For many businesses, an effective debt collection strategy is essential. The traditional approach has fallen out of favor with consumers, and embracing a digital strategy has become table stakes for businesses. Without the right expertise or tools, sending out collection messages through digital channels takes up a lot of internal resources.
These facts leave many businesses scrambling to find efficiencies that can increase recoveries while providing a consumer-centric experience. Not to worry, there are actionable tips to help your business collect more while spending less. Here’s 11 tips from the experts at Retain that you can use to improve recovery rates:
1. Shift to a Digital-First Approach
How often do you answer phone calls from unknown numbers? Or immediately take action after getting a physical letter from a business? More consumers than ever before prefer businesses to contact them through digital channels. To maximize your recovery efforts, it’s essential to meet consumers where they are.
2. Make It Easy for Consumers to Repay
Every digital debt collection message should have an easy path consumers can follow to make a payment. It might sound obvious, but self-service options are incredibly effective and fall in line with consumer preferences. When combined with personalization, self-service empowers consumers to make repayments on their own terms.
3. Put Empathy at the Heart of Your Collection Strategy
The aggression and stress that became synonymous with traditional debt collection strategies aren’t the right fit for consumers today. Digital debt collection that leads with empathy and understanding increases a consumer’s willingness to work with your business. This approach can increase recoveries without hurting your brand’s reputation with consumers.
4. Practice Personalization At Scale
The “one-size-fits-all” approach to debt collection no longer works, and consumers expect personalization beyond a mail merge. Businesses can personalize content, subject lines on emails, the time a message is sent, the channel being used and more. Look for machine learning tools can even help determine what combination would be best for each individual account.
5. Protect Your Email Deliverability
Your debt collection strategy takes a hit every time one of your emails ends up in a consumer’s spam folder. It’s essential to maintain email list hygiene, authenticate your domain and keep tabs on your sender reputation with email and internet service providers (ISPs). The more collection emails are opened, the higher your recovery rate will typically climb.
6. Offer More Payment Methods
Consumers have moved beyond using only checks or standard debit/credit cards to make debt repayments. By expanding acceptable payment methods to include popular options like Apple Pay, Google Pay, bank accounts and more, you’re lowering the barrier to entry for consumers trying to address their balance.
7. Make Sure to Keep Up with Compliance
Debt collection regulations and compliance rules change at a rapid pace. It’s important to have legal expertise baked into your digital debt collection strategy. Aim for having deliverability checks and compliance guardrails in place to reduce risk.
8. Send Branded Digital Model Validation Notices
When managing debt collection compliance, manually sending model validation notices (MVNs) often requires a lot of internal resources. The right white-label debt collection software gives your business the ability to send branded MVNs electronically without adding to operational expenses.
9. Implement Data-Driven A/B Testing
Some of the best debt collection strategies are optimized for continuous improvement. Machine learning makes it easy to constantly adjust subject lines, sending times, the message being sent and more. This is done at a speed that humans can’t match and constantly works in the background to optimize engagement with every consumer.
10. Segment High-Risk Accounts Early
Once a consumer account enters delinquency, they shouldn’t be put into a generic outreach bucket. Accounts should be segmented based on key variables such as the balance, repayment chance, length of time spent in delinquency and more. This will help your human-agents identify the consumers who need hands-on attention.
11. Create a Hierarchy Across Communication Channels
An omnichannel debt collection strategy doesn’t mean hitting a consumer with every channel. Map out a channel hierarchy to give your strategy a roadmap of channel types to try first like email. If the first message doesn’t spur engagement, try again with the next channel. Debt collection software like Retain can do this automatically with patented machine learning technology.
Ready to Collect More While Spending Less?
The process of improving recovery rates starts with embracing digital and using a smarter approach. Retain white-label debt collection software automates digital communications to optimize engagement and provide a consumer-centric experience. Contact our team today to learn how Retain can give your collections strategy a boost.
