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Getting to know your customer in collections through data 7 OCTOBER 2016

Getting to know your customer in collections through data

All businesses have similar challenges when it comes to debt collections where debtor information is limited or missing. Customers in debt are sometimes elusive or hard to track down but the biggest group are just difficult to contact when data is lacking.

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

KYC (Know Your Customer) is half the battle – throughout the different industries, KYC has various impacts in the whole customer journey, not just CnR. 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). Utilities such as water and energy however 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 collections, e.g. incorrect billing – this causes delay in collection, attempting to locate who the consumer is causing delay and reduction in collections.

If you can obtain information from the bureau providing 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 for your business, as each debtor performs differently with each creditor based upon the importance of the product to them. For example, there has been a large shift in recent years where mobile phones have become a necessity in not just customers but everyone’s daily lives, and we now live in a very digital age where nearly all daily tasks can be carried out on a mobile phone. Based on this, it could be said that debtors are more likely to pay their mobile phone debt ahead of say council tax, water or energy due to the perception that they cannot live without their mobile phone.

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 the reasons for contact. Use Marketing and Sales information, Customer/Account Servicing, Retentions, any area where the customer could have contact needs that could be utilised across Collections and Recoveries (CnR) – these can be used to create a holistic customer view.

More often than not CnR do not utilise their own business information to understand how customers interact with them, and the reasons for interaction which then forms a break in knowing your customer and creates a disjoint 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.

If a customer throughout their tenure has predominantly contacted 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. This can be supported as recent Ofcom figures show a decrease in post between 2014 and 2016 by 700 million and a rise in digital interactions, accounting for over 35% of all customer interactions based on the Dimension Data 2015 report.

Contacting the customer in the method that they interact with your business provides the highest probability in right party contact opportunity. For that customer who interacts with your business via digital channels alone, utilise methods such as a notice on the app advising of the overdue balance or the web page when they log into their account, or utilise email strategies which are an extremely cost-effective way of contacting customers when targeted in the right manner.

By enriching your data overall whether it be in-house data, bureau purchased data or from another method, this will not only improve collections overall 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 be built to enable staggering of inbound contact levels throughout the day, again improving operational effectiveness and optimisation within staffing levels.

Arum provides deep experience within debt collections and recoveries throughout all aspects of strategy design and development, including enriching customer data to improve the effectiveness of collections.

If you would like discuss how to make best use of data in collections, contact us today.

Owen Atkinson, Senior Consultant

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