Many industries have had to rethink their collection strategies due to the current financial environment. Notably, personal debt levels are projected to increase in the UK and according to the Trade Union Congress, unsecured debt per household is set to go from £13,361 in 2023 to £14,792 in 2024 - a rise of about 11%.
As more consumers struggle to meet payment deadlines, the need for a sensitive and effective approach to debt collection becomes evident, and businesses are turning to debt collection software to achieve this end.
Well, the good news is that the response from the business community has been a turn towards putting the needs of customers first and the tone used has shifted. So, how can you make debt collection a gentler and better customer experience?
Accepting that the one-size-for-all approach is no longer fit for purpose is the first step in customer engagement. A customer that has fallen on hard times and is struggling financially is totally different to a customer who was on holiday for a couple of weeks and didn’t make a payment. Two totally different scenarios that need to be handled differently.
Being able to fit the message to the individual customer throughout a conversation is becoming a minimum standard. Quickly identifying which customers are just the late payers, which are going to have difficulty paying and those that will go into late-stage debt is all possible to do with AI - all while a digital conversation is taking place using intent recognition and propensity guidance.
The days of ordering customers to ‘CALL’ to ‘PAY’ are all but over. Rather, a conversational and supportive tone will deliver better results than a demanding one. It is obvious, if a customer is struggling to make a payment and receives a "Hello John, we are trying to contact you, I am here to help, can we talk about how to work on your outstanding balance?”, they are more likely to respond.
Tapping into the power of AI and automation to build digital customer contact strategies enables lenders to connect with customers through digital messaging channels such as WhatsApp, SMS and web chat.
This approach to collections delivers a whole different customer engagement experience - a more efficient, positive and productive conversation that ultimately impacts debts recovered and cash flow. Digital debt collection strategies are more reliable, more effective, and less risky than traditional models that have been used for decades. No matter where you turn, the future is digital.
AI and automation are improving the debt collection processes and getting to the heart of what the customers actually mean, want to do (entity gathering and intent recognition) and the most likely outcome (propensity). This allows collections teams to design conversation journeys and guide customers on a journey based on responses during the live conversation.
In essence, every customer conversation is being managed to the level of your absolute best agents.
Call centre agents are an expensive resource that shouldn’t be handling time-consuming and low-value conversations. Their skills and effort should be given to engaging with customers who need more time and empathy to help them on their journey with the lender.
By using technology like AI, chatbots, APIs, etc. agents will only need to engage with customers that need their attention and let those customers who want to self-serve, those that are happy to engage with a chatbot, and those that just want to make a payment can do it easily.
There is also an element of symbiosis, where AI chatbots learn from agents’ customisations and agents' can rely on chatbots to assist in identifying customers that are struggling and assist with speeding up certain intensive processes. As a result, both chatbots and agents grow smarter and more efficient and the customer is dealt with in a more personal manner.
A multi-channel approach makes it easier for people to pay. If you send a payment reminder like SMS or WhatsApp, customers should be able to pay straight from their mobile phone. If you interrupt the process by adding in additional steps, for example, the customers have to access another device or call your contact centre, then they will be less likely to follow through and make the payment.
Again, this comes back to personalisation, tailor the engagement offering to each individual customer based on your data and what you know about their preferences. Some may prefer digital self-service options, while others will respond better to an SMS conversation that they can message an agent, rather than speak to an agent on the phone.
So, the days of using the traditional methods of collecting customer payments, it is fair to say are gone forever. The integration of AI and automation into debt collection not only makes the process more efficient but also aligns it more closely with the needs and circumstances of each customer. This shift is not just about improving financial outcomes but also about fostering trust and respect between lenders and borrowers.
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.
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