When it comes to collections management, key performance indicators (KPIs) and metrics are imperative in measuring recovery on accounts receivables. They enable you to evaluate how well your current collections processes are working and decipher whether an employee is meeting certain performance goals.
While original methods of collections like mailed invoices and calls have proved effective for many years, they’re not easy to track and don’t offer a deeper insight into consumer behaviours – which is integral in reducing your average days sales outstanding (DSO) in the 21st century.
As Deloitte highlights in its white paper on ‘Collections strategies for the digital age’, using the right analytics and doing it well enable you to understand which customers are most likely to be positively influenced by certain collections benchmarks.
This is where modern digital marketing metrics and KPIs come in. Harnessing the power of innovative digital marketing enables you to create a well-rounded customer journey. In contrast, common collections metrics and KPIs, such as Right Party Contacts (RPC) and Profit per Account (PPA) focus on volume, generating results and hounding customers.
Using digital marketing metrics and KPIs in collections management will also provide you with the necessary information to measure success and adjust your approach, tone and messaging to successfully get your foot in the door with overdue account holders.
Below, you’ll find a list of the best digital marketing metrics and KPIs your collections software should be using.
1. Total Email Delivery Rates and Bounce Rates
Before you can think about email open rates and click-through rates, it’s useful to know whether your collections email actually made its way into a customer’s inbox.
Your email delivery rates will show you the percentage of email addresses that received the correspondence out of the total number you sent it to. Whereas the email bounce rates will refer to the percentage that didn’t receive your message because it was returned by a recipient mail server.
There are two categories of email bounces, including a hard bounce and a soft bounce.
- Hard bounce: It is used to show a permanent delivery failure – i.e. the email address no longer exists
- Soft bounce: It shows a temporary delivery issue – i.e. technical server problems or that the email was blocked by some security protocol
2. Email Open Rates
The email open rate is one of the most common metrics to indicate the success of an email campaign. This shows you the percentage of the total number of subscribers / customers who opened an email.
In collections, an email open rate is particularly useful during the early stages of the collections management cycle, where you’re more likely to send out similar automated responses. For instance, this would be a perfect metric to measure the success of a confirmation email which contains the terms of the payment agreement. In this case, the higher the percentage rate, the more transparent you’ll appear to customers.
Some of the best email open rates are achieved when the subject line is personalised, to the point and incentivised. It’s a matter of finding what works well with certain customers and adjusting the tone in relation to each stage of the journey.
3. Email Click-Through Rates (CTR)
The second most important metric of any dunning email is the email click-through rate (CTR). You can achieve fantastic open rates, but if your email fails to prompt clicks, you won’t improve the number of customers resolving their issues. Measuring click-through rates (CTR) is particularly useful when you’re trying to drive customers from email to a landing page where they can communicate and pay.
The key to improving email CTRs is to:
- Use button call to actions: Paying close attention to the psychology of colour.
- Place the CTA on the right: Put it on the left of text and image sections looks and feels inconvenient.
- Include CTAs throughout the email: If your email is long, weave in a CTA into the body text as well as a button at the end. Otherwise, customers may lose interest.
- Make the design look consistent and inviting: The way your email looks needs to be on-brand and friendly. Don’t make the design appear formal and serious or that will put customers off from settling their account.
- Use nudges: As we covered before, using incentives for early payments, the offer of payment plans and waiving fees can encourage customers to take action.
4. Traffic by Sources or Channels
This digital marketing metric is useful for segmenting your traffic sources to pinpoint which ones are over- or underperforming in your collections processes. For example, you may generate positive numbers of visitors to your payment landing page via an SMS link, but very little from letters.
You should break this metric into the following channels and sources:
- Direct visitors: These are the customers who come to your payment page by typing your URL into their browser. This is perfect for measuring the success of a collections letter which contains a unique URL.
- Email: For customers who clicked a link to the payment landing page via an email.
- SMS: For customers who clicked a link to the payment landing page via a text message.
5. Landing Page Views
Landing page views is a metric which can tell you whether your sources, i.e. emails, text messages and letters are driving customers to the conversion end of the collections process.
If this number is low, then you need to look at the other factors that could be hampering the payment journey, such as the CTA, email open rates, email bounce rates and the messaging in the correspondence.
6. Reaction Time
Reaction time is a metric that can be used to show how quickly it takes a customer to view an email and the time it takes them to complete the payment. It’s essential in measuring the timeliness of repayment based on your messaging. If customers are opening the email and taking too long to act accordingly, this implies your call to action, nudge or tone of your content is missing the mark.
Alternatively, if the results from this metric reveal that customers are taking a long time to actually open the email, there could be an issue with the time of day you’re sending the message. Or in other cases, your subject line might not be enticing enough to make the customer feel like they need to take immediate action.
7. Landing Page Conversions
IfThis metric focuses on the business end of the collections process, showing you how many customers have taken action by making a payment.
If this figure is low but you’re generating ample landing page views, it’s worth taking a deeper dive into the functionality of the landing page itself. Is it taking too long to load? Is the design not mobile-friendly for customers who want to pay on the go? Is there too much body text detracting from the user experience (UX) and driving the time on-site metric up?
Using these common digital marketing metrics within your debt collection processes should give you a better understanding of customer behaviours and set more realistic KPIs regarding repayment conversion. Moving forward, you’ll be able to harness this knowledge to gauge roughly how many responses or results you can generate from certain deliveries and tweak it to improve the customer journey.
While standard metrics like DSO, RPC and PPA are still useful for accounting ratios and numbers, collections software that uses digital marketing KPIs to improve the overall collections process will provide more insight, better results and a complete picture of the individuals who have outstanding debt.
At receeve, we can help you drive dialogue between businesses and customers to create an efficient repayment experience. By using artificial intelligence, we’re able to leverage the latest findings in behavioural science and combine this knowledge with cutting-edge automation methods. As a result, you’ll find it easier to achieve consistent high digital marketing KPIs.
To find out more, take a look at our debt collection and management software or explore our thoughts on the state of debt collection.