After three decades of providing exceptional customer experience, a leading national bank recognized a lot has changed in the world of personal banking, technology, compliance, and, in turn, debt collection. To continue delivering the level of service their customers expect meant it was time for the bank to update their recovery methods for the new digital age.
Although the bank had seen moderate success in late-stage collections with their call-and-collect vendor, they had a list of goals that they were unsure their existing collection provider could achieve:
Improve and increase liquidation performance
Keep up with new regulations and ensure compliance
Leverage new, more cost-effective solution
But what was the best way to evaluate the effectiveness of new digital-first engagement versus their existing outbound calling approach?
To test and measure the success of each distinct debt recovery method, the bank decided to use the Champion-Challenger model with TrueAccord joining their existing collections partner.
For their Champion-Challenger test, the bank assigned TrueAccord 50% of primary placements and tertiary placements against their traditional collection provider. By using scorecards, the bank was able to compare the two using set collection goals (varying by month and season) and several key performance indicators (KPIs), including:
Overall liquidation rates
Percentage of settlements in full
Percentage over/under set collection goals
With the Champion-Challenger model in place, collection goals and KPIs designated, and scorecards set, it was time to see how TrueAccord’s digital engagement methods would measure up compared to the old school call-and-collect method…and the numbers would speak for themselves.
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.
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»»
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.
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»»
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!
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:
Unlike telephone calls, two unwanted emails are insufficient to confer standing and wouldn’t be “highly offensive” to the reasonable person.
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.
Vague and conclusory statements that the plaintiff suffered financial harm without any allegations of facts to support that alleged harm are insufficient.
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.
“Wasted time” is not a sufficient harm for standing where no facts are alleged to support the claim.
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.
Reaching consumers can feel harder than ever these days, so struggling to engage delinquent customers can leave some businesses ready to accept losses as just another “cost of doing business.” With 75% of Americans reporting that they will never answer calls from unknown numbers, even the most targeted scoring model for calling has low chances of recovering funds.
But the omnichannel approach—utilizing a combination of calling, emailing, text messaging, and even self-serve online portals—is the preferred experience for 9 out of 10 customers, according to a study conducted by UC Today. And it’s not just beneficial for consumers. The omnichannel approach has been shown to increase payment arrangements by as much as 40%!
So integrating an intelligent digital communication strategy with traditional call-and-collect or letters sounds like a smart plan, but why is it more important now than ever before?
Let’s look at why today’s economic landscape makes omnichannel engagement critical for collections and how your business can get there.
Delinquencies are Rising—And Call Centers Can’t Keep Up
The first quarter of the year revealed that Americans have almost reached $1 trillion in credit card debt, breaking a record set in 2019. Fueled by inflation and higher interest rates among other economic factors, some card issuers’ charge-off and delinquency rates are also rising back up to their pre-pandemic levels.
So we know that delinquencies are on the rise in addition to new compliance regulations that have put greater restrictions on calling (such as the inconvenient times rule, 7-in-7 rule, among others), which put greater limitations on the reach call centers can actually have. Even using scoring models to focus on those who have the highest propensity to pay, consumer preferences have moved away from engaging through (or even answering) the phone.
Even if you know which delinquent accounts are primed for repayment, old school methods will never be able to reach them all efficiently in comparison to digital engagement.
On top of that, consumers are typically already carrying out financial transactions online—so why would a business expect their preferences to shift offline when it comes to handling another financial interaction? When a customer defaults on their account, it is a disruption to their lives to suddenly receive phone calls and letters regarding an account for which they previously only communicated via digital channels.
From our own experience, many of TrueAccord’s creditor-clients prefer a seamless transition to debt collection, and will even go so far as to prohibit TrueAccord from making any outbound calls or sending letters on their accounts because their customers have only ever interacted digitally.
