Collection Agencies Experimenting with Technology to Deliver Results in Tough Times
Difficult times in the ARM industry have called for strategy shifts in contact operations. In addition to increasing payment plans and settlement acceptance, collection agencies are leveraging technology to get through to debtors.
Collection placements are continuing to grow, but recovery rates continue to lag as more Americans lose their job and no longer have access to assets such as home equity to pay down debt. Additionally, with many people using caller IDs to screen calls, or with no landlines at all, debtors are much more difficult to reach.
As such, accounts receivable management firms are increasingly relying on technology to maintain profit margins in the recession.
In insideARM’s most recent Credit & Debt Collection Industry Quarterly Confidence Survey, many participants said in open-ended comments that they are using various contact technologies to guide them to elusive debtors (“In Your Words: Comments from the ARM Industry Confidence Survey,” June 1).
Collection companies should follow some survival strategy guidelines in order to make the best out of the current economic environment, says Matt Edmunds, general manager for collections, for SoundBite Communications in Bedford, Mass.
“It’s much more difficult to reach people now than ever before,” Edmunds says.
Automation helps manage this issue. Edmunds recommends carefully defining a company’s automated voice messaging strategy to increase agent productivity and revenue-per-agent-hour.
“Agentless solutions (automated calls) are growing more effective and accepted and provide options for debtors to pay at their convenience,” Edmunds says, adding that it is critical to test different strategies on different segments of accounts, even within the same portfolio. “This works best for balances of under $500 and for fresher debt.”
Though the tight margins mean that most firms don’t have additional revenue to invest in automation and other equipment that could take time to produce a positive return on investment, collection firms can use hosted solutions in which the provider owns and maintains the equipment and the collection firm pays fees based on its usage.
Hosted dialer provider LiveVox echoed the benefits of outsourced communication technology recently when they noted that a recent internal study showed that a hosted solution could provide dozens of lines per collection agent compared to premise-based dialers that average around three lines per agent (“LiveVox Data Reveals Dialer Line Starvation Reduces Collection Agent Talk Time up to 50%,” June 10).
The next strategy is to use a local caller identification when calling a debtor, Edmunds says. If a debtor sees a toll-free number on the caller ID he is much less likely to pick up the call. If, instead, the caller ID reflects a local area code, the debtor is more likely to answer, meaning the collection firm is more likely to be able to initiate the collection process. According to Edmunds, use of a caller ID increases live answer rates by as much as 40 percent to 200 percent when contacting debtors.
<!--PAGEBREAK-->
As communication shifts to cell phones, and as cell phone users continue to increase their use of texting, Edmunds recommends collection agencies adopt a texting strategy. Some companies have seen more than a 50 percent increase in right-party connections using texting.
“We’ve run a couple of pilots and have had some tremendous results,” Edmunds says.
For texting to be an effective strategy, Edmunds recommends using a solution that won’t charge the debtor’s account for receipt of the text message.
Debtors are also more sensitive than ever to the size of payments they may have to make. Many can’t pay their outstanding balances in the one to three months that was expected only a few years ago, according to Edmunds. He recommends that agencies introduce more flexible payment arrangements, including long-term payment plans, and then using automated reminders to alert debtors of upcoming payments.
^pullquote'Increase IVC technology.' 'More calls via technology, less FTE.' - Responses from Q1 Confidence Surveypullquote^
Consumers also are more accepting of automated voice messaging solutions that offer the payment plans. Using such solutions saves on the cost of live collectors.
Edmunds recommends more flexibility in other areas as well.
“Collection [agencies] need to move away from the ‘one size fits all’ approach,” Edmunds explains, recommending experimentation with multiple scripts, multiple voices and leveraging other contact numbers. “You need to make your company stand out more. You need to use a more tailored contact strategy.”
<<< Return to Newsletter
Care to Comment?
(Please read our comments policy first.)
Tell us what topics you're interested in and we'll keep you posted. Enter your email address below.
Related Resources
News
Analysis
Publications
Research
Products and Services
Comments
Comment from Aron Tomko on June 10, 2009 at 11:46AM EST
Any suggestions on a texting service that will not cost the debtor money to receive the text?
