An analytics division today is the backbone of decision and strategy, capable of transforming companies. Investing in technology and people should ensure that strategy is continually improved and business potential is maximized. In the collections industry, while dedicated analytics wings are a rarity, collectors can’t thrive and flourish without leveraging analytics in this digital age of the customer.
Analytics can help
The margin of error in the collections industry is minimal which means understanding the scope and profile of an assignment is essential before starting. Analytics will help gain a comprehensive understanding of the entire process by asking pertinent questions of the administration such as cost of collection, scope of payment, and the effort required. In addition, questions on how well you know your customer, who will respond best, how and when to approach individual customers, through which channel, and amount that can be liquidated help in refining strategy.
Analytics is necessary to grow out of antiquated patterns and behaviours. You might be looking at several delinquent accounts and within a broad scope, while the techniques applied might be similar, the reasoning behind navigating each account will be different.
Having sub-par analytics is often worse than not having them at all. Studies show that there is a higher response rate while contacting customers based on their preferences rather than randomly calling them first thing in the morning as soon as you get in to work. Having access to analytical insight is not the goal; leveraging them is.
One of the best ways you understand your customers, is by segmenting them using a process called nearest neighbour analysis. The more data you glean across different metrics on a customer such as age, spending habits, credit and payment history, loan defaulting (if any), the better you can categorize them.
This starts with knowing where to look for information. For instance, overpaying can mean one of two things:
- Client wants to pay back early, and has great credit quality thanks to excess cash on hand.
- Client wants to pay less anticipating hard times, as they have a lower than average credit quality.
Looking at overpayers as a single category is what analytics will help change through data enabling different treatments for each of the categories within overpayment. Analytics can help segment customers based on their behavior and execute different strategy based on that.
But to be able to actually enable this segmentation and personalized approach, there are certain things that the collections team must sort out in terms of both information and skill management.
Manage information flow, access, and usage
Robust analytics is possible by investing in quality IT support, with seamless access, transfer and structuring of data that allows for an integrated view of each client.
1. Remote access
Collectors and lenders today allow clients to access records and extract necessary information, understanding the results of various strategies and how many accounts have been serviced using them. This gives the clients the autonomy to decide how much information they want and when.
2. Integrated view of customer
At every point in the collections sequence, agents should interpret data and ask themselves what to do differently with the data they now possess. Constant review of performance relative to formulated action plan and projected results will help real-time tweaks to drive collections.
Allow the AI-driven insights to build a sound strategy having time and resources in place for unforseen circumstances.
4. Tailor data
Grant differential access and visibility for various levels in the firm. The management is unlikely to need the minute details as much as the immediate supervisor in charge of a particular assignment. Develop the algorithm so that it is specific for each access level showing pertinent results, and being capable of responding to queries.
While analytics is more focused on the interpretation, the data needs to flow across levels for swift and easy communication. This is particularly important for updates on regulatory bodies and laws, marketing strategies, business developments etc.
6. Leverage information
Copious data is generated at every turn within the industry. Leverage the data you need and pass it on. It is in the best interest of the firm and the management to know in real-time if there are glitches in the system, drop in quality of data or hike in payment value.
How well things go depends largely on the customer profile, their credit history, and possibility of other loans. It also takes a special skill set to understand the customer, their circumstances, and excel at managing arrears. This is why it’s important to build a collections team that can not only drive collections but also instill a better customer experience.
The collections agent that a customer interacts with is the face of the brand. This means call quality, speed of resolution, and query management are all up for evaluation. Practicing on dummy accounts, engaging with difficult customers, getting familiar with scripts, learning collections strategies, data interpretation, and evolving regulatory requirements is mandatory. Continuous training, regular seminars, and refresher courses are necessary to stay up-to-date.
2. Maximize potential
Successful collections shops work smartly. They know who to assign where and invest wisely in personnel. This doesn’t mean doing mundane jobs day in and day out, rather it means employing skill sets that are in demand on the most important problem on hand.
Incentives and perks should be balanced and based on high quality work. Metrics for evaluation should move toward call quality, maintaining compliance, cash collected and promises kept than most number of calls.
A collections team is expected to handle tasks from responding to queries to loading new accounts . This means having a multifaceted, flexible team with varied skills, capable of donning more than a single role. Typically, these personnel combine knowledge of customer behavior and regulatory processes used by customers.
Our next-gen, AI-driven SaaS platform helps identify the right consumer behaviors; and optimize collection efforts thereby driving collections. Feel free to reach out to us if you have any questions. We can also showcase how Dasceq’s 2i™ platform can help optimize collections for you.