While some debt collectors like to believe that they have a captive market, the truth is that most customers can settle their debts with someone else later in the process. With that in mind, it becomes clear that effective marketing strategies can substantially boost your company's debt collection efforts.
A Unique Selling Point
One of the most useful marketing concepts for debt collectors is the idea of a unique selling point. Why should customers settle their debt with you? A unique selling point answers that question. In the early stages of missed consumer debt payments, your firm might be able to waive penalties or avoid reporting it to credit agencies. After that, the problem becomes more difficult because they have already rejected offers from other collectors. What makes you any different? Perhaps your firm can offer a payment plan or a lump sum settlement for a smaller amount. Collectors usually need a unique selling point to succeed where others have failed.
It is often said that it takes seven marketing touches to build enough credibility to make a sale, and it is even more important for collectors to build trust. Consumers are unlikely to pay off older debts after a single contact, and businesses almost never do so. Multiple touches are generally more effective in difficult cases. For example, sending some documents is often a good first step. Following-up to make sure that they got the documents can be the next step. They'll probably want more time to look over the documents, and it is usually necessary to follow-up again after that.
Personalized Customer Service
Personalized customer service is still not widely practiced in the debt collection industry, so it holds real opportunities for growth. For example, a 2017 SOTI survey found that 66% of retail customers prefer self-service to a sales associate. Most consumers prefer to avoid dealing with collectors, and missed payments rarely turn into defaults. Automatic emails with links to self-service options on the web can be a cost-effective way to deal with the early stages. Later on, more personal interaction based on the principles of permission marketing is often a better strategy. Because customers generally feel obliged to deal with collectors, your firm also has a rare opportunity for direct cross-selling.
A modern data analytics package is the key to opening up the possibilities of personalized customer service. Data analytics allow your firm to segment customers into smaller categories and take appropriate actions in a timely manner. Advanced analytics are widely used for marketing purposes thanks to Google and social media, but many debt collectors use older software with limited analytical capabilities. Marketing analytics accounted for 9.2% of total marketing budgets in 2017-2018 according to the research firm Gartner. Gartner also found that data analysts were spending too much time formatting and preparing data rather than actually analyzing it. These issues are much more severe in collections. Too many hours are still spent manually picking targets from lists of receivables trapped in older systems.
A Call to Action
Marketers are often ahead of debt collectors when it comes to applying new techniques, but it does not have to be that way. By updating your firm's collection software, you'll gain access to the latest data analytics, customer-centric management tools, and the ability to build credibility with multiple touches. With all of these new capabilities, your collectors will be able to create marketing-style calls to action that get debts repaid sooner rather than later.