With the growing sophistication of debt collection software, and the rise in AI performance, it makes perfect sense to pivot to digital communication channels for customer engagement.
Among these, WhatsApp has emerged as a formidable player, boasting an impressive engagement rate of over 60%.
This surge in preference for WhatsApp over traditional SMS in debt collection practices, or even the more advanced conversational SMS, can be attributed to its high reach, underscored by a 72% penetration rate, coupled with its ability to maintain low noise levels, making it an attractive option for businesses aiming to connect with their customers more effectively.
Demographic Insights for WhatsApp Use
A closer look at the age group demographics reveals a telling trend:
47% of users are aged between 35 and 64
31% of users are in the 18 to 34 age bracket
This shift leaves SMS to dwindle in popularity, especially among the younger generation. This change is particularly relevant in sectors like Buy Now, Pay Later (BNPL), which is predominantly used by younger customers. Additionally, the uptake of WhatsApp and similar channels by individuals over 40 is on the rise, highlighting a broadening acceptance across age groups.
The preference for WhatsApp can also be attributed to several key factors:
WhatsApp's familiarity and tendency to have very little spam reduces the clutter often associated with SMS, leading to higher open rates.
The platform's ease of use across multiple devices and its support for rich media make it a more appealing choice for users, particularly those who may find extensive typing challenging. It’s like choosing to take the lift to get to the top of a tall building rather than taking the stairs.
With heightened security features compared to SMS, WhatsApp offers users peace of mind, knowing their conversations are private and protected.
These advantages are further validated by an 18% improvement in Net Promoter Scores (NPS) among customers using WhatsApp for debt collection enquiries, underscoring the platform's effectiveness in fostering positive customer experiences. 
Debt collection agenices (DCAs) have noted remarkable success in engaging customers through WhatsApp. One of Webio’s clients has seen engagement rates soaring to between 78% and 90%. The Delivery Rate is also high, averaging at 95%+. There was some initial concern that not all customers have WhatsApp, but with a Delivery Rate at that level, it didn't seem to be a problem for this client. If clients don’t have WhatsApp, the system will then send an SMS.
This is a significant improvement over SMS, primarily due to WhatsApp's higher delivery rates and the strategic shift towards shorter, more interactive messaging.
The transition also highlights the importance of a multichannel approach, recognising that while WhatsApp is increasingly preferred, SMS still holds value for certain customer segments. 
Let's start by comparing to voice communication: how many conversations are there, how in-depth do they go, and how satisfactory are the outcomes? Next, let's consider SMS - where do conversations tend to stop, and how many exchanges does it take to reach a conclusion?
We’ll save the best till last: with WhatsApp, we see a 30%-40% reduction in time to resolution, translating into lower costs for the company.
From a customer's perspective, which is more user-friendly? SMS or WhatsApp? Consider factors such as ease of use and functionality - the more you can do, the better. This means businesses are sending fewer messages and spending less time on each interaction, which reduces the time agents need to spend and, consequently, reduces costs.
However, it's still necessary to combine SMS with WhatsApp, as some customers prefer to reserve WhatsApp for personal interactions only. Businesses, in turn, need to identify who prefers SMS and who leans towards WhatsApp. This is where the advantage of adopting a multichannel approach comes into play.
Do more with the same resources
WhatsApp's rich media support and integration with business tools offer a new dimension of customer interaction, enabling more engaging and visually rich communications. This, combined with AI and automation capabilities (entity gathering, intent recognition, vulnerability detection, etc.), facilitates a higher level of automation and self-service, reducing the need for human intervention and decluttering the debt collection process.
We always say that any AI and automation needs to be as good as, if not better, than interacting with a human. Customers love self-service when they can simply check a balance or pay an account without the need to wait on hold for an agent.
The key points to consider are where the two channels deliver on security, completed conversations, rich media support and group messaging.
With SMS, you receive a number, but with WhatsApp, you start off with a number and then if you are adhering to the rules, you will be allowed to display your company name with a WhatsApp Business authorisation icon. 
Rich Media Support
WhatsApp supports a wide array of media types. For instance, 18% of inbound communications for one of Webio's clients are voice notes. Rich media capability encompasses images, videos, and documents, enabling you to engage your customers with more visually appealing content. This includes the use of images for identification and verification purposes, such as passports or driver's licences, from which we can extract relevant data. This feature gives WhatsApp a competitive advantage.
Group Messaging
Group messaging enables businesses to communicate with multiple customers at once. This feature is particularly useful for making announcements or providing customer support. Similar to family decisions that affect more than one individual, such as a partner, involving all relevant parties in a single conversation can significantly reduce resolution times.
Integration with Business Tools
WhatsApp's business API integration allows companies to automate and speed up customer interactions using third-party tools and services.
The true advantage lies in combining these features. Through integration, businesses can leverage rich media to, for example, photograph a bank statement and then use AI to extract the data, offering a highly effective tool.
Financially, WhatsApp presents a cost-effective alternative to SMS, with no character limits and a flexible pricing model that adapts to different types of messages. However, the costs of both channels work out to be fairly similar in the end.
With SMS, you pay about 3p for a 160 character message, but if it goes over that, you pay another 3p. On the other hand, WhatsApp charges different fees for different types of messages, for example, a service message (inbound) costs about 3p whereas a marketing message is 5.6p per message at current prices.
This is particularly advantageous in an era where SMS charges are on the rise, reflecting the shifting dynamics of digital communication in business.
The move towards using WhatsApp Business in debt collection signifies a broader trend of digital transformation and AI use within the credit and collections industry. With its ability to offer secure, engaging, and cost-effective communication, WhatsApp stands out as a powerful tool for DCAs and financial services, promising a future where customer interactions are more personalised, efficient, and satisfactory for both parties.
This blog is a summary of the webinar: How WhatsApp is Surpassing SMS Engagement in Debt Collection
If you need to improve your customer engagement, talk to us and we'll show you how AI automation via digital messaging apps works.
You will love the Webio experience.
We promise.
