The debt collection process can be difficult, stressful and time-consuming for both the debtor and the lender. Due to the ongoing coronavirus crisis, there are more loss-making accounts than ever, and the pressure is on lenders to provide debt collection methods and techniques that are effective and compassionate.
What are the advantages of a sympathetic approach to debt collection? Humanising debt collection and being sensitive to individual customers’ needs has always been key to our customer service improvement strategies at Target.
Take a look below for our insight into effective debt management procedures and the role of customer service.
The Rise in First-Time Debtors
For some customers, circumstances outside their control have led to debts rapidly accruing. Individuals who have never been in debt before may now find themselves needing compassionate debt recovery solutions.
Some of the most common reasons for customers falling into arrears in the current climate are:
- Loss of employment
- Reduced salary
For some, these circumstances will prove temporary, and customer service will play a vital role in making sure the debt collection process goes smoothly. The ability to tailor the collections and arrears process to a person’s individual needs helps build trust, particularly for customers who are in debt for the first time, and taking an individual approach can help boost customer retention.
Understanding Customers’ Needs
We recently explored the four customer types that have emerged due to Covid-19. For lenders to continue to provide good levels of customer support, it’s vital they have a solid understanding of the very different needs of these customer groups. Lenders will also need the ability to create customer experiences and journeys that support those needs.
Using Data to Personalise the Debt Collection Process
Data and insights play an important role in enabling personalised debt collection journeys. For instance, you can use customers’ payment history to identify those who are newly vulnerable, and provide additional support to prevent individuals from falling further into debt.
Adding flexibility to your policies also helps mitigate risk; good customer service can even prevent arrears before they accrue. For example, if customers miss a payment or request a payment holiday, you can use this as an opportunity to engage and offer both short and long-term support.
There are many ways in which good software and servicing give lenders a competitive advantage, as well as keeping customer satisfaction high.
For Smarter Debt Management Procedures, Trust Target
Target’s collections and arrears management services are designed to be both highly flexible and technologically advanced, to cut operational cost and processing times for even the most complex accounts. We service the complete collections and arrears cycle, offering support for the most vulnerable customers.
If you are in need of a smarter solution to debt management, contact us today.