rate: how likely a consumer is to be reacquired by a given brand after his or her delinquent account is rehabilitated

Keep a Close Watch on These KPIs for Collection

As payment-driven organizations across verticals focus further into the world of recovery, it is safe to anticipate that digital engagement and consumer-centric KPIs like the ones we covered above will become even more deeply woven into the fabric of the organization.

Ready to evaluate your debt recovery operations using more sophisticated KPIs? Schedule a consultation to get started today»»

Core Components for a Successful Email Program in Debt Collection

By on September 12th, 2023 in Customer Experience, Product and Technology

If your business and collection partners aren’t utilizing email in your debt recovery strategy, you’re leaving vital engagement opportunities (and potential collections) on the table. There are plenty of reasons why digital communications are the way to go, but reaching out through email is especially important in collections.

Surveys show that 59.5% of consumers prefer email as their first choice for communication, and 14% of bill-payers prioritize payments that offer lower-friction payment experiences, which increases to 23% for millennials specifically. Considering this, it shouldn’t come as a surprise that courts have actually ruled that “an email is less intrusive than a phone call” for debt collection.

But what makes a successful email program when it comes to connecting with delinquent accounts? Whether your business is handling collections in-house or are looking at working with a third party, your operations should be confident that you have these core components covered.

Core Components for a Successful Email Program

While adding email into the communication channel mix is critical, it is the set up, execution, and continued optimization of that email program that can actually make a difference when it comes to consumer engagement. There are many elements to a successful email strategy, but here are three of the core components that we’ll focus on:

Infrastructure, Data, and Content

All 3 are required for a successful email program—each one relies on the other two to create a high performing program.

Let’s take a look at why each of these is important and the risks that can occur without each component in place.

INFRASTRUCTURE

The infrastructure an email program is built on has many components itself: Mail Servers, Mailbox Providers, Internet Service Providers (ISPs), Email service providers (ESPs), and more. How these components are set up and work together influences sender reputation, which in turn influences email delivery rates. You can learn more about these different pieces in our blog focusing on the The (Hidden) Anatomy of Email here»»

While infrastructure can admittedly be complex, the risks your operation runs without a sound infrastructure are clear and quite consequential, including having your emails blocked, deferred or delayed delivery, or winding up lost in the recipient’s spam folder.

DATA

In today’s digital world, data is everywhere—but how you harness that data can make or break your email program (and even get you into hot water if you or your collections partner are not following all the necessary compliance regulations around data privacy and protection). Understanding data helps intelligently influence an email program, especially when focusing on email engagement metrics such as:

  • Opens
  • Clicks
  • Unsubscribes
  • Spam complaints
  • Hard Bounces
  • Spam traps

But without quality data analyzed appropriately, your emails could result in consumer complaints, hard bounces, falling into spam traps, not to mention negatively impacting all the engagement metrics listed above.

CONTENT

Solid infrastructure and reliable data are essential in any email program, but when it comes to debt collection, content can be the tipping point between a consumer committing to repayment or ignoring the outreach altogether—or even reporting your communications as spam or harassment.

From subject lines to your call-to-action (CTAs), sending the right message to your customers is crucial. Without compelling content you miss opportunities to capture consumers attention resulting in fewer opens, fewer clicks, or even pushing consumer perception in the wrong direction. If you lose your customers’ trust, you’re most likely going to lose the chance to recover their debt.

Successful Email Engagement Can Boost Debt Recovery

Studies have shown that engaging consumers through digital methods can increase resolution rates by as much as 25%. But if your digital efforts are missing any of the core components we just covered above, it doesn’t matter if your collection strategy includes email—your operations are going to be missing recovery opportunities.

Ready to step up your engagement with better email strategies? Schedule a consultation to get started»»

Call-and-Collect vs Digital-First Engagement for Debt Recovery

By on June 1st, 2023 in Compliance, Customer Experience, Industry Insights, Product and Technology, User Experience

Outbound calling has been the main mode of collections for decades, but the cost of a call center or in-house full-time employees (FTEs) making calls is no longer justifiable when most consumers simply don’t answer the phone, on top of the mounting compliance restrictions limiting opportunities to call in the first place.

But outbound dialing isn’t completely obsolete—digital-first omnichannel strategies can turn traditional call-and-collect operations around by integrating new digital channels into the communication mix.

