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At the heart of any successful company are happy customers. Without the right care and dedication towards providing excellent customer service, you’ll haemorrhage money through increasing customer churn.

It only takes one bad experience for a customer to jump ship to one of your competitors. Multiply this by thousands over the period of a year and suddenly there is a significant problem with cash flow.

Today, companies must think about the bigger picture by listening to customer needs, especially when it comes to debt collection.

For years, companies have treated the debt collection process not as an opportunity, but as a relentless process of retrieving outstanding balances at all costs. This inward-thinking approach has left a dark cloud hanging over the debt collection cycle and hampered the progress of many companies.

A recent development and possible solution challenging this approach is the emergence of customer self-service. While you might be aware of CRM systems and mobile banking apps, how does this method work in the world of debt collection? And more importantly, is it a more effective way of settling balances and keeping customers happy?

What is customer self-service (CSS)?

In layman’s terms, customer self-service (CSS) allows users to find solutions on their own using a platform or a piece of software.

What makes a customer self-service solution practical is that it doesn’t require an employee to assist the user, thus reducing valuable resources required and automating the experience for the customer.

Examples of self-service experiences are infinite. It can be anything from:

  •       Blogs like ours
  •       Knowledge hubs
  •       Online banking
  •       Customer support knowledge bases
  •       Chat features on websites
  •       Free downloadable content
  •       Automated platforms

The evolution of customer behaviours

For years, person-to-person interaction has been an integral part of doing business. While this may still hold some relevance during the acquisition stage, debt collection has started to move in a different direction.

In a fascinating article by McKinsey, it was revealed that more customer calling won’t improve lenders’ contact and recovery rates. Instead, customers prefer to be contacted and to act through digital channels. To be precise, email tops the preferred channel of contact for both low and high-risk respondents, ranging from 34-62%. Closely followed by text messaging, 17-31%.

Despite these findings, companies seem to be lagging behind their own digital inclinations. For instance, while high-risk customers may prefer to be contacted through email and text, companies with outdated debt collection strategies are only doing this for low-risk customers.

In terms of customer experience, this is creating a void between the early stages of the debt collection cycle and the later stages. Customers can go from receiving polite email reminders to receiving multiple phone calls and threatening letters within a few days. While calling more frequently and sending several letters may eventually work, it leaves the client-customer relationship in tatters.

This attempt to find a balance between reducing days sales outstanding (DSO) and providing a first-class customer experience has plagued dunning processes for years.

Today’s customers are used to gaining information and purchasing things with a click or swipe of a button. It’s deemed as an inconvenience to customers when they’re required to visit in-store or call a customer service line which often has long queues.

Customers want to feel empowered to manage their own time and not have to waste part of their working day repaying debts.

The need to exert control or agency in life is a recognised psychological need. Now, overdue customers will refuse to speak to collectors by making use of caller ID or only make a payment as soon as they have the money, in an attempt to feel in control.

Ignoring a customer’s need for agency can trigger “reactance”, whereby they refuse to pay to assert control. This causes an unnecessary delay in settling accounts. Decisions are subject to biases and require you to understand this dynamic to create interventions and positive touch points to change this customer urge to react.

Customers are too accustomed to countless calls and know how the system works. Using a self-service solution gives them control, while offering nudges, such as repayment plans or incentives, makes the situation feel manageable. Developing this positive experience will allow your customers to feel like they can open up to you and be up-front about any issues before they spiral out of control.

Customers also require speedy solutions. They want their debt collection questions answered and their problems solved in real-time. In fact, Comm100 revealed that 71% of consumers aged 16-24 years old regard fast response times as an essential ingredient in improving the customer experience.

Part of addressing your customer experience in debt collection is understanding that your customers don’t want to prolong the repayment process. Modern civilisation operates at a breakneck speed and demands accessibility using digital technology. Assuming a customer would pick up the phone during working hours to discuss their financial obligations in front of their colleagues and employer is neither logical, nor practical. Also expecting a customer to sit in lengthy call queues after receiving a letter is frustrating and severely detrimental to the client-customer relationship.

Using self-service solutions in debt collection has the potential to address this conundrum. Whether a customer has a low balance outstanding or high, they still want to feel valued and have the ability to make their own decisions.

Self-service is setting the bar for collection

In this day and age, integrating self-service into a debt collection strategy should be regarded as the new standard.

According to Steven Van Belleghem, a thought-leader on customer relationships and the future of marketing, 70% of customers expect a company’s website to include a self-service application, while 40% now prefer self-service over human contact.

When a customer is experiencing financial hardship or facing a challenging situation in their personal life, the last thing they want to do is pick up the phone and discuss it with a debt collection agent or team member.

They want to find the answers online themselves via a knowledge base, arrange a payment plan in seconds, or make a quick payment at any time of the day. It’s the kind of thing that enhances the customer experience and breaks down the negative perception of debt collection.

If you’re able to automate the customer journey in any shape or form, you can build stronger relationships and secure future business.

You must remember to treat your customers the same, whether they’re in the acquisition stage of the customer journey or amid the collection cycle. Switching your company strategy, as a whole, from a funnel to a multichannel flywheel approach can create a seamless journey which goes beyond just the outcome.

The key to growth is to develop a system which enhances lifetime value (LTV) of every customer, instead of focusing all your efforts on acquisition.

When you place the customer experience at the core of your strategy and align marketing, sales and collection around it, the momentum of your happy customers will keep your company’s flywheel spinning towards success.

A self-service debt collection solution is a vital part of achieving this customer-centric approach. Settling outstanding bills is a part of life and should be treated as such. It should not be a dreadful thing where customers feel scrutinised. A self-service collection platform allows customers to control their finances at a time which suits them and when they’re in a position to do so.

This is the precedence of 21st century customers. It’s just a matter of whether you’re going to align your current debt collection strategy to meet these new standards.

Learn more about our self-service collection platform

If you’re ready to make the change and utilise the possibilities of self-service in debt collection, we’re here to help.

As a self-service payment solution provider, we can show you how to automate collection processes to enhance the customer experience, maintain relationships and safeguard future business.

To find out more, schedule a demo with us today.

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