It is certainly safe to say that text messaging is loved by consumers.

As the go-to for everyday communications, SMS and other messaging apps have seen off the chart growth.  And this is not only true for personal messages but it is booming in customer service.

While text messaging is successful in all areas of customer engagement, it is showing stellar results when used in debt collection software where reaching out to customers via messaging is more powerful than solely relying on phone calls and agents to chase customers.

The Traditional Way of Debt Collection is Flawed

For some time now, the process for collecting debts has been flawed. The core premise for a business chasing a payment is that they 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 with, 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? So, using phone calls and human agents alone is not bringing in the results. (See: Best Debt Collection Technology for Customer Engagement)

SMS is a Trusted Tool for Debt Collection

But with the explosion of messaging apps, a huge opportunity is 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 it increases the quality of customer conversations.  

Before I get into more detail, let me step back for a moment.  There are other powefrul messaging channels like WhatsApp, web chat and Messenger that are used succesfully in customer service but this blog focuses on using SMS for debt collection and customer service.

The AI Evolution of SMS Messaging

SMS is still a hugely popular channel with over 5 billion people in the world able to send and receive messages. 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 the addition of automation and AI chatbots. 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? 

SMS 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.  

I hear you say, "We can't wait two weeks to get a response".  Well, the reality is SMS messages have a 98% open rate (The Daily Egg), with 90% opened within 3 minutes (Venture Beat), and a staggering 209% higher response rates than phone calls and emails (SMS Bump). Without a doubt, 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. At Webio, we have direct experience of this with our clients 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. 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, SMS helps the business have more quality conversations with customers, even those that have been hard to contact. 

SMS 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 you have 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 all using a chatbot-driven or blended agent/chatbot conversation.  

And so, redirecting calls to SMS messaging significantly and immediately reduces operational costs. 

SMS 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 the more conversations you have, and 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.  Webio clients have seen a 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.

But the number one concern with payments professionals at this time where many customers are being hit by the cost-of-living stresses is the ability to get customers back into the repayment habit. Many have been 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.

SMS Helps You Engage with Customers in a More Respectful Manner 

I touched on this earlier, but SMS messaging, in fact all messaging apps, 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 and 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.  

Conclusion

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 to transform your customer relationships and your businesses success.

8 Steps to Using Conversational SMS Messaging in Debt Collections