Let’s compare traditional outbound calling methods versus a digital-first approach in three key areas impacting your business’s ability to collect more, faster:

  • COST
  • COMPLIANCE
  • CONSUMER PREFERENCES

Get even more statistics and data in our latest eBook — Why Evolve from Outbound Calling to Omnichannel Engagement? Cost, Compliance, & Consumer Preferences — available for download now»»

COST: Call-and-Collect

The cost to collect has been on the rise for traditional methods for years, whether you outsource to a call center or have FTEs dialing the phones.

One reason for this rise is based on the fact that many lenders still practice old strategies to prioritize contacting customers based on their risk profiles, balance, and average days delinquent—completely missing portions of their portfolios. Factoring in propensity to pay is important to successful engagement, but it means that agents’ time is focused on only a small portion of accounts, leaving potential repayments on the table.

Add in the overhead costs, inflation, and hiring challenges of using agents as first attempts at engagement and watch the expenses continue to climb past what you’re able to collect through outbound calling.

COST: Digital-First Omnichannel

Right off the bat, digital-first shows the cost of collections can fall by at least 15%.

Since digital is infinitely scalable, this communication tactic can touch every single account, regardless of scoring models—unlike human dialers who can only physically call a certain number of accounts on any given day. Going digital-first cuts down on the time billed for making repeated outbound calls that are never answered or returned, and it allows agents to interact with customers that want to speak directly to a person.

Overall, digital-first has shown to boost customer engagement by 5x, the first step towards repayment.

COMPLIANCE: Call-and-Collect

It’s no secret that it’s increasingly complicated to reach customers with all the legal communication restrictions.

While all debt collection communication is subject to compliance rules, outbound calling has specific laws and regulations that can carry costly penalties for non-compliance—and it’s only becoming more complex with new state-specific rules rolling out right and left. But no matter where your business is doing business, if you’re making collection calls you must follow these federal guidelines:

  • Inconvenient Time Rule: prohibits calling before 8am or after 9pm
  • Regulation F’s 7 and 7 Rule: Cannot call more than seven times within a seven-day period
  • Telephone Robocall Abuse Criminal Enforcement and Deterrence Act (TRACED Act) tagging legitimate businesses as spam
  • FCC Orders further restrict dialing to landlines and include opt-out requirements for prerecorded voice messages

But there is a more streamlined way to ensure your collection communications are following all the rules: enter code-based compliance.

COMPLIANCE: Digital-First Omnichannel

Code-based compliance works by programing rules that ensure all communications fall within all federal and state laws and regulations, such as:

  • Frequency and harassment restrictions
  • Consent requirements*
  • Disclosure requirements

This digitally designed approach to compliance greatly reduces the opportunities for human error that are bound to occur in more manual processes. Additionally, the digital-first approach allows companies to continue to collect during times that calling would violate certain regulations, like the Inconvenient Time Rule. In fact, 25% of payments come in after 9pm or before 8am (the determined inconvenient times), since these hours can actually be more convenient for consumers to catch-up on digital communications they received throughout the workday.

*Generally, there is no requirement in the federal law to send debt collection communications by email, though some states are more restrictive. This is not legal advice, please consult an attorney for guidance on your unique circumstance.

CONSUMER PREFERENCE: Call-and-Collect

46% of consumers want to be reached through their preferred channels—so what are today’s consumers’ preferences?

Here’s a hint: phone calls aren’t at the top of the list.

And today’s Right Party Contact rates show it, ranging between just 0.5% – 4.0%. And out of those that do answer the phone, 49.5% of consumers take no action after a collection call. The old call-and-collect tactic may actually do more harm than good if compliance rules are ignored: out of the communication tactic complaints received by the CFPB in 2020, over half complained of frequent or repeated calls.

CONSUMER PREFERENCE: Digital-First Omnichannel

So if phone calls aren’t consumers’ preferred method of communication, then what is? For 59.5% of consumers, email is their first preference when it comes to debt collection communications. This is especially important considering that first contacting a customer through their preferred channel can lead to a more than 10% increase in payments.

