Reinventing Outbound Collections and Recovery: Bringing ‘Debt Collection’ into the 21st Century

In this instalment of Reinventing Outbound we discuss how to modernise your collections to improve your customer lifetime value

Can contact centres turn collections from an unpleasant experience into a chance to build customer relationships?

Collections is almost a taboo topic in contact centres. When hearing the words ‘collections and recovery’ the image of a pair of bailiffs aggressively knocking at someone’s door might spring to mind, ready to intimidate whoever was unlucky enough to open it.

At the end of the day, if you don’t get paid, you don’t have a business. However, we believe it’s time to wave goodbye to old-fashioned debt collection strategies in favour of softer tactics that not only provide better results but can even improve customer relations in the process.

FCA research shows us that pre-pandemic 46% of adult customers in the UK displayed characteristics of vulnerability and this only increased during the pandemic. It’s now likely to be worsened even further by the recent climb in energy prices across the UK, making the customers on the other end of a collections call even more likely to be vulnerable.

In our most recent instalment of the Reinventing Outbound series, TMAC CEO & Co-Founder Jimmy Hosang and Senior Solutions Consultant Paul Banks with Al Hughes of FAB Solutions, Marianne Withers of The Verity Centre, and Chris Warburton of ROStrategy, got together to discuss how we can reframe collections and turn difficult discussions into an opportunity to build rapport with customers instead of simply “dialling for dollars”.

Why ‘debt collection’ is dead

In recent years there has been a more customer-centred approach in all stages of contact. With an abundance of choice and information available to consumers, they will go out of their way to only work with organisations they trust – with research showing the 79% of consumers are willing to switch to other providers based off customer experience alone.

It may come as a surprise to some, but the same applies when it comes to collections and recovery. Taking a softer approach with customers who are in debt to companies has actually been shown to make them more willing to make an effort to pay their debts, and being shown empathy in their situation only makes them more likely to continue their relationship with the company in the future.

The language used in these situations has a great effect on the customers involved. Gone are the days of debt collection, it’s time to focus on ‘credit encouragement’ - true financial support that helps customers to not only pay their balance, but ensures they are not put into vulnerable situations going forwards.

Simply by changing the language in the scripting for their contact centre agents, certain energy companies were able to collect 40% more payments than in previous months.  

Why having an omnichannel approach is vital, even for outbound

Some companies still fail to consider the fact that some customers will feel embarrassed to have a conversation about their financial situation with a stranger. It’s vital that all customers are provided with a variety of channels to make contact with a company.

Some customers would be uncomfortable sharing such vulnerabilities over a phone call, and therefore opt to use a webchat or email service. Whereas for others it will be the other way round, as they may feel unsafe providing details about their financial situation over the internet, and choose to have a more human-to-human interaction.

Consider this when contacting a customer – if a contact centre agent makes a call and the customer is happy to have that discussion over the phone then go for it. But if the customer is showing signs of being uncomfortable in the situation, or even if they are too busy in the moment, give them other options by offering to call them at a different time or send them an email that they can respond to directly if it makes them more comfortable.

Your customers will massively appreciate being given such care and consideration compared to the outdated methods of collecting debts and will be more likely to not only make their payments but continue as a customer going forwards.

Proactively helping customers before it’s too late

Too often we watch businesses focus on immediate cost-cutting activities without considering the long-term repercussions. Whilst some areas of business work well being automated, removing the human element entirely from collections is a dangerous tactic.

But why? The answer is a common topic in contact centres, and for good reason – caring for your vulnerable customers. If you are working within collections the chance that you are speaking with a vulnerable customer is higher than usual, considering there’s a greater risk that the customer is facing financial difficulties.

One area for businesses to consider is ensuring that consumers are not put in a vulnerable position in the first place and that they are only ever offered products and services that they truly need and have the means to pay for. This is something the new FCA Consumer Duty Act intends to crunch down on in the coming year, with the final rules expected to be announced in July 2022 (you can read more about that new Act in our recent insight here).

Another way to help customers from going down a route that leads to collections is to provide them with nudges in the right direction through other means of communication. For example, with the recent energy price increases many will have received a higher number of reminders asking to submit energy meter readings, or information on why costs are going up. This is a small step to take that could truly help customers, whether they’re vulnerable or not.

And if the above reasons weren’t enough for you to focus on outbound contact, research shows that 62% of customers still favour a phone call over other contact options – something that is simply not possible if everything is automated.

Customer lifetime value

“If over time, we focused more on educating customers, on life, on products, on services and on financial management, maybe that's worth more than trying to upsell them a product.” – Jimmy Hosang, TMAC CEO & Co-Founder

For too long we’ve focused on increasing immediate sales instead of thinking about the customer lifecycle and how long that could last providing we serve our customers in a way that creates the most positive experience. If we can provide our customers with the knowledge they need to make the best decisions within the business, this builds the trust and rapport required to create better customer loyalty.

With acquisition costs being so high, it’s more important than ever to keep someone as your customer for as long as possible. When thinking about the lifetime value curve we want to make the curve both longer and higher – something that can only be done through maintaining a positive relationship with the consumer in question.

Consider which groups are at the highest risk of dropping off this curve, and it’s likely that those who’ve faced the collections and recovery team are up there. Take this into account when planning your customer journey and use this information to prevent as many customers as possible from leaving.

In conclusion

It’s clear that there’s already a shift in the right direction when it comes to collections and recovery, which was inevitable when considering the rise of vulnerable consumers. However, there is still progress to be made and with the recent increase in energy prices it’s a more salient discussion to have in your contact centres than ever before.

Some final pointers:

  • Coach your contact centre agents on how to effectively use empathy without causing themselves unnecessary stress. If you’re interested in hearing more, we’ve written a full article on empathy in contact centres that you can read here.
  • Use your CRM system to evaluate potential reasons for non-payments before you pick up the phone. Even a small acknowledgement of circumstances can be the difference between a customer feeling they are cared for or not.
  • Utilise conversation and speech analytics to try and identify customer vulnerabilities to save agents having to do so themselves, and use this information to offer the appropriate help – whether that’s a different communication channel or financial advice.

If you want to see the ‘Reinventing Outbound: Collections and Recovery’ live event, click here for the full recording.

About TMAC, FAB Solutions, The Verity Centre and Chris Warburton

At TMAC we want to make every conversation valuable, and we believe human-to-human interactions augmented with AI will provide the best experience. Solve real problems with our three contact centre software solutions (Listen, Act & Learn), that put your customers front and centre by helping you listen to them, act on their preference, and coach your teams to success.

FAB Solutions have collectively over 50 years’ experience working in contact centres fixing broken processes, creating engaging people plans, and driving performance through effective use of people, process improvement and leadership development. FAB offer a range of solutions including outsourcing, consulting services, contact centre training & leaderships development. Click here to learn more about FAB.

The Verity Centre is a boutique contact centre, offering full OMNI Channel communication. Their services are personal and bespoke, offering a range of customised, tailormade services to support your particular market and specific needs. The Verity Centre is an extension of your brand; engaging and working with you in partnership to understand the nuances of your company and business objectives. Click here for The Verity Centre’s website.

Chris Warburton has spent over 15 years leading transformation and delivering performance improvements in businesses in the UK, Canada and many other markets around the world.  With a passion for new ideas, technology and process innovation, he helps teams find new ways of working to improve performance. Chris is currently working on a series of videos exploring the latest ideas, innovation and technology in Credit and Collections, available at RO-AR.com.

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