What you'll learn: Digital debt collection strategy is not just about new tech. Companies that demonstrate success at switching to digital collections have made major adjustments to their operational mindset and their company culture, too. Find out what four operational moves every company needs to make to prepare for a successful digital strategy.
Look at this list of the 10 biggest digital banks for 2022, and pay attention to the number of customers for each of them. Chime alone has had a 50% growth during the pandemic, and the CEO describes it as “more like a consumer software company than a bank.”
Technology, of course, is a big part of digital collections. But, when it comes to implementing a successful digital collections strategy, companies have to shift their mindset and change company culture, too. Most collections companies are not prepared to make that shift.
How can you prepare?
1. Make meeting customers where they want to be met standard practice
Customers are in the drivers’ seat. Everyone on staff at a collections company needs to understand (and buy into) this theory, from the top level executive to the front-line agent. While the industry has been trending towards customer service since the inception of the CFPB in 2011, it’s never been more important than it is now to focus on your customer’s needs. This might mean a restructuring of incentives, offering more convenient hours, and (of course) increasing the ways in which a customer can reach you and pay.
When you’re developing new policies, procedures, and practices, one of the check-marks has to be “does this advance our ability to focus on the customer?” If it doesn’t do that, it might not be worth it.
2. Change how you hire agents
It’s not just about high-frequency outbound calls anymore.
With Reg F providing a guardrail for digital collections strategies like email and SMS, collections companies need to seek new types of talent. Great negotiation skills no longer serve as the main qualification for an ideal agent. In the world of digital collections, a well-rounded agent may have to communicate via email, follow up via telephone, and then trigger an automatic text. It’s important that recruiters and human resources departments focus on writing skills and technical skills during recruitment and interviews.
3. Hire for new skill-sets
If the banks are trending towards behaving more like consumer software companies, then collections will have to trend in that direction, too. To meet customers where they want to be met, digital collections will become a core expectation, and your staffing needs will change.
Do you have a project management office? Do you employ business analysts or data analysts, or anyone with an analyst title? If you don’t, it’s time to explore how those roles can help move your organization toward digital collections.
If you already employ personnel that have the key traits of a good project manager, invest in them. If you don’t have anyone on your team who exhibits those traits, it’s time to update what you’re looking for when you hire. You should be looking for people who understand what your operation is trying to accomplish and can help get you there.
4. Start small
Shifting from a collections company to a consumer software company sounds like a monumental shift, and it is. But you don’t need to boil the ocean. Start by examining long-standing practices in a single department. Are they efficient? Are they consistent with your goals as a company? Are the business practices advancing you towards a better customer experience? Do you have the right people in the right roles?
If not, then it’s time to make a change to that specific business practice. Keep asking those questions in all areas of your business and make incremental changes where necessary. The results will be worth the time and effort.
It takes a certain level of risk-appetite to be willing to try something new, especially in a highly-regulated industry like collections. But without change, collections companies will not be able to keep up with the digital transformation.
Thinking Differently is a core tenet of the Innovation Council, a place where business leaders converge to solve problems in real, practical ways. Interested in membership? Get more information on the Innovation Council here.
Erin Kerr is the Director of Content at insideARM and the chair of iA Strategy & Tech - a digital resource for collections strategy executives. She is a seasoned receivables management professional, with recent experience in digital strategy and a passion for crafting digital solutions for a better customer experience.