We are talking about 'Customer' re-engagement; specifically three scenarios where focus appears to be lacking:
1. Do creditors' neglect Customers who are in arrears?
Is enough being done to re-engage Customers who fall into arrears, while they are still Customers and under the stewardship of the creditor?
There is a widely held perception that a majority of Customers in arrears are potentially bad Customers. Is this true? Looking at our data, not at all - with customer engagement exceeding 50% between days 30 to 60 of our client’s ‘live’ cycle.
Customers can fall into arrears for many reasons but a majority are only temporary, leading to a short-term ‘head in the sand’ scenario. Add out-dated Customer contact details into the mix and the volumes can grow very quickly if effective ‘live’ re-engagement strategies are not used.
The point is, missing a payment doesn’t necessarily make them permanently bad Customers and for business reasons alone (E.G. reducing bad debt and increasing Customer retention), they deserve much more focus. Approximately 30% of accounts passed to a conventional Debt Collection Agency (DCA) or sold to a debt purchaser are easily rehabilitated internally if the right cost effective strategies are applied.
2. Are creditors overlooking a huge opportunity by neglecting ‘Customer Retention’ and continuing to focus on ‘New Customer Acquisition’?
Absolutely! Here is a simple example:
Creditor ‘X’ outsources 40,000 accounts per month to DCA’s, in part because of strategy black holes in their ‘live’ arrears flows. That’s 480,000 lost Customers per year that have passed through their internal collections process without reaching a resolution.
How much do you think that same creditor would spend on advertising to gain 50% of that number (240,000)? Seven figures wouldn’t be an outrageous guess..
Now, where do those Customers actually come from? Some will no doubt be ‘good’ Customers who have come to the end of their current contract and are attracted by a special offer etc... but a big proportion will actually be Customers that their competitors lost due to a lack of engagement within their own arrears process!
Do you see the irony here? Many creditors potentially spend millions of pounds per year to attract Customers from each other’s non-optimised, internal collections strategy!
3. The Escalation experience!
The Customer experience and overall journey have long been major areas of focus but how they are controlled by creditors within the collections space is another perplexing subject. If the Customer and the way they are treated are central to a creditors operation, why are they apparently so eager to hand them off to a fully outsourced DCA/debt purchaser, without first attempting to maximise engagement internally?
There is no doubt that both DCA’s and debt purchasers have an important role to play within long-term credit strategies, but only once all other ‘internal’ collection strategies have been explored?
Industry regulation and professionalism has improved beyond sight in the last twenty years but no matter what, fully outsourcing Customer accounts for collection will always result in increased risk, as well as loss of control and oversight. Query loops can also become a significant issue.
So what’s the answer?
Ensure that your internal collections flow utilises re-engagement strategies that enhance the Customer experience and allow you to retain full control and oversight at all times. If your collection strategies only include white labelled lettering, emails, SMS and outbound dialling/IVR then consider reviewing/piloting alternative solutions.
Themis Global provides ultra compliant, controllable and cost effective re-engagement solutions to clients across every industry sector.
Benefits include:
- Significantly increased Customer engagement and retention (40%+)
- Average savings of 70% on current collection costs
- 100% of conventional outsourcing compliance risk eliminated
- Full control and oversight retained at all times
- Improved Customer journey and elimination of query loops
