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Conversational SMS Messaging in Debt Collections Illustration of hand holding a phone with speech bubbles with icon for person sending a messaging and chatbot

The Importance of Conversational SMS Messaging in Debt Collections

Andy Turner | Webio

The Importance of Conversational SMS Messaging in Debt Collections

It is certainly safe to say that messaging is loved by consumers. We have been talking about it this for quite a long time.  As the go-to for everyday communications its growth in popularity is off the charts.  And none more so than in customer service.  There has been so much written about the benefits of using messaging like WhatsApp, SMS, Messenger, Chat in customer service,.but messaging, make no mistake, is not just for customer service or marketing. It has also been successful in many other areas and none more so than in credit and collections. Reaching out to customers via messaging is more powerful than solely relying on phone calls and agents to chase customers. Perhaps it's the pandemic but now people are starting to see the light.  

I suppose the reason for this is that it can be hard to change the traditional way outstanding debts are collected. If it ain't broke. But for some time, the process for collecting debts has been somewhat flawed. The core premise for business chasing a payment is that we must talk to customer to secure a payment.  And as we all know individuals in financial difficulties do not always want to, and are not comfortable in having that one-on-one phone conversation with an agent. And to be honest, I don't blame them. If you see a number that you know is someone you don't want to talk to right now, do you pick up the phone? 

But with the explosion of messaging apps a massive opportunity has been presented to collection teams and organisations. Although it may appear counter intuitive, messaging gives more control to customers and consequently, when you make a customer feel empowered, that they have some measure of control over a process, this increases the quality of customer conversations.  

Before I get into more detail, let me step back for a moment.  I spoke earlier about messaging channels like WhatsApp and Messenger but today the focus is going to be on SMS messaging - the less glamorous sister of WhatsApp. SMS is still a hugely popular channel with over 5 billion people in the world able to send and receive messages1. It is still a cornerstone channel for any business that believes in engaging with customers in their channel of choice.  But messaging, like all things, has gone through an evolution. From simple texting and relying on one-way SMS blasts, or simple two-way SMS to now the addition of automated chatbots and artificial intelligence we are living in the age of conversational messaging and conversational SMS

So why is Conversational SMS Messaging such an important tool to have in any debt collection software toolkit? 

Gets Customer Engaging and Responding 

At its heart conversational SMS drives customer engagement and efficiency. Unlike traditional chat which takes place in real-time, messaging is asynchronous -- with conversations taking place over an expanded period-of-time, if necessary.  Yes, SMS messaging conversations can take place in real-time when required, but there is the added element of customers engaging when they want to.  When they have the time, when they have considered what their response should be, when the time is right.  I hear you say, "we can't wait two weeks to get a response".  Well, the reality is SMS messages have an 98% open rate2, with 90% opened within 3 minutes3 ,and a staggering 209% higher response rates than phone calls and emails4. The reality is that customers respond to SMS messaging.  Why, how, and when they respond are things that can be improved with conversational messaging design which pays attention to elements such as wording, phasing, tone, and options presented. We have direct experience of this with the clients we do business with where some of them were able to achieve significant lifts in response rates by being very specific in their attention to copywriting - how you name a button, what detail goes into a link, it all adds up. 

Why is this important in debt collections?  

Customers in arrears feel that they are being given a little more breathing space to respond when they interact over conversational SMS.  The pressure of having to speak person to person with an agent at the other end of the phone line asking an increasingly embarrassing line of questions for some, is just too stressful. So messaging is a good fit. Customers can respond in their own time and responses are usually therefore more considered and as a result more honest and accurate. They are more realistic, and what we need is for customers to be realistic in their appraisal of their situation. That way there is an increased likelihood that they will actually be able to keep the commitments, promises and payment arrangements they enter into.  Thus, helping the business to have more quality conversations with customers even those that have been hard to contact. 

Drives Efficiencies Across the Customer Journey with Automation 

Agents working on voice channels account for approximately 87% of the contact centre workforce. While they are essential for some high-value conversations, there is no need for them to manage every conversation from the beginning. It's expensive and very inefficient. This is where conversational SMS really comes to the fore. 

Automating customer conversations across the customers journey with chatbots ensures that agents are only engaging with higher value conversations and sometimes they don't have to be involved at all. Conversations can be self-directed by the customer, where a combination of natural language understanding combined with intelligent workflows that can handle out of hours responses, so conversations are always being moved towards a positive outcome.  

Why is this important in collections?   

Because the process of reaching out with late-payment or missed payment reminders to customers who don't want to talk and trying to secure the payment or at least a commitment to pay is time consuming and costly.  Chatbot messages can be triggered via an API to send out messages 24hours after a missed payment and engage and guide the conversation closer to completion. During arrangement conversations add payment links, capture future payment dates, obtain promises-to-pay using a chatbot driven or blended Agent/Chatbot conversation.  Redirecting calls to SMS messaging significantly and immediately reduces operational costs.  

Increases Payment Conversions

Put very simply, opening up communication channels with customers has a direct link to the number of payments secured.  It makes sense that more conversations you have, the more options you give to customers to pay or rearrange payments the higher the level of collections.  There is a direct corelation between the number of customer conversations and the number of payments secured.  Clients have seen 52% increase in the number of payments collected using conversational SMS.  

Why is this important in collections?   

Well I think this one is an obvious one. Each payment collected may not have been for the full amount, but payments are coming in and cashflow is moving in a more positive direction as a result. And at this time cashflow is vital to the lifeblood of any business.  But the number one concern for 2021 with payments professionals is the ability to get customers back into the repayment habit. Many have been furloughed, put on part time, or find themselves facing an uncertain income stream. Just getting people back into regular habits is a challenge and conversational SMS can really help in managing this transition.

Engages with customers in a more respectful manner 

I touched on this earlier, but SMS messaging, in fact all messaging whether it is SMS, WhatsApp Messenger etc, have given debt collection agency teams that ability to engage in a more thoughtful and respectful manner. 

With conversational technology, the days of firing out cold one-way messages, barking at customers that they are one day from being cut off, are well and truly over.  Using the correct tone, message timing, coupled with the right tempo ensures that customers who may be in financial distress are treated with a lighter touch that ensures difficult conversations can take place and a positive outcome can be reached for all.  If there is one thing that has come out of this pandemic is the need to empathise with those who may be struggling and adopt a kinder more caring approach.  The outcome of which is 99.9% positive. 

So, all in all, conversational SMS is a digital tool that should be in every debt collection managers toolkit.  If your business is not maximising the use of messaging in a world driven by digital engagement you are really missing an opportunity transform not only your customer relationships but your businesses success. 


1 Text Magic
2 The Daily Egg
3 Venture Beat
4 SMS Bump

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