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Getting to know your customers in collections through data 18 AUGUST 2020

Getting to know your customers in collections through data
5 minute read

Since the outbreak of COVID, collections operations have been impacted heavily, with a high volume of indebted and unindebted customers requiring help. We have worked with a number of organisations whose reaction to the situation has been to throw more resource into their operation as a mitigation technique, and although this works as an initial response, it isn't sustainable long term.

A much more effective method is to properly segment and target your customers, based on your knowledge of them; we’ve seen some simple techniques result in a reduction in agent-required interaction, quicker resolutions and most importantly, improved customer satisfaction.

In this blog, we look at the importance of KYC (Know Your Customer) and how you can put it to best use, especially during this challenging time.

 

Usage across different industries

KYC can positively impact the whole customer journey, not just collections and recoveries.

In banking, it is used to validate the customer from a fraud prevention stance, and changes in regulation/guidelines actually state that a KYC verification check be carried out whenever a new product is applied for (somewhat contentious with long-standing customers).

Within utilities, KYC can be a real problem as many consumers do not report their tenancy/occupancy within a property, therefore knowing anything about them becomes very difficult. This causes issues from many angles, all of which impact on the ability to collect, e.g. incorrect billing, or attempting to locate who the consumer.

Although it can be difficult, especially when only using your own data, the key is to access as wide a range of information as possible to build up a holistic view of your customers.

 

Access bureau data

There are many different ways to enrich customer data in order to increase the effectiveness of contact strategies; the most obvious and widely known is to utilise bureau data to enrich your own data.

If you can obtain information from the bureau (known addresses, credit history, lending history, contact information etc), then you build up an understanding of the customer without ever speaking to them. This helps to form rounded contact strategies which can be tailored toward customer preferences, characteristics, propensity to pay and overall customer risk.

Bureau data, however, can be expensive and may not be the most accurate barometer of your customers, as each debtor performs differently with each creditor based upon the importance of the product to them. For example, debtors may be more likely to pay their mobile phone debt ahead of council tax, water or energy due to the perception that they cannot live without their mobile phone.

 

Look at other areas of your business

An often overlooked but vitally important (when done well) and successful way of enriching customer data is by utilising information on debtors based upon their contact across the whole of your business.

Look outside of collections; what methods are debtors using to contact and what are their reasons for contact? Use marketing and sales information, customer/account servicing, retentions - any area where the customer may have contact needs that could be utilised across collections and recoveries.

More often than not, collections departments do not utilise their own business information to understand how and why customers interact with them, and this knowledge gap creates a disconnect when it comes to collection of debt. Utilising data sourced across different areas and feeding that into collections models, no matter how basic or complex, will immediately expose areas of greater recovery.

For example, if a customer has predominantly interacted via digital methods (web, email, app) then the chances of collections receiving a response through traditional methods such as the letter or dialler becomes a lot less likely. For this customer, you should utilise methods such as app notifications advising of the overdue balance, a web portal when they log into their account, or email strategies, which are an extremely cost-effective way of contacting customers when targeted in the right manner.

This is supported by Ofcom figures which have shown a decrease in post and a rise in digital interactions, which accounted for over 42% of all customer interactions, and is forecasted to further increase based on the digital demands from millennials (23-38 year olds) and Generation Z (18-22 year olds).

 

Summary

Enriching your data, whether it be in-house data, bureau data or from another method (such as non-bureau data companies, publicly available data, or demographic statistics), will not only improve collections but will also aid operational areas (such as staffing levels, which could be allocated to focus on key areas where previously wasted dialler efforts were pursued).

‘Best time to contact’ models should also be built to enable staggering of inbound contact levels throughout the day, again improving operational effectiveness and optimisation within staffing levels.

 

To gain further insight into COIVD-19 exit strategy, download our free playbook.

Arum is the only truly independent company offering services across the credit management lifecycle. All our consultants have the ability to work remotely, so we can continue to offer our exceptionally high level of service during this challenging time.

Owen Atkinson
Lead Consultant
Arum

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