What can your collections strategy learn from modern consumer behaviours?

To understand why traditional collections practices often miss the mark when it comes to customer experience, let’s set the scene on how today’s consumers typically make purchases, seek support, and manage their accounts. Most transactions today include: 

• Digital channels: most people prefer engaging with businesses through mediums like webchat or email. Between 2019 and 2021 alone, digital transactions increased by 36%. 
• Convenient services: 44% of consumers say that convenience is their reason for switching brands, which means offering support like self-serve and full digital autonomy. 
• Immediate availability of customer service agents: If consumers do have a query or want to speak to someone, they expect a quick response and resolution - whether that’s by webchat or phone. 
• Seamless user experience: Navigating through apps or websites has to be straightforward and easy for the average customer. Too many buttons or unclear messages? Be prepared for high drop-out rates and reduced engagement.

Unfortunately (but not surprisingly), most collection experiences don’t fit the above:

• In 2022, Transunion found that over 90% of agencies still use manual dialling (telephone) and letters as their primary communication methods. 
• Around 2 in 3 UK adults (64%) who have interacted with existing debt collectors in the UK say the experience was “stressful”, increasing to about 3 in 4 (74%) among 18-34 year olds.
• Only 4 in 10 collection agencies (41%) use self-serve tools, forcing most customers to engage directly with collectors to resolve their debt.

A need to shift towards Millennial preferences

Born between 1981 and 1996, Millennials recently surpassed Baby Boomers as the biggest group, and they will continue to be a major part of the population for many years. How do the largest subset of the population prefer to engage with products and services?

Millennials are by far the most tech savvy generation, with 66% opting for self-serve and 65% preferring digital engagement. Having grown up surrounded by technology, they have dramatically different preferences from their predecessors:

• Rarely have landline telephones
• Texting is their preferred communication method
• Many won’t answer calls from unknown caller IDs
• Many have never activated or checked their voicemail
• More responsive to informal communication styles such as emojis in professional emails or short phrases

Engagement tactics need to be targeted to who they’re trying to reach, especially in collections. This means considering the channels, messages, and even the times that communications are sent.

Where should innovation in collections be prioritised? 

It’s easy to become overwhelmed when we compare the standard collections experience to the customer journeys created by progressive industries, like fintech or ecommerce. To make it manageable, here are the three areas that you should put first when it comes to innovating your collections strategy. 

1. Digital-first communications

Digital-first is still not the norm in the collections  industry, with most third party agencies or internal teams running dialler-based operations.  To better support your customers using the channels they prefer, offering digital channels such as email, SMS and webchat are key to keeping pace with today’s consumer.  

2. Enable customers to  self-serve 

Consumers no longer want to have to speak to agents over the phone to take control of their debt. Self-serve tools like an online portal provide more digital autonomy that enables customers to manage their account, without the need for human interaction. In intelligent debt collection, 4 in 5 customers resolve their account independently, with no involvement from our Customer Service teams. 

3. Create a gold-standard customer experience

Every modern digital transaction aims to create a seamless user experience, and collections should be no different. Factors like accessibility, quick links and simple messages are essential to making it as easy as possible for consumers to get back on track. This is a clear shift towards empowering people in debt, by providing an exceptional experience. To know whether a collections agency is moving in the right direction, look for real customer reviews - as these provide an accurate reflection of customer satisfaction.

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