It can even stifle the flow of information that helps consumers make informed decisions about their finances. According to the Pew Research Center, “reliance on smartphones for online access is especially common among younger adults, lower-income Americans and those with a high school education or less.” In fact, 87% of TrueAccord consumers visit our web portal from their mobile devices and tablets, not their desktop computers. Choosing not to engage via digital methods can hurt vulnerable populations of consumers who primarily conduct most of their affairs digitally.
But the answer to this challenge isn’t going 100% all-in on digital communications necessarily. There’s a better way to reach past-due customers and collect more, faster (and from happier people).
Enter the Omnichannel Approach
We’ve seen that call-and-collect operations have proven less successful over time, even using propensity to pay scoring models, but there is a time and a place for those traditional methods in an omnichannel strategy. Adding different technologies to your debt collection operation like email, SMS, and even self-serve online portals can actually enhance the hard work your call centers are already doing and make it overall more effective.
Why is the use of different channels—and more importantly a customer’s preferred channel—so critical for today’s debt collection efforts? The numbers speak for themselves:
46% of consumers expect to communicate through preferred channels
Initiating contact with delinquent customers through their preferred channels can lead to a more than 10% increase in payments
Some banks have found digital communication channels can increase payment rates of customers in late delinquency by 30%
Lenders that have implemented digital-first solutions have seen their cost of collections fall by at least 15%
Traditional outreach methods like outbound calling elicited 18% fewer responses from customers with accounts 30 days past due who prefer digital communications.
The key takeaways from these studies go beyond just “going digital”—to see improvements in engagement rates, repayments, and operational costs you must communicate through the consumer’s preferred channels.
At TrueAccord, we’ve seen this approach’s success time and time again for our own clients and their customers.
Statistics and Stories from the TrueAccord Omnichannel Strategy
Almost all TrueAccord communications with consumers (93%) happen electronically with no agent interaction. The remaining 7% of consumers who do interact with an agent, send an inbound email or make a phone call to our inbound call center where any of our customer care agents are prepared to assist with their request. This is a more cost-effective and efficient use of agents’ time versus making outbound calls, which benefits both businesses and their customers, as one consumer told us on June 1, 2022:
“Thank you for not calling a million times and texting me and allowing me to pay this when I could.”
As described above, TrueAccord primarily sends digital communications to help consumers navigate and take actions at their convenience online, as this consumer told us on January 18, 2023:
“I like how you explain everything in detail by email and easy payment plans for people to regain their credit scores and to get back on their feet.”
In fact, more than 21% of consumers resolve their accounts outside of typical business hours (before 8am and after 9pm) when it is presumed inconvenient to contact consumers under the federal Fair Debt Collection Practices Act (FDCPA). If we relied solely on reaching consumers during a call center’s business hours, that is almost a quarter of consumers who wouldn’t engage and take the next steps in their repayment process.
Our omnichannel approach is compelling for our clients as well—and it’s proven to pay off. As Todd Johnsen, Senior Manager of Collections Vendors for Snap Finance, explained:
“This audience [consumers in debt] may have already had experiences with incessant collection phone calls, and they are used to avoiding them. I wanted to find an agency that was doing things differently. I knew that TrueAccord was using technology and digital channels in a way that other providers weren’t. What we saw was almost 25-35% better performance with TrueAccord, compared to the accounts we placed with traditional agencies.”
See what other clients and consumers had to say about their debt recovery experiences with TrueAccord in our case studies and resources here»»
The Recovery Opportunities are Ripe with the Omnichannel Approach
Omnichannel targeting is a more effective way of maximizing repayment and conversation rates by offering a level of service and personalization that customers have come to expect from companies in the digital age.
With this holistic communication strategy, you can engage with every single account while call center agents still deliver the human touchpoint that can never fully be replaced. Reach customers with the right message, through the right channel, at the right time that works best for them—whether through email, text, or with a real person ready to guide customers back to financial health.
At TrueAccord, our goal is to meet customers where they are to personalize a strategy for each individual customer. We do this by sending them a communication via the right channel, using messaging that resonates with them, and making them an offer they can afford.
