Blog: What does digital debt collection mean for customer engagement?
Colleen Magee, CSA Head of Sales, Marketing and Events
At the Credit Summit 2016 earlier this month, one of the key topics discussed was digital technology and innovation in debt collection. This is a complex area that can often seem at odds with the ‘customer engagement’ agenda, which focuses on understanding and interacting with customers to achieve the best possible outcome based on their specific needs.
Taking the stress out of financial difficulty
Does ‘automating’ debt collection with digital tools mean that the ‘human’ element is completely taken away? Not necessarily. Our members’ job as collections professionals is to take the stress of financial difficulty away from people, enabling them to repay their debts in an affordable way that suits them. For some people, traditional debt collection methods, including face-to-face and telephone interaction, may increase customer stress. Having their finances ‘sorted out for them’ can make some feel like they are not in control. We also know that direct contact from a debt collection agency can make people feel concerned, even if there is no reason to be. Often, the solution is fairly straightforward.
Giving customers the option of dealing with debt online
Back in November 2015, Experian published a report (*survey conducted by Opinium Research, September 2015) which showed that one in three UK adults prefer to deal with debt online. These people need to be given the option to create their repayment plans online and then be offered help to manage their financial commitments if and when needed. The research shows that avoiding confrontation and taking control of their finances empowers them rather than leaving them feeling isolated. Offering this option and these choices are a key part of treating customers fairly.
Nick Grant, Business Development Consultant from Experian’s Decision Analytics, commented: “It’s understandable that most people prefer email, text, web chat and self-service options. That’s not to say that traditional letter or telephone based methods don’t work. Understanding the best way to communicate with each individual, as well as what they can afford, will ensure the right outcome for those in debt, as well as the organisations trying to recover those debts. For those in financial difficulties, often a good first step is to seek advice from organisations such as National Debtline, Citizens Advice and StepChange Debt Charity, who can help them understand what their options are. It is important to remember there is always support.”
At the CSA, we feel it is vitally important for customers to engage and communicate with our members so that they can understand what methods of contact and communication options are available and most suitable for them. Members will talk through each option available for a customer and may also signpost to free debt advice organisations if that is seen to be the best outcome.
Breaking down barriers to debt collection
Giving customers control of their finances is not only good for the customer, there is a strong business case for debt collection agencies. Experian’s research showed that offering customers the convenience of using an online portal after reading an email or text message at a time that suits them increases the likelihood of action being taken and a payment arrangement being kept. Having to speak to someone about their debts can, for many, create a barrier to doing something about it.
This topic and others that relate to it will be discussed as part of our Technology and Innovation stream at the UK Credit and Collections Conference at Hilton London Wembley on 15 September. Find out more here.