It is safe to say that most of the general population wants to pay its bills on time. However, as anyone in the payments industry knows, this does not always happen as planned. Having a system in place that makes it easy for consumers to do the right thing will benefit all parties in the long term. An intentional and efficient strategic collections system can be a tremendous benefit to your credit union.
As technology continues to advance, the task of collections becomes more complex. The Telephone Consumer Protection Act (TCPA) restricts the making of telemarketing calls and use of automatic telephone dialing systems and artificial or prerecorded voice and text messages.Compliance with collections legislation is key, and the technology used to perform collections is crucial. Third-party data systems allow collectors to filter the dialing structure, become more efficient with query capabilities and ultimately impact delinquency rates by changing up the messaging. With the increased use of cell phones and decreased use of landlines, reaching consumers of certain demographics is more difficult and more expensive than ever before.
When formulating your credit union’s collections strategy, keep the following tips in mind:
- Limit the use of an automated voice messaging system.Members tend to be surprised when they answer the phone and hear a live person on the other end, since most collections calls are automated. Having a live representative makes members feel more comfortable asking questions, and it is easier to find solutions for outstanding payments when you can work together as a team.
- Find ways to make the member comfortable. Once you get the member on the phone, one way to do this is through authentication. Asking security questions will assure them you are calling from a legitimate source, ultimately making them feel better about disclosing personal information. A call from a collections agent can be stressful, but making sure the member knows your true intentions will yield better results.
- Identify yourself as the credit union and not a collections agency. Introduce yourself as a representative of their credit union. This approach will make them more comfortable and less defensive when answering questions about their delinquencies.
- Incorporate advanced technology.Making your collections processeasy for the member to understand goes hand in hand with the type of technology your credit union chooses to utilize. For example, increasing the connect rate with members can be done with changes to the caller ID system. PSCU is beginning to movetowards havingthe credit union’s name show up on the caller ID so members recognize the name and are more inclined to answer the phone.
Measuring results is equally as important to the success (or failure) of your collections strategy as having a robust collections process. Credit unions should measure traditional metrics, including:
- Penetration – Measure how many times a single representative is calling a delinquent member. It is recommended that amemberbe called anywhere from 10 to 15 times per month.
- Right Party Connect Rate – This number refers to how many times the representative is able to get the “right party,” or decision maker, on the phone. Representatives should be strategic with the time of day they are calling, depending on the demographic of the member they are trying to reach,in order to optimize connect rates.
- Conversion – A conversion can have multiple outcomes,including a member making an appointment to discuss the delinquent charges or actually collecting the debt owed. When creating your collections strategy, outlining clear objectives will help the data analysis process run smoothly so that results can truly be measured.
PSCU has excelled in the collections space by shattering the traditional notion of a “telemarketer” or collections agent. Having a streamlined and efficient collections process allows PSCU to significantly reduce its Member-Owner delinquency rates.Each dollar collected has an impact on the bottom line of the credit union. Rehabilitating delinquent members’ debts early in the collection process allows members to continue in good standing and remain profitable for the credit union.
Creating a strategic collections plan and diligently measuring the resultswill provide your credit union with the tools needed to improve delinquency rates and create a more enjoyable member experience.
Steve Balmerhas been with PSCU since 2007. He provides management and leadership support to the Fraud Recovery, Dispute and Collections Operations departments. Steve utilizes outbound technologies, third-party vendors and manual effortsto handle collections for over 40 clients.