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Boost recovery rates with balanced communication strategies!
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The world of debt collection is often associated with negative images of pushy phone calls and forceful tactics. However, the reality is much more balanced. Effective communication is the key to successful collection, smoothing the way to resolving outstanding balances while fostering positive relationships with customers. Let see how:

Pre Collection: The crucial first step

Modern collection begins with a proactive approach: pre-collection. This phase focuses on identifying potential delinquencies and taking action before payments become significantly overdue. Effective communication is a crucial element in addressing customer challenges and fostering a cooperative relationship.
Automated systems facilitate early outreach, underscoring the bank’s dedication to addressing customers’ financial difficulties. This proactive communication not only resolves payment issues but also establishes a collaborative relationship between the customer and the bank.
Selecting an appropriate communication strategy is essential for achieving a competitive advantage:

  • Email: A cost-effective communication channel
    The use of email as a balanced communication tool is both cost-effective and convenient, allowing for the sending of personalised and professional reminders. Pre-defined email templates ensure consistent communication while allowing for customisation based on specific circumstances. This results in a balance between efficiency and a human touch.
  • SMS: Stand out from the communication noise
    In a digital landscape characterised by a high volume of information, SMS messages offer a direct and immediate means of balanced communication. They provide a convenient and effective method for sending timely reminders about upcoming payments, encouraging customers to take action.

  • Push notification: Communicate on the top of the screen
    They can be delivered directly to the debtor’s mobile device, thereby ensuring that they receive timely updates and payment reminders. They can be personalised and aligned to the customer’s specific situation, encouraging them to take immediate action.

Soft collection: Strenghtening the collaboration

In contrast to the pre-collection phase, which is primarily concerned with the prevention of delinquency. The soft collection employs a balanced approach to address the complex task of managing debts with a collaborative approach.
Communication during this phase requires a delicate balance between urgency and empathy:

  • Next-level email communication
    Emails remain an important channel for soft collection, with a shift in tone. Messages address the debtor’s situation with a focus on finding a mutually acceptable solution. This fosters empathy and opens a dialogue for discussing repayment options.

  • Collaborative SMS messages
    The soft collection method maintains the directness of SMS messaging while adopting a more understanding approach. They are tailored to address the specific circumstances of the debtor’s situation. Presents a solution-oriented approach, demonstrating a willingness to work together to find a solution.
  • Targeted push notifications
    It remains a valuable channel, but its focus is shifting towards highly targeted and precise communication. It serves as a reminder of the importance of cooperation and understanding, encouraging debtors to take action while addressing the challenges they may face.
  • Call to collect
    The introduction of phone calls in soft collection personalises the process, allowing for a more tailored approach. Agents actively listen to the debtor’s situation and work collaboratively to develop a mutually beneficial solution. This human interaction helps to foster trust and strengthen the relationship.

Late and Legal Stage: Navigating the challenges

The late and legal stage represents a shift in the debt collection process. At this stage, communication becomes more assertive, with the focus being on recovering the outstanding debt in a way that is compliant with ethical and legal regulations.

  • Demand letters
    A formal and legally significant document, a demand letter serves to notify the recipient of the potential legal consequences of non-payment. The letters are written with precision and emphasise the need to resolve the outstanding debt without delay to avoid further action.
  • Assertive phone calls
    It is essential to communicate with debtors clearly and assertively by telephone at this late stage. Agents underscore the urgent nature of the situation and strongly encourage debtors to take immediate action. This assertiveness is driven by the objective of finding a solution before the situation escalates further.
  • Field visit
    A more forceful means of communication, field visits are employed as a last resort after phone calls fail to reach the debtor. The aim of the field visit is to impress urgency and seriousness on the debtor with respect to addressing the outstanding debt and the potential consequences.

The art of balance: Effective communication in collection

Effective, balanced communication is essential at every stage of the debt collection process. By adopting a optichannel strategy that combines automation with personalised engagement, financial institutions can achieve effective debt recovery while maintaining positive customer relationships. Key takeaways:

  • Transparenc
    Maintaining transparent and consistent communication throughout the process fosters trust and empowers customers to effectively manage their financial obligations.
  • Empathy
    Understanding the debtor’s circumstances facilitates collaboration and encourages them to take steps towards a solution.
  • Strategic communication
    The use of a combination of automated outreach, personalised communication and effective methods allows for a customer-focused approach that is tailored to the specific stage of the debt collection process.

Debt collection doesn’t have to be a negative experience!
By prioritising effective communication and fostering a collaborative environment, financial institutions can create a win-win situation for themselves and their customers. This approach not only improves recovery rates but also strengthens customer relationships, ensuring a more positive and effective business interaction for all parties.

What’s next?

If you would like to learn more about creating a positive experience in collections, we invite you to read our latest white paper.

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