This digital preference isn’t surprising since nearly nine in ten Americans are now using some form of digital payments—why would they expect collections to be any different? 14% of bill-payers prioritize payments to billers that offer lower-friction payment experiences, and digital is often preferred because of it. Digital communications are easily controlled by consumers and are tightly managed by service providers with built in mechanisms to prevent harassment (like with code-based compliance), which we know has historically been a challenge for call-and-collect practitioners.

Digital-First is the Future of Collections

And it’s here today, working for TrueAccord clients and customers.

At TrueAccord, we find that more than 96% of customers resolve debts without any human interaction when digital options are offered—reducing costs associated with outbound calling, lowering risks with code-based compliance built in, and delivering an experience that consumers prefer.

Get even more statistics and data in our latest eBook — Why Evolve from Outbound Calling to Omnichannel Engagement? Cost, Compliance, & Consumer Preferences — available for download now»»

Ready to go digital-first with your debt recovery operations? Schedule a consultation to get started today!

Reduce Costs While Collecting More With Digital-First, Omnichannel Strategies

By on May 10th, 2023 in Customer Experience, Industry Insights, Industry Interviews, User Experience

Over the past two years, revolving credit card balances have grown more than 25% and are now above $1.2 trillion. Additionally, personal savings rates are stubbornly holding near 65-year lows, and combined with higher interest rates driving higher minimum payments, consumers are obviously feeling the stress. At the same time, delinquency rates on these higher balances have increased over 45%, putting significant strain on bank credit losses.

So what can lenders do? Let’s start by looking at what consumers want, and what outbound calling agents would like to see as well.

What do Customers Want? And What do Agents Want?

For businesses executing outbound call strategies and leveraging dialer technologies, the range of right party contact rates are anywhere from a struggling 0.5% to 4%. With these diminished returns of connection rates, calls become more expensive and less impactful.

It’s no secret that consumer preferences are changing rapidly and younger generations especially do not want to answer phone calls—and it’s important to keep in mind these younger borrowers will be the customers businesses will be servicing for the next 30 to 40 years, especially in a delinquent environment.

In general, consumers want to pay off their debts, but they want to be able to do so when it’s most convenient for them, which is often outside the “presumptively convenient times” between 8am and 9pm. In fact, 25% of payments come in after 9pm or before 8am. At TrueAccord, results show that more than 96% of customers resolve debts without any human interaction when digital options are offered.

But what does that mean for the humans dialing phones for traditional call-and-collect methods?

When businesses deploy an outbound call strategy before digital, often agents are shooting in the dark despite good intentions and dedicated efforts—which can affect outbound agent morale, making it a difficult environment to hire and retain top talent. And given today’s economic landscape, it’s challenging to call and collect from people who are behind on their bills or payments when so many other financial obligations are competing for dollars.

The key: let agents do what agents are good at—the human touch—but leverage digital as the first touchpoint. Let digital get the customer to understand where they are in delinquency. If and when they want to talk to a human, agents are there to do what agents do best: empathize and resolve any issues that digital cannot.

Agents are able to attend to higher-value inbound calls when digital, self-serve options are available for those who just want to make a payment—and it allows those customers to do so in a more convenient, preferred way.

Digital-First, Save More

Digital early stage solutions reduce collections costs for leading organizations across industries by making full-time employees (FTEs) more impactful (or even lowering FTE headcount) and reducing overall expenses while maximizing repayment rates. 

Companies that do rely heavily on an outbound call strategy must realize how expensive each call becomes. The longer that an account is in delinquency, every call becomes more expensive because the likelihood or the propensity to pay diminishes as the debts get older in age. So being able to automate and find those right channels at the right time with a digital strategy will help those phone calls get better results.

Plus, the digital first strategy is infinitely scalable—it doesn’t matter how rapidly a business grows on the frontend for lending or on the backend with new accounts that fall into delinquency. This digital-first approach allows companies to mitigate against turnover or having to compete for talent in the market. And again, FTEs can now be more effective in the delinquency cycles where phone calls are preferable, especially as accounts get further into delinquency.

Making outbound phone calls absolutely serves a vital part of a business’s omnichannel strategy, but deploying digital first will make those calls more cost-effective. It also delivers a stronger connection rate by identifying those preferences through feedback from leveraging a digital-first communication strategy.

Think about how this data can help businesses not only from a performance and liquidation perspective, but by learning from which customers are opening communications versus which ones aren’t. Those that don’t respond to digital should go to the top of the call queue because the data points towards a probable preference for person-to-person calling.

