Debt Collection & Recovery
Did you know that almost half of all credit issuers – including banks, telecoms, government agencies, healthcare organizations and other credit issuers --- place delinquent debt with third-party collection agencies?
It’s easy to see why. Creditors often don’t have the capacity or time to devote to recovery activities. Collection agencies focus on effective data use, and are adept at analyzing, identifying and segmenting consumers as part of the recovery process.
They’re focused on the compliance front as well, having faced more headlines and court decisions on this topic in 2015 than ever before, with no slow-down in sight. Larger participants are growing ever larger, and the focus is 24/7 on the consumer.
We’re seeing the dynamics within the third-party space change from family-organized to corporately-owned. Mandated audit capabilities are driving collectors to communicate more skillfully in a consultative manner in a variety of channels. The times, they are a-changing.
But partnering with an agency isn’t always easy. Return on investment (ROI) and return on objective (ROO) are always hard to attain, which makes the story I’m about to tell you even more interesting.
Placement Success
This study in successful debt placement focuses on an organization from the highly-competitive pay-tv market, with significant margin pressure due to competitive pricing and high programming costs. Equipment repossession is a significant aspect of their collections process. There were difficulties inherent in re-assigning consumer accounts between agencies and they were frustrated with the lack of visibility and control over their account placements.
They found themselves with stagnant recovery rates and languishing consumer accounts while regulatory disputes within the industry were skyrocketing. Objective number one was improving the customer experience while increasing recovery rates and maintaining regulatory compliance. Objective number two was achieving ROI in one year.
Instead of following what they’d been doing for the past several years, they decided to take a new approach to agency management. Working with FICO® PlacementsPlus service, they began to use specific placement, reporting and exception processing tools to better manage their charged-off debt.
New rules management directs advanced strategy capabilities, including automated recall and replacement of accounts. Work queues efficiently direct exception handling. A full reporting suite illustrates collector activity and puts them in much more of a proactive position rather than reactive.
The results speak volumes.
- The customer experience has been greatly improved.
- Disputes have been reduced by 70% and better segmentation strategies have resulted in significant commission savings.
- They beat their ROI goal a full six months ahead of schedule.
- Recovery rates are up almost 12%.
To better manage your own debt placement, read Stephanie McFarland’s “Collect More with Smart Outsourcing” Q&A. Or send me an email – at carolbyrne@fico.com for more information about efficient, effective debt placement strategies.
