When banks segment their customers, a very important aspect is to engage with the customers on their terms regarding their preferred channel, the timing and tone of voice of the communication. When we speak of tone of voice, we mean the style of communication for each individual customer, with some tones of voice being more formal than others. It is important to have a selection of tone of voices that can be used across the customer base. The way to discover which one to use is through engaging with the various segments.
Important things to have in mind when doing collections
- Know your customer and use such knowledge when contacting them. It is very important to use what you know about your customer to build the right message, moment, and channel of contact. In collections, it is important to create rapport with your customers, to create the perception that you know them and care about them. Such knowledge and a ‘customised’ approach must always be used in every step of the collection effort.
- The hierarchy of channels is very important. The first channel of communication must give the customer room to manoeuvre, minimising embarrassment, and the bank can choose from email, WhatsApp and SMS communications channels, using its understanding of the customer to use the channel that they feel most comfortable with. Email and WhatsApp are better, as they allow a more personalised message and provide a more human touch. SMS messages are typically machine generated and lack personalisation and empathy. However, if the bank’s country is one where the penetration of smartphones that can support email and WhatsApp is low, SMS is a very good option. Do not use telephone calls for the first stage of collection contact. Using a written message enables the customer to act in a more comfortable way. If the first message is personalised, most times a second message isn’t needed.
- When engaging with customers who are responding to messages, the bank must be ready to answer any question and to provide options to the customer for them to fulfil their financial obligations. Remember, when starting a conversation via WhatsApp, SMS or email, the customer may return with questions, so the employee receiving it needs to be prepared to answer them immediately. To be prepared to answer is to understand the contract between the bank and the customer enough to clarify any doubts and have the numbers that reflect options on repayment. Do not miss any contact opportunity to get the customer’s commitment on repayment.
- In difficult negotiations, it is important to have options on repayment extensions that will reduce the amounts of future instalments, or rebates in case of onetime repayment.
- Try always to keep the conversation friendly. In most cases, there can be legitimate reasons why people do not repay a debt or an instalment. The effort to listen, understand and seek a solution will benefit the bank and strengthen the relationship with the customer through this difficult time.
- Use the opportunity to advise customers how best to interact with the bank, and the different options for credit. Sometimes customers use the fastest and more convenient way to borrow money, not always the cheapest. When the bank advises a customer not to use an overdraft or credit card, but to use an instalment loan or a loan secured by collateral, showing them that the later options are cheaper, the bank gains twice. With an instalment or secure loan, the possibility of delinquency reduces significantly, and the customer feels you care about them.
- Employees dealing with collections and recoveries must always be professional, as they will hear terrible and emotional stories. They will need to keep their professionalism to ensure that the goal of recovering the money or the financial obligation is fulfilled.
- It is important to mention to the customer the benefits of keeping their relationship with the bank in order, as it will make it easier for new loans, or special conditions when borrowing in the future. Always try to avoid threatening the customer, saying that if the repayment is not made that their name will go onto a blacklist, which will make it very difficult for them to get credit, and will also reduce their credit score.
Using a Collection Agency
A collection agency is a business that provides collection and recovery services to financial services and other organisations. It will have the volume of collection activity to justify the development of highly trained teams and automated technologies.
The bank and the collection agency have a contract that sets out the services that they will provide, how they will go about collections and recoveries, and how much they will be paid for successfully collecting or recovering debts. How much they will be paid is usually a percentage of the outstanding repayment or a percentage of the amount of the debt recovered with recovery.
As it is important to continue collection and recover efforts without delay, the bank will send a daily list of accounts to be collected that provides the collection agency information on:
- Customer name;
- Customer contact details;
- Action to be taken:
- Before due date – the message to remind the customer;
- On the due date – the action to be undertaken;
- After due date – the number of days before each step of the collection.
- Segment information:
- Characteristics of customer segment;
- Tone of voice;
- Channel of preference.
- Product or service contract terms and conditions;
- Acceptable options for repayment.
With the above information, the collection agency can populate its systems with the data, create contact lists and input the series of actions into their various channels to reach the bank’s customer and deliver a collection message. It will also be able to answer any question from the customer and perform negotiations up to a certain level before referring to the bank for approval.
At the end of each day, the company will send a file to the bank with the results of any contact interaction, so that they can update their systems.
Sometimes, banks provide direct access to the bank systems, so they can update them, with no re-work.
The benefits of using a third party are that the cost of using email, WhatsApp, SMS, and telephone automated telephone number dialler platforms moves to the supplier. Because they serve many clients they will usually use the most up-to-date technology and collection techniques and will share these with the bank, as collections should not be the bank’s main function. (If it is, the bank probably has a major problem.)
Where the bank wants to have part or the total process in-house, it still needs to produce the above matrix of information and daily reports to feed the unit in charge of communications.
The acquisition of a multichannel platform is a must, in order for the bank to send personalised and segmented messages, respecting each segment characteristic to maximise response, as defined in the matrix. The collection agency also needs to have a call centre capability to perform automated outbound calls and human inbound call response capability that may require access to the bank systems, and customer information. The bank should ensure that it has the capability to monitor the quality of the calls made by the collection agency.