ARM Firms Leverage IVR Technology to Lower Costs

Companies that provide interactive voice response (IVR) devices and services tout them as ways that collection firms can be more efficient and can weather some of the difficulty of increased placements with a tougher collection environment.

Most basically, IVR is interactive technology that allows a computer to detect voice and keypad inputs. In the collection context, IVR allows companies to broadcast a large volume of calls at one time with no operators. If the call connects to the correct live person, the call is routed to a collector. Calls can also route to other automated systems.

The central argument for IVR is cost reduction. When combined with dialer campaigns, IVR can accept collections automatically, expanding the amount a firm can collect without the need to expand human collectors.

Darrin Bird, executive vice president of Mays Landing, N.J.-based Global Connect, said that one firm made more than $30,000 in collections by spending only $20 on the firm’s hosted IVR solution. The collection agency was already a Global Connect payments customer, so it only had to pay for the per-minute rate for the hosted solution. Firms using only the IVR and none of Global Connect’s other services would pay more.

Bird also pointed out that the success of his customer or any others using IVR technologies is largely dependent on proper analytics, a sentiment that many of his competitors echo.

“Using analytics and scoring can help you segment your customer base,” Bird said. “IVRs work best with certain select segments.”

Often an IVR is good for making the next contact after a letter has been sent, according to Bird. But the best way to know when an IVR will be the most effective, and produce the best return, is to look at the collection firm’s own history with customers, campaigns and other metrics.

“Not every [debtor] is comfortable using an IVR,” Bird said, adding that first-time contacts and low payment amounts (e.g., cable bills) tend to offer the best response rates for automated calls and collections.

Bird also said that he augments his firm’s own IVR offerings by asking employees how they would respond to certain scripts, options and other changes.

As part of analytics, collection firms should look at key words and sentiment (e.g., tone of voice) used by both the collector and the debtor to tweak collection campaigns and techniques, said John McNamara, chief marketing officer for LiveVox, Inc. in San Francisco.

“Listening to key words and sentiment will give you a road map to understand what works,” said McNamara, explaining that collection firms should constantly be analyzing techniques and refining them as the analysis dictates.

“We are seeing wider, faster adoption [of IVR-based technologies],” McNamara said. “There is a larger percentage of the population willing to self-pay.”

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Another important element driving collection firms to use automated solutions, Bird and McNamara agree, is the concern over compliance. The IVR technologies can easily capture phone key entries — e.g., press 1 if you agree to payment — providing an easy audit trail.

Greg Ablett, vice president of operations strategy for accounts receivable management firm West Asset Management in Marietta, Ga., agreed, pointing out that there is no need to worry about an IVR deviating from a scripted message, as collectors some times do.

McNamara also recommended blending these technologies with skills-based routing which will connect those debtors who do talk to collectors with the appropriate ones.

“The IVR is not an end in itself, it’s a means to an end (collecting the debt),” McNamara said. “It should be seen on a continuum. At one end is all automated collections, at the other end is all agent-based collections. Where the IVR is on that continuum for any firm depends on the portfolio. You need to have analytics to pump into the feedback loop to adjust how you use the IVR.”

While there are very large firms, like IBM — through its acquisition of Information Builders — that offer analytic services, there are smaller ones as well that are more appropriate for collection firms.

Some debtors will never pay using an IVR, so the technology itself isn’t a silver bullet, providers agree. Some of the most productive uses of IVRs for collection firms, according to Randy Cooper, president and CEO of IAT in Salt Lake City, are to follow up on NSF checks, leaving messages and taking payments “after hours.”

“We’ve been in the collections business for 20 years,” Cooper said. “In the beginning, all of the [IVR] calls were outbound. In the current marketplace, there are outbound demand for payment options as well as inbound options for checks, credit cards [and other uses].”

IAT’s system offers 30 different dialogues, which can be modified further to handle individual needs of different collection firms.

Message blasting, or using the IVR to deliver similar messages across accounts, isn’t too effective, Cooper added. Instead, the more effective approach tends to be using the IVR to help identify answering machines, even for accounts that agents are expected to handle.

Some 80 percent of outbound calls go to answering machines, so the system shouldn’t involve the agent until another human is on the line, Ablett explained. “This way, you can divert the most meaningful calls to agents,” he said.

Jim Eccleston, CEO of Central Credit Services, Jacksonville, Fla., agreed that a collection firm needs to wisely balance its use of technology. A firm’s analytics change hour by hour, so strategies should constantly be evolving to respond to the different results. He recommends firms customize their own analytics, as his firm has done, otherwise they get something that a vendor believes is excellent, but might not be the best solution for the collection firm.

Central Credit acquired telephony and software firm Radius Solutions earlier this year.

While IVRs can provide good returns if combined with the right analytics, Eccleston agreed, he had a different take on where he finds them the most effective. Rather than using automated solutions for initial contacts, he prefers to use them after a debtor has established a short payment history.

“I’d rather have the cost of talking to the customer (debtor) initially,” Eccleston said, adding that a skills-based routing system helps place those initial calls with the most appropriate collectors.