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Successes from Automating Communications in Collections

You may be asking yourself, “What is the value of automating collection communications?  Will this truly move the needle?” The answer is definitely “Yes.”

More than 25 years ago, I was the lead on a project to implement a new collections system for a client.  As part of that implementation we also implemented a fully automated self-service mechanism to take payment agreements. My client was the visionary for this functionality; I was cynical and could not imagine that a consumer would use an Interactive Voice Response (IVR) to set up a payment agreement on a delinquent account.  I expected that they would either opt out in order to talk with a collector or they would try to game the program to delay repayment.  Fortunately, I knew enough to listen to my client, and what we implemented was a very successful early application of self-service in the collections space.

Once the results came in and I saw how successful it was, I became a true believer.  Within 3 months, more than one-third of all payment agreements recorded by this client were taken by the IVR (and not their collectors), and those payment agreements had a lower default rate than the ones taken by their agents.  The last statistic seemed counter-intuitive at the time because the agreements the IVR offered were consistent with the ones their collectors were supposed to offer.  The reason the IVR agreements were more successful, I believe, was the consumer didn’t feel pressured by an agent to make bigger payments than they could afford, and the self-service model led to the consumer internalizing their promise more, because they had set the agreement monthly amount (of course within pre-established parameters).

The client also performed customer service surveys.  What they found was enlightening.  Consumers had a higher satisfaction rate when the payment agreement was taken through the IVR as compared with a collector.  So, the cost of collections was lower, the agency collected more money, they reduced their cost of collections, and they delivered a better customer experience.  Truly a win-win.

Fast forward to today.  The technology has dramatically improved.  Rather than being available only for inbound requests through an IVR or a Website, self-service can now be implemented through a proactive contact (email, text message, or fully unassisted phone call).  The technology also allows for further improvement through the addition of predictive analytics.  You can also use predictive models and experience with your omni-channel communications to decide when to contact the consumer, through what channel, how often, and even the size and/or duration of the installments that you will offer.

FICO’s Customer Communication Services allows clients to automate, coordinate and integrate multiple channels into their contact strategy.  You can coordinate a campaign which includes SMS, Email, and fully automated phone calls, all working as part of a coordinated campaign, managed from one robust user interface.

Below are some representative results from a single large client who collects delinquent accounts for a monthly consumer service.

  • 35% increase in payment arrangement handles by the automated system above prior expectations – The client set robust expectations for the number of payment agreements which would be set up without staff intervention.  The system quickly exceeded those expectations, and dramatically reduced the number of times staff member would have to negotiate and record payment agreements.
  • Reduction of 425,000 annual inbound calls to agents to make a payment, saving our client $2.1M per year – The system resulted in significantly fewer calls which required an agent to speak with the customer.  This resulted in real savings to the department, allowing them to either reduce staff or re-assign staff to other workloads.
  • Significant increase in customer experience – As discussed above, consumers were surveyed as happier to use the automated system rather than talk with a live agent.  While their agents are well trained, consumers who were ready to make a payment preferred not having to discuss their debt with a live agent.
  • Through automated outbound contacts they completely eliminated the need for a dedicated outbound team for early stage collections – Because of the success of the automated outbound contacts, the department shifted resources, and all early phone calls which previously required staff, were re-directed to incoming contacts, and outbound calls for the remaining consumers at a later stage in the collection process.  This allowed the organization to simultaneously increase revenue and save money.

The reality is in today’s marketplace, many of your consumers want to communicate with you using newer technologies (email, SMS, automated voice).  They would prefer to not talk with your live agents.  They also value the flexibility of contacting you 24/7/365 on their schedule.  A tool like FICO’s Customer Communication Services can increase collections, decrease costs and improve the customer experience.

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