We’re able to achieve this thanks to insights from the 20 million customers. This includes data like what email and SMS messages drive the most engagement, which web pages are customers viewing the most, what is the ideal payment plan length, as well as where and when customers stop engaging with us. With every insight, we’re able to improve the overall consumer experience and help keep customers get back to financial health (and recover more efficiently and effectively in the process).
The Resolution Funnel
A funnel is built using a lot of data and a lot of consumer insights. It helps organize that data into a view of the customer’s journey within our product and allows us to identify areas where we can concentrate product improvements. Whether that’s making the website more user-friendly, promoting new and different channels, or utilizing our patented machine learning models—each is a different lever or strategy we can use at different stages of the funnel.
At TrueAccord, our funnel is tailored to fit our business needs while still getting all the benefits of understanding our customers’ behaviors to move them through the funnel, in our case to resolve their debt.
Here’s an example that gives you a good picture of how we think about the customer journey. We have two different funnels for two different clients we work with. You can see they’re fairly different in shape. At the top of the funnels you can see all of the debts placed. Next is reachability, which looks at how the customers were reached, and then if the customers acknowledged their debt, all the way down to when they resolved their debt. These funnels show that for Client 1 we should concentrate our improvements at the top of the funnel, while for Client 2 we need to look at improvements at the bottom of the funnel.
We can slice and dice the funnel in different ways to see how different customer segments are performing. This helps us identify what is working for different consumer segments and for different clients so we can see on a granular level what stages of the funnel to lean into to improve performance specifically for them.
Top of the Funnel
When planning strategies that will improve performance and customer experience at the top of the funnel, it’s important to make sure that the contact information for a customer is correct and that content is personalized in order to get engagement. The stages that make up the top of the funnel are: Debts Placed, Reachability, and Acknowledgment.
Debts Placed: All of the debts that are placed with the company.
Reachability: For the reachability stage, the goal is to reach the consumer and make sure that they’re receiving communication efforts which could be something like a customer opening one email.
Acknowledgment: This could be clicking on an email or SMS and visiting the company’s website, but it could also be from an interaction with customer support via phone or email.
Middle of the Funnel
The two stages we consider the middle of the funnel are: Active Consideration and Commitment. This is where the customer considers the options they have, chooses one, and then commits to a payment arrangement. By providing an online platform that’s easy to use and navigate through filled with helpful content, customers are more likely to self-serve.
Active Consideration: A customer visiting a payment form on the website or having the intent to pay.
Commitment: A customer signing up for a payment plan or agreeing to any other type of deferred payment.
Bottom of the Funnel
Lastly, we’ll cover the two bottom-of-the-funnel stages which are: the Progression and Resolution of the debt. In these stages, it’s essential to have a plan management system in place to help customers keep up with their payments as well as a plan in case they fall off and stop paying. The funnel ends once the customer passes through these last two stages and has paid off their debt.
Progression: A customer paying a portion of their balance either through partial payments or payment plans. Sometimes this stage is skipped if the customer pays in full or in a lump sum payment.
Resolution: The last stage of the funnel, where a consumer satisfies their agreement through paying in full, settling, or filing a valid dispute.
Effective Recovery Through the Resolution Funnel
The more you listen to your customers through their usage and their behavior, the more you can learn and improve your digital collection strategy. Funnels can be an effective tool when you’re trying to improve your performance and customer experience, which are key factors to getting customers through to repayment. It helps you segment customer groups and define how they move through your system and products so that you can focus your collection strategies on where they matter most.
Watch the full Resolution Funnel webinar on-demand to learn more about how TrueAccord gets insights on funneling customers through each phase of the repayment process.
When it comes to New Year’s resolutions, improving personal finances isn’t anything new. But as we look ahead to 2023, we see more and more Americans adding serious financial goals to their list. A recent Ascent survey found 66% of Americans plan on making a financial resolution.