Comment from Anonymous on June 10, 2009 at 11:47AM EST
We call consumers all over the United States and our caller id is a 1-800 number. Does Live Vox have the avaialibility when it calls the consumers to show their local area code?
Comment from Marc Johnston on June 10, 2009 at 11:47AM EST
Agencies that utilize Livevox can control the caller id number that appears on the debtor's phone. It has worked quite well for me in helping to prevent "broadcasting" who is calling.
Comment from Parth Sundriyal on June 10, 2009 at 12:26PM EST
I want to know how can we use blaster campaigns with the inclusion of FOTY message?
Comment from gumshoe121 on June 10, 2009 at 12:50PM EST
How is the local phone number generated?
Comment from Marc Johnston on June 10, 2009 at 1:00PM EST
The interface that the agency uses to control the campaign speed and other parameters provides for an area to manually enter a call back number that is to be displayed on caller id.
Comment from Lethal on June 10, 2009 at 2:09PM EST
"Does Live Vox have the avaialibility when it calls the consumers to show their local area code" Isn't that deceptive. If you leave a local number, but you aren't a local collection agency... then the debtor calls in and finds your in Montana and they are in Ohio?? they think they are calling Ohio??
Comment from Gina McNaughton on June 10, 2009 at 4:28PM EST
In response to
"As communication shifts to cell phones, and as cell phone users continue to increase their use of texting, Edmunds recommends collection agencies adopt a texting strategy. Some agencies have seen more than a 50 percent increase in right-party connections using texting."
This is taken from pg 39 of the Feb 2009 FTC Workshop Report...
"Consumer advocates, however, expressed serious misgivings about the possible consumer harm that might arise if debt collectors were free to contact consumers via mobile phones and other newer technology methods.250 These commenters noted three primary concerns: (1) that some of these methods, such as mobile telephones, email, text messages, and instant messaging, may lack the requisite level of data security or confidentiality to be used for sensitive debt collection matters;251 (2) that consumers may incur costs for some contacts using new technologies if, for example, the mobile calling plan of a consumer who receives a debt collection call does not permit unlimited minutes, or imposes charges for text messages;252 and (3) that debt collectors using newer technologies may inconvenience or embarrass consumers by contacting them when they are driving, in appointments, or at work.
The entire 120 page report can be found here..
http://www.ftc.gov/bcp/workshops/debtcollection/dcwr.pdf
It is my understanding that the upcoming FTC Roundtables starting in August will be a stepping stone to FDCPA reform.
Comment from Marc Johnston on June 10, 2009 at 6:55PM EST
No more deceptive than sitting there looking at caller id numbers choosing who to call and who not to. There have been no rulings indicating it is deceptive and as long as the number actually rings back to your agency...whats the deception?
Comment from Anonymous on June 10, 2009 at 11:38PM EST
I guess that depends on your definition of what the displayed caller-ID number is designed to accomplish.
Does the definition mean "how to get back in contact with the call originator"? If so, then displaying a local area code (as long as it actually does connect back to the collection agency) isn't deceptive. In fact, it could benefit consumers by avoiding long distance fees.
Conversely, if the definition means "describe the physical location of the call originator with the displayed number", then we'd all be in trouble. If anyone were to take their cell phone into a different area code then they'd be guilty. Also VOIP would be outlawed, since there isn't automatically a corresponding physical telephone line for each VOIP call. Some VOIP systems display the location of the VOIP computers, not the call originator. So displaying a local number or a toll free number to connect to the collection agency would actually be LESS deceptive by informing the consumer of a number where to contact the collection agency, rather than a number back to the VOIP provider.
Comment from Ken Crowne; Global ARM team on June 11, 2009 at 3:33PM EST
A bit of a shameless plug, but I can answer the first two questions posted.
Premiere offers COMPLIANT and free to end user text messging. Voice is still our agencies #1 mode, but thats changing as a younger more tech savvy demographic deals with debt.
Premiere offers the ability to post whatever is desired in the caller ID space.
To learn more about SMS or other voice strategies to give lift and lower the hang ups, I'm at ken.crowne@premiereglobal.com