DISCLAIMER: For those of you who are happily divorced, DON’T PANIC! I am not suggesting that you run round to your ex’s and get down on one knee!
I’m talking about ‘Customer’ re-engagement and three scenarios where focus appears to be lacking;
1. Do creditors’ neglect Customers who are in arrears?
I am not suggesting that this happens on purpose, but 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 more than likely bad Customers. Is this true? Looking at my data, not at all, with up to 50% re-engagement being achieved 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 companies overlooking a massive opportunity by neglecting ‘Customer Retention’ and continuing to focus on ‘New Customer Acquisition’?
Absolutely! I will give you a simple example and let you make up your own mind.
Creditor ‘X’ outsources 40,000 accounts per month to DCA’s, in part because of the strategy black holes. That’s 480,000 lost Customers per year that have passed through their internal collections process without clearing the arrears in full.
How much do you think that creditor would happily spend on advertising to gain 50% of that number (240,000)? Seven figures would be my 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 lack of re-engagement within their own arrears process!
Do you see the irony here? Each creditor potentially spends 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 has always perplexed me. 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 DCA/debt purchaser, without first attempting to maximise re-engagement internally?
There is no doubt that both DCA’s and debt purchasers have important role’s to play within any long-term credit strategy, but only once all other ‘internal’ collection strategies have been explored surely?
Industry regulation and professionalism has improved beyond sight in the last ten 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.
• Significantly increased Customer engagement and retention (up to 50%)
• 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