The debt collection industry is in the midst of rapid change. With the decline of the effectiveness of phone calls and upcoming legislation from the CFPB that includes limiting call volume, it’s more important than ever that your company’s collections strategy diversifies and introduces a digital, multi-channel approach to communicating with consumers.
Determining what digital channels work the best for your collection strategy isn’t an overnight decision, and using them effectively is another hurdle entirely. When reviewing potential communication channels, you have to consider how you want to use them, how you plan to scale them, and what the investment will be for doing those things properly.
According to the State of Collection 2019, email is the most commonly used digital channel used to communicate with consumers in debt (beating SMS text messaging by 45%). Its frequency of use, however, does not mean that it is necessarily being used effectively. Sending manual emails haphazardly can lead to mixed results at best.
Trying to send emails at the scale required of a dedicated agency, however, is even more difficult, and poor email management can lead to low deliverability rates, poor domain authority (you may end up relegated to spam folders), and can even end up getting your company’s sending domains blacklisted from reaching any of your consumers. Figure 1, below, shows Debt Collector A’s email sending volume.
Sending hundreds of thousands of emails per month can seem like an effective strategy at face value, but when deliverability is taken into consideration, that appearance changes.
Figure 2, below, mirrors the bar graph in Figure 1 and represents the percentage of the emails sent from Debt Collector A that are delivered to an inbox vs. those that are filtered into a spam folder.
A 2019 email client market share study by Litmus shows just how valuable it can be to understand how to work with individual email service providers that all come with their own unique challenges and filters to protect their users. Gmail, for example, maintains 28% of email users, but only 1% of Debt Collector A’s emails are reaching Gmail users.
Emails can be an effective strategy, but doing so effectively at scale requires extensive infrastructure. That infrastructure includes five major things, including bringing on email experts to work with email service providers, detailed performance tracking, and creating valuable content for your consumers to engage with. Simple email may not cost much, but building a powerful email-driven strategy from the ground up won’t be cheap or easy.
Emails can serve as the foundation of an omni-channel digital strategy, but creating an ecosystem for consumers to engage at their convenience requires more than one tool.
SMS text messaging
Smartphones abound, and when Americans are sending roughly 26 billion text messages every day, it’s easy to see the potential in the texting as a collections communication channel. Millennials spend 3X more time texting than calling or emailing, and they hold an average of $4,712 in consumer debt (not to mention mounting student debt) which makes them prime targets for daunting debt collectors hounding them about a balance. This can be intimidating and turn consumers further away from wanting to work with you.
SMS allows for fast, direct contact with consumers that are on the move, don’t have time for a phone call, and may have breezed past an email or two. By creating a flexible system with multiple touch-points across different channels, you can create an organic system of contacting consumers rather that gives them the power to contact your team when and where they want.
Key uses for SMS:
- Payment notifications
- Following up with customers to confirm a payment can help to reassure them that their next step toward financial freedom is done and increases transparency between your business and consumers.
- Payment reminders
- Even consumers on a payment plan might forget once in a while. A ping with a text message can be just enough of a nudge to remind them to log in and make their scheduled payment.
- Providing instant access to their account
- By providing a one-click option for a consumer to make their payment, you can make taking the next step easy! Pairing this option with a simple online payment portal gives consumers the opportunity for a full self-service experience.
- Tracking your performance
- As is the case with other digital channels, tracking your data and performance is easier than ever with texting. You can A/B test messaging and get consistent results for improving engagement.
When you’re considering what to include directly as part of the content of a text message, keep in mind that people expect texts to be short! Length aside, make sure to avoid:
- Sensitive information (e.g., account balances, credit card information, etc).
- Misleading information
- Threatening consumers
- Harassing consumers
Text messages have a 209% higher response rate than phone, email, or Facebook, and part of the reason for that is that they are digestible and often feel informal and friendly. On the flip side, misleading, threatening, and harassing texts not only deter engagement and damage your brand, they are also illegal.
Plus, the CFPB’s proposed rules will give consumers the ability to opt out of text messaging, and your texting numbers can still be blocked manually. Be selective with the messages you send and consider the consumer experience.
Getting started with texting using certain software companies can be as cheap as pennies per message. Full-scale agencies like TrueAccord also make use of SMS tools as part of a broader collections strategy alongside other digital tools.
Direct drop voicemail
Direct drop voicemails (also known as ringless voicemail drops) are a unique channel that can help supplement a digital communication strategy but can’t do much on their own. Rather than an agent calling a consumer directly, a voicemail is delivered to the recipient’s inbox without their phone ringing (hence the name).
The consumer still receives a message from a pre-recorded voice that can relay much of the same information that they would have gotten from an agent, but they do not feel the urgent response pressure associated with a phone call. Much like text messages, direct drop voicemails can be used sparingly as a touch point to remind consumers of upcoming payments or ask them to check an email or call an agent back.
From a cost perspective, direct voicemail offerings can range from a few cents to a few tenths of a cent depending on the provider, and many companies will charge based on successful drops rather than a flat charge for the volume sent which can avoid costs incurred for out of date or incorrect phone numbers.
Both direct drop voicemails and text messages are legally classified as phone calls by the TCPA as the law applies to “placing a call or text to a consumer using the consumer’s mobile number.” Be careful with when and how you decide to use either channel in your collections strategy!
As consumer preferences and collections law continue to evolve, we should expect to see rapid growth in both existing digital channels as well as the emergence of others! Effectively integrating these tools into your strategy together can create a much larger impact than any one channel in isolation, and teams that build these systems today will be the future leaders of the industry very soon.