TrueAccord Difference

Learning from these digital engagements is vital for optimization, but if an organization is new to digital communications or has only been sending mass-blast, one-size-fits-all emails, it can feel like an uphill trek to start getting insights to drive better results. 

But by partnering with TrueAccord, who’s been mining consumer engagement data for over 10 years, businesses get plugged in and start benefiting from our data from the get-go. Being able to automate with TrueAccord allows your company to focus on inbound human interactions while simultaneously, TrueAccord’s first-party, client-labeled platform sends effective digital communications to all of your past-due accounts. 

The bottom line benefits of working with TrueAccord:


Maximize the productivity of your business’s resources with a managed, digital-first approach that enhances the efforts of your FTEs and overall collections operations. Start with a consultation today!

An email is less intrusive than a phone call, finds N.D. Illinois while granting TrueAccord’s motion to dismiss

By on April 12th, 2023 in Company News, Compliance, Customer Experience, Industry Insights, User Experience

By Katie Neill & Steve Zahn

A court victory by TrueAccord Corp. (TrueAccord) in the Northern District of Illinois continues to showcase the benefits of digital collection as the court found receiving an email about a debt is less intrusive to consumers than receiving a phone call. Messer Strickler Burnette represented TrueAccord and filed the briefing in the case.

In the Branham v. TrueAccord opinion, the court granted TrueAccord’s motion to dismiss finding that the alleged injuries claimed by the plaintiff—undue stress and anxiety, financial and monetary loss, uncertainty as to how to proceed about the debt, and a harm that “bears a close resemblance” to invasion of privacy—are insufficient to establish standing for a Fair Debt Collection Practices Act (FDCPA) claim.

Plaintiff’s Allegations

Plaintiff alleged that TrueAccord violated the FDCPA by contacting her twice by email after having received notice that she was represented by an attorney. TrueAccord had no record of receiving a notice of attorney representation from the plaintiff. However, when deciding on a motion to dismiss like this, the court must rely solely on the facts and allegations in the complaint and consider them as true, whether or not they are.

In the complaint, the plaintiff included a laundry list of alleged injuries suffered as a result of receiving the two emails from TrueAccord. These injuries included:

  • “Actual” financial and monetary loss without any specifics
  • Confusion on how to proceed with TrueAccord’s debt collection attempts due to “misleading statements”
  • Undue stress and anxiety as well as wasted time, annoyance, emotional distress, and informational injuries
  • A harm that “bears close resemblance to” invasion of privacy

Plaintiff Did Not Allege a Concrete, Particularized Injury

In its decision, the court shot down each of these alleged harms and found that the plaintiff failed to properly plead a concrete, particularized injury as the U.S. Supreme Court required in Spokeo, Inc., v. Robins. 

Specifically, the court found:

  1. Unlike telephone calls, two unwanted emails are insufficient to confer standing and wouldn’t be “highly offensive” to the reasonable person.
  2. Alleged physiological harms (e.g., emotional distress, anxiety, and stress) are abstract harms and not concrete enough to support standing without a physical manifestation of such harms.
  3. Vague and conclusory statements that the plaintiff suffered financial harm without any allegations of facts to support that alleged harm are insufficient.
  4. Attorney fees for bringing suit on a matter cannot be the sole basis of standing to bring the matter; to do otherwise would permit any plaintiff without standing to create it by retaining counsel.
  5. “Wasted time” is not a sufficient harm for standing where no facts are alleged to support the claim.
  6. The risk of an invasion of privacy without an actual invasion of privacy is too speculative and not sufficient to confer standing.

Sophisticated Omnichannel Communication Strategies

This decision is another step forward for the use of email in debt collection as the consumer-friendly way. It also showcases the need for mindfulness when implementing an omnichannel communication strategy. Notably, while the court found a couple of emails are less intrusive than a phone call, it also stated that text messages, voicemail, and calls are different as they “are sufficiently intrusive on an individual’s peace and quiet” to support standing. Using a sophisticated omnichannel strategy helps debt collectors reach consumers at times that are right for the consumer and through the right communication channel, which ultimately creates a non-intrusive consumer experience.

Schedule a consultation to learn more about how email and an omnichannel approach can help their business’s collection efforts today»»