The COVID-19 pandemic reinvented how consumers engage with financial institutions. When bank branches were forced to close their doors and customer service telephone lines became overrun with callers, financial institutions were left with only one option: to rapidly roll out digital services.
Consider the following:
- According to Aurelie L’Hostis, Forrester senior analyst, “The past two years of the pandemic have fast-tracked digital behaviours and redefined how customers engage with their banks.”
- Today, 76% of Spanish banking customers use their mobile banking app at least monthly.
- An estimated 10% of British adults will open an account with a digital-only bank by the end of the year. This will take the total number of British citizens with digital-only bank accounts to 36%.
Collections teams must keep a close eye on these changes, embracing digitisation and adapting their own ways of working. This will allow them to meet consumers on the right channels and at the right times, thereby increasing the success of their collections.
In other words, collections professionals need to act like marketers.
Marketers monitor their customers closely. They stay up-to-date with changing attitudes, trends, and behaviours, which means they are quick to understand what consumers want and on which channels.
Marketing metrics & tricks collections any team can embrace to track success
The best collections teams are data-driven, keeping a close eye on common collections metrics and KPIs like Average Days Delinquent (ADD), Days Sales Outstanding (DSO), and Collections Effectiveness Index (CEI).
But while these are fantastic ways to measure your collections’ performance, they’re not the only metrics to focus on. Today, most communication happens online via digital channels, meaning collections teams should also leverage marketing metrics—and use marketing strategies—to enhance their performance.
1. Email open rate and click-through rate
The email open rate shows the percentage of customers who opened an email, while the click-through rate shows the percentage who have clicked through on a link to your repayment landing page. By monitoring your open rate and click-through rate (CTR), you can identify whether customers have seen your messages or taken action.
If your open rate is low, you might want to consider trying alternative subject lines. However, if your click-through rate is below what you expect, you should perhaps try different tactics such as using other recovery email templates, tweaking the position of the button, or making the design look more inviting/friendly.
2. Email bounce rate
There are two types of bounce: hard bounce and soft bounce.
Hard bounces refer to permanent delivery failures. This likely means the email address no longer exists—so you either need to find the customer’s new email address or try a different channel.
Soft bounces, on the other hand, are when there’s a temporary delivery issue (such as when security protocols prevent emails from being delivered successfully). While soft bounces aren’t as bad as hard bounces, you still need to pay attention to when they occur and make sure to resend the message.
With snail mails, however, you would never gain this level of transparency or insight.
3. Repayment landing page views
The goal isn’t just for customers to read your dunning messages—it’s for them to take action. In other words, visit your repayment landing page. Therefore, you need to keep an eye on your landing page views.
Imagine you send out an email but when you check your landing page views a few hours later, it’s still on 0. This probably means you attached an incorrect link—so you need to fix this as soon as possible.
4. Repayment page conversion rate
By analysing your repayment page conversion rate, you can identify whether your page is effective at driving repayment action.
If your repayment page conversion rates are low, you might want to rethink your design. For example, tweaking the content or redesigning your page. You might also want to look at your payment succeeded/disrupted rates to find out if there are any errors in the repayment processes—perhaps customers have tried to pay you back but have been unable to do so.
5. Instalment requested rate
The instalment requested rate shows you the percentage of customers that have requested an instalment. Collections teams can monitor this metric to understand how much they will receive going forward.
Plus, there’s another added benefit. By monitoring who requested and executed instalment plans, companies can identify who successfully repaid what they owe. This will help them categorise customers as being high or low-risk in their system moving forward.
6. A/B testing and segmentation
Marketers understand the importance of A/B testing and segmentation—and so should collections teams. When you don’t yet know anything about a customer, you might segment them due to demographic. While this is a good start, it doesn’t necessarily predict how they behave. This is where A/B testing comes in.
By testing different strategies (like messaging templates, communication channels, and delivery timing), collections teams can identify which tactics work best for which of their customers. Once they know this, they can more effectively segment their customers according to their preferences and behaviour and enjoy increased debt recovery rates.
It’s time to ditch Excel spreadsheets
You can’t run a collections department with Excel spreadsheets. Asking agents to enter data manually is a low-value, time-consuming process that’s incredibly error-prone. Excel also lacks advanced data visualisation capabilities and prevents collections leaders from gaining access to real-time data-driven insights.
The solution? Collections teams should instead embrace AI-powered collections management software embedded with data visualisation capabilities.