Collections: Learn From Marketing to Improve RPC
Originally published on LinkedIn.
Collections agencies’ efforts to execute their missions are being stunted thanks to a confluence of issues. From Consumer Financial Protection Bureau (CFPB) rules on outreach limits to the prevalence of bad data, fraud and consumer distrust, collections firms seemingly contend with one roadblock after another. To find a way around and improve right-party contact (RPC) rates for better results, collections agencies might consider some important lessons from the marketing world.
Background trends impacting RPC
Agencies like the CFPB and the Federal Communications Commission (FCC) have introduced new and potential rules intended to protect consumers from robocalls, spam and other unwanted contact. These rules, however, will likely impact the effectiveness and RPC rates of collections agencies. Last October, the CFPB finalized its rule limiting contact attempts by collections agencies to just seven per week. Additionally, the FCC proposed robocall regulations that may inadvertently catch legitimate companies in their net.
Coupled with the regulatory environment, consumer behavior is challenging collections firms. Consumers have, understandably, lost trust in the phone channel and rarely answer unknown calls due to the prevalence of spam and fraudulent calls. Moreover, consumers’ propensity to change their phone numbers, phone carriers, residences and more, mean that the data relied upon by collections agencies becomes outdated quickly.
Marketing lesson 1: Access smart data insights
Marketing tactics have evolved to help brands connect with their customers in meaningful, effective ways. Marketing agencies are adept at learning which customers want to interact with a brand and at advising brands on how to engage. They have come to rely on smart data insights to strike that delicate balance between not enough and too much contact.
In light of new rules and regulations, collections agencies are walking a similar line: racing to contact individuals to collect as many debts as possible, while limiting outbound calling and contact attempts to remain in compliance and avoid allegations of harassment. With smart data insights, like those used by marketing firms, collections agencies can gain a better understanding of the behavior of consumers they need to reach — such as which phone numbers they answer and when — to generate stronger results.
Marketing lesson 2: Winnow the data set to the most relevant
Accessing more data does not necessarily translate into better results. Collections agencies have often operated on the premise that more data means more opportunities to find the right contact point, in part relying on efficient auto-dialers to test quality. Marketers, however, know that this shotgun approach will not produce the same results as a targeted approach using quality data from the start.
Consumer data is dynamic, and odds are most collections organizations are relying on a significant proportion of stale information. In any given month, as much as 15% of an organization’s consumer data becomes outdated. Within two years, up to 60% of the data may be out of sync. After all, each year 75 million consumers change their phone carriers, 45 million change their phone numbers, 60 million relocate and another 2.1 million legally change their names. As a result, right-party contact rates can be difficult to move in an upward trajectory.
Collections agencies must sift through their mountains of data to identify which is most relevant, enabling them to focus efforts on contact methods proven to reach consumers. A consumer may be associated with numerous phone lines, and the trick is to verify which is current and which call window is likely to get an answer. Unlike consumer brands with loyal followings willing to share contact details, collections agencies may require external support in this endeavor since their audiences may prefer being hard to reach.
Marketing lesson 3: Use a customer-first approach
Beyond acquiring good, targeted data and updated sources, collections agencies need to know how to optimize that information. Marketers have turned engagement into an art form, developing insights to audience preferences and behaviors. Marketers tend to meet consumers where they are — and when and how they can get the best response — which means considering more than a single communication channel.
For collections agencies, this is the time to look beyond the phone channel. Complex interactions like collections and payment management should certainly be handled over the phone, but the reality is consumers don’t always answer calls. Combining outbound calling with email, text and other channels can elevate chances for success. For instance, a well-timed phone call may be more likely to be answered if preceded by an email or text alert.
A Marketing Mindset Can Improve Collections
The environment for collections agencies is evolving at a rapid pace between changes in consumer behavior and new rules on outreach limits. By thinking like marketing agencies and focusing on the potential of quality data, collections firms can work smarter and more efficiently to increase their RPC rates and their business results.