And your business should be paying attention to the New Year goals of consumers: it’s the ideal time to support your customers to pay off debt (one of the most common financial resolutions for 2023) by meeting them where they are—with the right message, right channel, and right time.
Let’s take a look at why now is one of the best times to start engaging with consumers in a more flexible way to recover more in 2023.
Financial Resolutions Rise, Along with Delinquency Rates
As we mentioned above, financial resolutions aren’t new, but the number of Americans making them is rising (which might have something to do with rising delinquency rates). For 2022, it is estimated that more than 92 million Americans made financial new year’s resolutions, compared to only 60 million who reported making a financial resolution in 2021. And surveys found that 41% of respondents expressed a strong desire to prioritize paying down debt in 2022—a trend that will continue into 2023 for good reason.
For six consecutive months there have been increases in the 30+ days past due delinquency rates, with those accounts showing a 3.28% increase month over month in October, according to Experian’s November Ascend Market Insights. Looking ahead, TransUnion predicts delinquency rates could rise to 2.6% at the end of 2023 from 2.1% by year-end, which would represent a 20.3% year-over-year increase in delinquent accounts if the projections prove accurate.
Regardless of consumers’ personal financial goals, these delinquency rates and predicted trends are a sign that if you’re not already tailoring your collections communications to today’s consumer preferences, then a better engagement strategy needs to be your organization’s resolution for 2023.
New Year, New You, New Collection Strategy
Meeting consumer preferences is about more than just boosting your bottom line (although that is a bonus)—showing empathy as delinquencies continue to rise can help retain customers even during their often stressful experience of being in debt. An early December survey from U.S. News & World Report shows that 81.6% of Americans who have credit card debt are experiencing anywhere from a little to a lot of anxiety about it. Among respondents to the Ascent survey who plan to make financial New Year’s resolutions for 2023, only 20% are optimistic about keeping them, with 63% predicting it’ll be too expensive to do so.
Help your customers keep their resolutions by making it easier for them to engage on their own terms with the right message through the right channel at the right time, and recover more in 2023.
Let’s look at how to do it:
Right Message As all these recent surveys have shown, consumers are literally telling us that they want to pay down debt in the new year. But treating them in a one-size-fits-all approach can fall flat when trying to engage an individual, especially when it comes to sensitive financial situations or delinquent accounts. In fact, 72% of consumers say they only engage with personalized communications, so don’t miss the opportunity to communicate in a way that resonates with them. Learn more in our Buyer’s Guide to Digitally Engage Your Past-Due Customers here»
Right Channel Engage with consumers through their preferred channels, whether it’s by email, SMS, or traditional calling. Research shows that 46% of consumers already expect to communicate through preferred channels. By using advanced machine learning (like TrueAccord’s patented decision engine, HeartBeat), your business can identify the ideal way to reach the customer and pivot in realtime based on reactions or engagements. Learn more about how to Elevate Your Collection Strategy with Machine Learning and HeartBeat here»
Right Time Minimize unnecessary communication efforts and reach consumers at a productive time—which can be easier said than done if your business is still relying solely on call-and-collect methods. To meet compliance regulations, the FDCPA prohibits communication through any channel at known inconvenient times for consumers, presumed to be inconvenient between 8AM to 9PM, but often customers choose to pay their bills and resolve their accounts outside the presumptively inconvenient hours as long as they can access online account portals that allow them to see account information and take actions to resolve their account. Learn more about it in our State of Compliance & Collections report here»
Not sure if strategizing to engage your customers is the right New Year’s Resolution for your business? Just look at how customers responded to TrueAccord’s customer-friendly, digital approach to debt collection in our 2022 Year in Review and schedule a consultation today to get started!
TrueAccord is a machine-learning and Al-driven 3rd-party debt collection company that is reinventing debt collection. We make debt collection empathetic and customer-focused and deliver a great user experience.
Our digital-first approach to debt collection creates a cycle of collections growth:
1. Improve the perception of the industry
2. Provide a personalized experience
3. Build brand equity and collect
