Millennials, the youthful generation born between 1980 and 1995, represent the largest generation ever in America, and they are very different from their predecessors. They are the generation with the fastest-growing debt load. According to the Experian 2020 State of Credit report, the average millennial consumer has about $27,251 in non-mortgage debt, including revolving credit or installment loans, credit cards, student loans, car loans, and/or personal loans. The millennial homeowners have an average mortgage balance of $232,372. Almost one-half of millennials are 90-days past due on at least one bill. Debt collection can be a significant challenge for businesses trying to collect from these young adults who prefer to communicate digitally and have short attention spans. With a large percentage of Millennials being in debt today, businesses need to keep the following best collection practices in mind when collecting a debt from this demographic.
1. Provide digital solutions
As a business owner, you need to remember that millennials are one of the first generations to grow up with the immediacy of the internet and a variety of digital tools ranging from the very first online messenger to the current, advanced apps that enable them to do almost anything online. In fact, several reports say that millennials spend more than 7 hours a day online, and most of them prefer to conduct their financial affairs online. So, providing digital solutions like online payment facilities via a web portal or mobile application can be fruitful for the business. With this digital approach, millennial debtors are more likely to make regular payments.
2. Personalize your collection approach
Millennials love personalization. It can be an effective method for reaching out and retaining the attention of this generation. Personalization should be used to communicate with them and leverage technologies like Artificial Intelligence and Machine Learning to create personalized, tailored experiences and ensure that they feel valued. Personalization can take various forms when it comes to debt collection: tailored communications preferred channels, or even online repayment plans suiting the customer’s circumstances. Businesses can provide tailored communication and payment plans to their customers by analyzing demographic, behavioral, and transactional data like previous repayment history. This improves customer response and ultimately brings in better results.
3. Appreciate the value they place on time
Businesses should be aware of the value millennials place on time, and they have even less patience when it comes to debt collections. Even though nearly every millennial delinquent customer has a phone, they typically do not answer calls. They want you to contact them on the channel they like, within their timeline, and on their terms. Make sure that you have an efficient strategy in place when it comes to communicating with them. If your strategy includes calls, try to keep each call concise while still delivering your message efficiently. Use simple personalized language with text messages or emails that are direct and easy to understand for them. Moreover, as customers today are more digitally aware and are engaging on more digital channels than ever before, they expect a seamless transition from one form of service delivery to another. So, providing omnichannel engagement to customers integrating all touchpoints for a seamless service is essential.
4. Provide self-service options
Almost a quarter of millennials prefer self-service when paying debt simply because they don’t want to interact with a debt collector and desire a quick transaction with no disruption. The millennials have grown up with a strong presence of technology in their lives. They have hardly ever had to wait for information, and hence, have lower patience for the tedious task of connecting with an agent to make a debt payment. Moreover, Millennials are the most self-educated generation in history so, they would expect self-service capabilities in almost every task they come across, including debt collection. For instance, a digital portal through which the customers can log in, check their debt status, and pay their debts online without the intervention of collection agents is a great self-service option to collect a debt from millennials.
5. Have a compassionate approach
Most millennials feel like they are walking on a more challenging path than their predecessors due to the increased cost of education and the reduced likelihood of a steady, well-paying job with benefits. So, employing digital strategies alone might not be enough as it lacks the empathy that human interactions can provide. Customers don’t want to be handled like numbers. They want businesses to show empathy, listen to their circumstances, and offer potential solutions. Employing human agents backed by digital capabilities is a great solution for tackling this issue. So, aiming for a compassionate and diplomatic approach to debt collection for millennials can go a long way.
One of the most challenging generations to collect a debt from is millennials. As businesses struggle to find new ways to recover money owed by this generation, hiring a digital debt collection agency with call center support can help. As a leading debt collection agency in the USA, First Credit Services follows best collection practices and offers a personalized and digital-first approach to collecting debt from millennials. We are pioneering the digital debt collection approach with our revolutionary Omnichannel platform and proprietary ‘contact optimization’ machine learning engine. Our specializations include First Party collections and Third-Party collections, Extended Business Office (EBO) services, and Business Process outsourcing services for various industries, including fitness industry, medical, automotive finance, and more.