Creating a customer centric email strategy in the collections process

Use of email as a communication channel in the collections process can provide following benefits -

• Increate the customer engagement
• Reduce the cost of operations/cost of collections

Challenges for collections organization

Growth:

Retail organizations (Banking, Insurance, Telecommunications, Retail and Utilities etc) are growing rapidly in terms of volume of customers and size of business, and thus increasing the number of accounts getting into collection cycle (delinquency) and rolling into arrears.

Operational workload:

Increasing number of collections account are generating additional workload for organizations service channel (call centre, service centres) and more importantly on DAC management team. They have more number of accounts falling into 30-60-90 DPD cycle.

Competition:

Every month at the same time many lenders are chasing the same debtors. Unless you have good knowledge of your customers, and strong relationships with them, you won’t be able to hit success.

Regulations:

Regulators which include government, central regulatory bodies and industry regulators, in every country have strong restrictive practises for collections organizations. Since collection is extremely sensitive area, there is a reputational risk associated if you stretch and go little beyond the boundary in the collections process.  There are cases in countries where organizations have hired goons to collect money from late stage delinquent customers. 

Cost of collections / Commission to DCA:

In most of the countries, DCA commission is based on the collection performance. Organizations has to pay out more commission to DCA for handling accounts in the mid and late stage delinquency cycle. 

Constraints:

• Focus on email address – Data collection at the time of customer acquisition might not include email address or typographical errors made by sales team restrict you to get in touch with customer by email.

• Overall email usage as a communication channel in the country, by customers, by organizations to engage customer (for example emails send out at the time of on boarding, new up sell or cross sell offers, Billing intimation and information etc)

• Reliance on other service channels for collections, for example calling every delinquent customer (cost of telephone calls) or visiting (cost of visit) or outsourcing the entire collection process to DCA (more commission payout, reputational risk)

 Example:

How and where (at what critical points) email communication can be use in the collection cycle -

Pre-delinquency Management

•          Payment reminders

•          Limit alerts (In case of credit cards & overdraft accounts in Banking, Post paid card in Telecommunication)

•          Transactions reminders

Early Stage Delinquency

•          Mild message – payment warning

•          Payment options suggestions

•          Request to call for assistance

•          Promise to pay confirmations

Mid Stage Delinquency

•          Promise/payment confirmation

•          Confirmation of conversations

•          Payment prompts

Late Stage Delinquency

•          Strong warning of legal action

•          Legal Teams / DCA Action