SMS Conversations: The Next Step For Collections

Mark-OppermanStrategic use of SMS text messaging is an effective and efficient way of reaching out to customers to increase promises-to-pay and collections performance. Mark Oppermann, Development Director at customer interactive messaging leader VoiceSage, explains theory and best practice here

Chasing customers and trying to get them to make a payment is a labour intensive, disjointed and costly process. Bombarding customers with letters, e-mails, one way texts and calls is ineffective. After a certain point customers avoid all attempts to engage them in a meaningful conversation about their debt. They have stopped listening. This does neither party any good. We need to create a bit of space to enable the customer to gather their thoughts, to ready themselves, to overcome their embarrassment, and to engage on the issue they have avoided for so long.

So where does SMS text messaging come in? It is used by almost everyone and has incredible reach. It can be used with even the most basic kind of mobile handsets as well as smartphones. It is embedded in everyday casual interactions, it can be discreet, and it is appreciated by customers where the communication is of value to them. However to date it has occupied a fairly low position in the priority list of most contact centre executives because its power is underestimated. In the mind of executives it might seem a rather “low tech” and an unsophisticated way of communicating. Yet personalised, context sensitive communications tailored to the individual’s preferences is the secret to successful outcomes.

The new concept of “SMS Conversations” delivers these outcomes. It is a powerful and proven way of reaching out to customers that is radically changing the contact process around collections. These one-to-one interactive texts messaging sessions between an agent and customers can deliver huge benefits in terms of improved efficiency, better utilisation of call centre agents, and improved collections performance. In particular it is a highly effective way to reach out and establish a working relationship with customers who have stopped responding to standard outbound contact processes. SMS text-based dialogues can turn defaulters into payers at a fraction of the cost of the letters and land line calls.

Why is this so effective? The UK is a nation of texters: Ofcom released data last year that showed the average Briton now sends 50 texts a week, with over 150 billion text messages sent in 2011 alone. Almost all (96%) 16-24s use some form of text-based application on a daily basis to communicate with friends and family.

However the fact that people love to text and are comfortable with the medium is only part of the reason why using a SMS text messaging is hitting the mark for customer contact teams. The other factor is that it balances intimacy with distance in a way that cannot be achieved within a real time telephone call with a live agent.

Stressed-out customers can respond to texts in their own time and don’t feel as “put on the spot” as if they’d answered a call and were connected to a live agent. There is also less psychological risk for the customer in offering a payment suggestion via SMS as opposed to over the phone in a live call as it removes the completely human fear of rejection.

So how are companies using SMS text messaging to improve collection performance? Simple. They’ve changed texting approach from “fire and forget” to “Guided SMS Conversations” – threading inbound SMS responses with outbound replies from the agent, seeing how conversations are flowing and determining how best to prompt customers to next steps. In essence SMS conversations engage each customer in a one-to-one text messaging session with an agent about their outstanding balances and it has resulted in some staggeringly positive outcomes.

For example, previously on a customer file of 10,000, using 30 agents and a dialler, 200 promises- to-pay were achieved with a kept rate (that is the customer adhering to the agreement) of 64%. Using SMS conversations, 192 promises-to-pay were achieved, with a kept rate of 75%, but using only two agents. SMS conversations are delivering the same, if not better, collections and promises-to-pay performances. When used as part of an overall messaging strategy, SMS conversations are effective at various stages of the debt cycle and particularly in late stage debt collections.

The added benefits of this particular type of “conversational engagement” is that it is fully compliant and has complete audit trail capabilities. Coupled with right party contact verification it has proven to be very effective and efficient. Developing a connection with a customer is a good way of opening up channels of communication allowing the customer to feel comfortable when discussing their personal situation. In terms of messaging and customer contact, context really is king.

Improved collection ratios

In fact organisations like Clarity Credit Management and Vanquis Bank have started to use this service and are already reporting boosted efficiency, markedly improved collection ratios and agent efficiencies and significantly improved relationship with customers. The latter, a leading UK-based credit card company, says, “Sometimes people just end up embarrassed about a problem. In some cases, if you pound them with outbound calls, they will just stop dealing with you.”

Operating a hugely successful credit risk operations, clients are now converting more late-stage ‘promises to pay’ to completed transactions – with 60% less agent resource – using this approach. In the collection arena, without a proven and consistent real-time contact strategy, eliciting payments from customers is becoming increasingly difficult. Excessive or badly-timed outbound contact impacts the relationship with customers, is expensive and also undermines profitability. At a time when consumers have never been so demanding nor resources or profits more stretched, flexible, automated and pre-emptive debt collection has to be the way to go.

Commenting on SMS conversations, Vanquis Bank’ Head of Credit Operations comments: “We’ve just started this using this capability and it has been exceptionally well received by our customers. Sometimes technology can hinder what you’re trying to do, but this is a real enabler.”

In addition, using SMS as an interactive, rapid-response mechanism to connect with defaulting customers is only one benefit of the medium. It is also a useful way to engage with your customers and deepen their interest in any new products or services. Banks can text customers during the various approval stages of a financial product, telling them where they are in the approval cycle (“your loan application is being processed now,” and so on). It’s also a great way to offer value added services, texting people with an up-to-date balance on a particular account.

In conclusion, when there is an on-going dialogue with customers, then SMS Conversations are simply part of the next generation of debt collection. Companies need to make sure that their collection processes are easy to use, unobtrusive, and convenient to the end customer which means the enterprise must continuously evolve their understanding of the customers’ communication preferences. Making it personal means treating different people individually. The more you can understand and accommodate an individual’s values, the greater your ability to influence the outcome. Technology makes this possible to a degree you may have never imagined before.

The author is Development Director at VoiceSage ( www.voicesage.com), a business services company which provides state of the art interactive voice messaging (IVM) and SMS solutions

 

 

 

 

 

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