Today, household debts are at an all-time high, delinquencies have been rising through the roof, and increasing numbers of people are falling behind on their bills. Along with these, shifting customer preferences, a stringent regulatory environment, and the lack of digital capability and automation exposed by the COVID-19 crisis has acted as a catalyst for businesses to adopt new methods and technologies for collecting debts, and stay competitive in this changing environment – one such practice is digital debt collections.
Over the past few years, especially in the last couple of years, customer behavior and expectations have undergone significant changes, accelerated by digital transformation and lockdown restrictions. As a result of these changes, in today’s information age, digital debt collection practices have become more of a necessity than a “nice-to-have” operational model for businesses. Here are the key trends that are driving the change in customer behavior and making digital debt collections a necessity.
Trend 1: Customers are digital-first and digital-fast
Today’s customers are constantly connected, app-native, and are aware of what they can do with technology. They are accustomed to compelling digital-focused customer experiences brought to them by digital-native, direct-to-customer brands, and they expect the same in debt collections too in the form of digital debt collections. Customers often rate organizations on their digital customer experience first. Although adopting digital strategies is not enough, hence businesses need to develop an effective approach to deliver improved customer experience. In fact, traditional communication channels for debt collections like letters and phone calls are not as effective as they were a few years ago. So, if your business fails to utilize new consumer communication options, customers might lose trust in your business, leading to a loss of revenue. This is why embracing the omnichannel mantra and dictating a presence in every channel where your customers exist is essential. At First Credit Services, our revolutionary Omnichannel platform enables businesses to overcome traditional barriers to exceptional consumer engagements and provide a complete digital experience.
Trend 2: Customers demand hyper-personalization
The digital age has elevated customer expectations for relevant, contextual, and convenient experiences to unprecedented heights. Customers today offer their trust and loyalty only to businesses that feel like they listen to them and understand them. According to a report by SmarterHQ (https://smarterhq.com/privacy-report), 72% of consumers state that they only engage with personalized messaging. This is why personalization is crucial in debt collections. A personalized outreach and collection strategy fosters loyalty and ultimately improves the bottom line. Personalization can take a variety of forms when it comes to debt collection: tailored communications (using someone’s name and messaging styles that they like), preferred channels, or even online repayment plans suiting the customer’s circumstances. In short, they expect you to value their time, engage them on the channel they want, on their timeline, and on their own terms to deliver answers and resolutions in a highly relevant, personal manner.
Trend 3: Customers prefer self-service
For customers, self-service means convenience. They want to take action by themselves and be able to do everything digitally without the need for other human intervention. In fact, most of the Gen-Z population prefer self-service- a choice that reduces the need to have real-life conversations. This is not only with Gen-Zs, but the pandemic has also accelerated this trend and even millennials today prefer an intuitive self-service that enables customers to engage with debt repayment in their own times. Moreover, digital debt collection strategies like self-service empower customers to control their finances at a time which suits them and when they’re in a position to do so. This ultimately contributes to the customer-centric approach and enhances the customer experience.
Read insights on 5 Reasons to Hire a Collection Agency
Trend 4: AI and automation are becoming foundational
As sophisticated technologies like Artificial Intelligence (AI), Machine Learning (ML), and Robotic Process Automation (RPA) are becoming foundational, customers are expecting businesses to leverage these technologies to serve them better. They even rate the companies that use advanced technologies much higher than the ones that employ traditional methods. These technologies power chatbot conversations, automated answers, and self-service processes that can help businesses provide superior customer service when it comes to debt collections. At First Credit Services, our “Contact Optimization” machine learning engine, EngageRight provides our clients with some of the highest reach and recovery rates in the industry.
Read more on: How can machine learning help in debt collection?
If you’re not already engaging with customers digitally to meet their needs and wants in a cost-effective and efficient manner, your organization is falling behind. Thus, the path to better customer outcomes involves expanding the use of digitally enhanced strategies and tools. Moreover, the cost of going digital in collections will be a small fraction of the payoff in inefficiency and an improved customer experience that digital debt collection strategy creates. This is why, in this digital era, getting these digital debt collection trends right is of paramount importance if you want to significantly increase the success rate in debt collections.
At First Credit Services, we are pioneering the digital debt collection approach with our revolutionary Omnichannel platform and proprietary ‘contact optimization’ machine learning engine. With these advanced digital tools and strategies, we tailor our customer engagements to meet all your debt collection needs. We specialize in First Party collections and Third-Party collections, and also offer Extended Business Office (EBO) services and Customer Engagement Outsourcing services for various industries including fitness, medical, automotive finance, and more.