Digital collection is quickly becoming the most cost-effective and reliable method of debt recovery in a post-pandemic world. Even in the middle of the pandemic, the numbers were there.
A McKinney study published in early 2020 showed that the industry averaged just a 20% collection rate on delinquent debt, yet debt recoveries improved by up to 65% when lenders and debt collectors switched to a digital collections strategy.
So, what is the importance of digital collection in debt recovery? Our experts at TEC Services Group explain below why we recommend digital collections and why it works.
First off, what is digital collection?
Digital collection in debt recovery can be explained as a technique in which the lender or debt collector utilizes artificial intelligence and machine learning to create effective strategies for contacting consumers through digital channels such as email and text messaging.
What is the importance of digital collections in debt recovery?
We believe that digital collection is an extremely powerful method of establishing customer contact and reduces customer delinquency, which results in an increased overall positive cash flow for a business.
These methodologies of omnichannel contact enable leaders and debt collectors to gather a multitude of details about consumers and automatically segment them using advanced algorithms. This creates custom contact strategies that are based on the consumer’s profile, from the amount they owe, their frequency of response, and their preferred method of contact.
This can further be used to forecast future repayments and the chances of delinquent debt, not only limiting the lender’s risk but also better preparing them for the future.
Effective use of digital collection techniques allows the lender to optimize communication across all digital mediums by shifting their contact from standard scripts to customized, consumer-centric messages. The data-driven approach takes detailed insights gathered on the consumer and uses this to employ more empathy-based messaging rather than traditional aggressive collection notices.
With tailored messages being delivered through the right channels at the right time to the right customers, the cost of implementing digital collections in debt collection will result in a more efficient and effective recovery strategy, as well as happier customers who will be more apt to repay what is owed.
If it’s time to make the change to a digital collection strategy, we’re here to help. With our proven results and impressive success rates for our clients, we guarantee to raise performance and profitability to the next level. Let’s do this: 941.375.0300