The digital age
We are living in an era where digital and omnichannel communication between ourselves and our consumers has become the status quo. Wherever you look you will see someone connected to the online world. Whether they’re scrolling through social media posts, shopping, chatting to their pet dog Ruffles through their brand-new home pet cam, or even handling their financials, all this via their smart phone. In fact, statistics show that more than 50% of the general population today is made up of digital natives.
This is nothing that should be surprising but, when it comes to collections or reminding someone to pay their invoice, we are still seeing an outdated approach in the industry. Thankfully some players are taking giants step forwards towards a more digital and modern way of collecting.
The collections industry needs to evolve into something far more appealing for consumers where they feel more in their natural environment. Among some of the few players that are revolutionizing the way traditional payment dates reminder services and collections are done you can find Pactum. Thanks to the introduction of new software’s and technologies that are adapted to today´s modern trends and way of living, communication between these businesses and consumers is done smoothly and efficiently.
Out with the old approach, in with the new trends
Long gone are the days (or should be at least) of harassing consumers with infinite daily outbound calls and threatening letters which all have one purpose: pressurizing the consumer into paying regardless of time of day, channel or even tone used.
This strategy has all but lost its effectiveness. Why continue with constant calls and letters in a digital world where consumers don’t pick up the phone and manage most of their lives and finances online?
Of course, speaking to a company representative on the phone is still a present need in the industry, for the small population who are less prone to the digital world. However, studies such as the one by McKinsey & Company in 2019 – Going digital in collections to improve resilience against credit losses – show that when contacted through a preferred digital channel, consumers are 12% more likely to make a payment in the early stages of delinquency and 30% more likely in the later stages. This numbers are highly significant, and the effect Covid-19 has had during 2020 has made them even higher as we will show you further down with our inhouse experience.
The main tools consumers use to communicate and pay their invoices are now online, usually through a portal or landing page where they can log in after discovering its existence through a friendly email or sms. The page must be attractive with a user friendly and visually appealing interface that will keep the consumer engaged. On this page, consumers can pay, in full, in part as well as discover multiple payment alternatives such as payment plans should they be running short of cash.
Digital interaction optimizes return
Through our inhouse experience we have observed that when using digital communication to steer consumers onto our landing page, +30% of payments are made through this channel in the first 7 days of delinquency alone. This is all done via the comfort of their mobile devices, whilst on the go, at work, waiting for an appointment or even relaxing at home with Ruffles.
Furthermore, feedback from the consumers has been incredibly positive as they are not limited to opening working hours since this service is accessible any day, any time. In many occasions it means many people going through a difficult financial period can get a good night sleep!
The beauty of it does not stop there. The collections industry is finally understanding that different people prefer different channels of communication. This is why, in addition to traditional channels such as phone calls and letters, we often find that it’s easier to make contact through interactive platforms that support two way communication such as sms, email and chats and in some cases even through social media.
By enabling such platforms, lenders can also learn the preferred channel of communication of each consumer and additionally what the best to make contact is. This will yield the best results, leading to increased customer interaction & satisfaction and ultimately higher repayments.
Adapt and progress!
All these benefits are clearly possible and already in practice by many lenders as they have either been adapting to the latest consumer habits and preferences themselves or outsource to partners that possess such capabilities. However way they chose to perform this, whether internally or externally they know it is a must have in today´s consumer setting.