This customer-centric approach, backed by automation in technology can result in better collection rates at a lower cost. More importantly, it can do so without alienating customers.
There is no escaping the fact that many companies suffer from a severe and deep-seated debt problem. In countries like South Africa, the average household spends nearly 62% of its income on servicing debt. This makes the re-payment of debts a challenge.
Customers overwhelmed by debt are more likely to miss payments. This has significant implications for the organisations that have lent them money, be that through a structured loan, a credit card, or even an in-store account.
Business risks
While businesses will (or at least should) bank on some defaults, the risks are significantly greater when a lot of customers start to fall behind on payments. But there is a very real risk that businesses will lose long-term, loyal customers if they take the wrong approach. The trick, therefore, is to encourage payment in a way that doesn’t alienate indebted customers and ensures that they return once they’re on a good financial footing again.
Being in debt to the extent that you’re unable to make payments is incredibly stressful. That means that attempts to make collections can easily become volatile, with customers reminded of how much pressure they’re under to make payments and customer service representatives bearing the brunt of their frustration.
Those frustrations aren’t restricted to interactions where the company is chasing down payment either. Even customers getting in touch to make a payment plan will rapidly get frustrated if they can’t find a quick resolution to their problem. How can companies ensure that they keep their cash flow stable while also keeping customers onside?
Good communication
Here, all of the tenets of good customer communication come into play. That means meeting customers where they are. And engaging them with the right message on the right channel at the right time. For instance, would you respond better to an empathetically written text message that you can read at your own convenience or a series of phone calls while you’re busy at work?
Organisations can go a step further to meet customers where they are. With a combination of automation and emergent technologies like Conversational AI Agents, they can interact with customers in personalised and solution-oriented ways, as and when customers are ready to engage. The organisation may be able to help affected customers restructure their debt so that it’s more in line with their ability to pay it back. It may even be able to help customers find accredited third-party debt relief, further improving the experience. Critically, this can all be done in ways that are less emotionally fraught than if the customer had to engage with a human representative.
This customer-centric approach, backed by automation in technology can result in better collection rates at a lower cost. More importantly, it can do so without alienating customers.