Digital Operations Impact on Debt Collection, from Team Structure to ROI

Justin Franklin, Vice President of Global Strategy and Execution at Cedar Financial recently sat down for an interview with PDCflow’s Dawn Updike. They discussed how digital operations impact team structures and revenue, measuring ROI and more.

Like other Accounts Receivable professionals, Franklin found his career by accident when he accepted a collection job after college in 2005. He has a wide range of experience, including consumer, commercial, international and legal collections.

His experience in his nearly ten years at Cedar Financial includes:

Managing multiple collection teams
Helping to develop core trainings
Leading engagement strategies and digital collection efforts

In his current role he focuses mostly on the business processes and communication tools that support leading to a right party engagement.

“I love it and I am definitely enjoying the data science behind it and the growth that we’re seeing – and the change and adaptation that we’re seeing in an industry that had very little of it for a long time.”

Justin Franklin, Cedar Financial

Digital Operations Team Structure

How many people are on a typical digital operations debt collection team? The answer will be different based on the size, scope and goals of a collection agency. But there are some best practices for who should be involved in decision making and project management across every organization.

Leadership Buy-In

Franklin views the digital operations team at Cedar Financial as “a lot of the company.” He says that without the support and leadership of top positions like the CEO or President, it’s difficult to move forward creating, implementing and monitoring digital strategies.

Interdepartmental Collaboration

Ideally, the digital collection strategies you use should be a shared responsibility. At Cedar, many different departments work together to keep things running.

In-house IT helps with software creation, data storage, etc.

Digital collectors on the front line manage chat conversations, email or SMS – anything not over the phone.

The client management team educates clients on the consent language needed in their terms and conditions/written agreements clients use with consumers.

The Direct Team

Of course, there is also a direct team of people who create, implement and monitor digital collections campaigns. In the direct team, Cedar has specialist positions, where employees work with different channels like:

dialer
SMS
email deliverability
social media engagement

Getting Collectors Involved in Digital Efforts

Introducing digital technologies and strategies that make it easier for people to self-serve can be threatening to front-line debt collectors. Team members shouldn’t feel like they are competing with software for their jobs.

Communicate how your digital operations framework will work to make collecting easier (boosting inbound traffic, decreasing the number of outbound calls needed to collect, streamlining the digital customer journey) and use this opportunity to create specialist positions and cross-train staff.

Collectors can also play an important role in creating or fine tuning your digital operations. They speak to consumers every day. They know what questions are frequently asked and what problems keep coming up. Use this expertise to improve your processes.

Remember, your digital strategies should be making it easier for staff to do their jobs. Continually monitor process changes and get feedback from employees for the best results.

Impact of Digital Collections on Revenue

Digital collection experts in accounts receivable have been outspoken – especially since the release of Regulation F – that digital channels increase receivables. What is the actual impact of using digital communications to engage with consumers? “It’s very positive,” says Franklin.

Increases Engagement

In the interview, Franklin stated that approximately 76 percent of people don’t answer the phone for a number they don’t recognize. This statistic goes even higher with younger demographics.

Digital operations increase engagement among consumers who would have been hard to reach through traditional methods.

“Our letters come in a plain envelope. We can't put anything on the outside. So it looks like junk mail. Our calls look like any telemarketer. There's a lot of scams going around, so they're not answering. So digital definitely increases engagement. They're seeing our emails, they're definitely seeing our SMS. That's probably the highest connection rate, over 90% delivery, and of course, open rate.”

Justin Franklin, Cedar Financial

Offers Better Consumer Insights

Just a few years ago, many collection industry professionals thought if a consumer wasn’t answering their phone, they were trying to run away from paying a bill. Now that agencies can reach these people easier, agencies are discovering that’s not true.

Some consumers don’t like phone calls. Traditional debt validation notices often come in an unmarked envelope which could be easily confused for junk mail.

Higher engagement numbers through email and SMS show that many people want to pay what they owe. They just need to be reached in a way that works for them.

Speeds up the Collection Cycle

Emails, text messages and other digital communications prompt consumers to pay in a more convenient (and less intrusive) way. Creating an easier way to interact means customers pay faster and need fewer messages or reminders.

This can speed up your entire collection cycle, which reduces redundant business operations (like multiple phone calls to an unresponsive number) and eliminates the need for staff to help with menial tasks like taking a payment.

“The other side of it, of course, is the lower cost. It's a shorter time window overall to reach that engagement, which means our other expenses leading to engagement that took 30 days, 60 days, 90 days in the past, a second letter, a third letter, 20 more calls, etc.. We're not spending that money because we're reaching them earlier and through a preferred channel that they want.”

Justin Franklin, Cedar Financial

Measuring Return on Investment (ROI)

It’s important to make sure you’re collecting the right information to prove your return on investment (ROI) with digital operations tools. SMS and email are often cheaper than traditional channels (like paper letters) but you should also monitor things like:

How fast did consumers respond or engage with your messages?
How quickly did customers make a payment on your portal?
How easily can a visitor navigate your website?

Final Thoughts

Franklin says to be mindful and be cautious of your execution, but don’t be afraid to test new strategies and reach out to others for advice. The ARM industry is very collaborative, and there are many resources available to help.

If you aren’t ready to send out digital campaigns, start with manual efforts instead. Test tactics with inbound channels and base your strategies on consumer behaviors you’re already seeing. Gather in-house data and formulate your plan based on what trends you’re already noticing.

For companies looking to add digital channels, streamline payment workflows and make work easier for your digital operations teams, talk to a PDCflow Account Executive today. Learn how Flow Technology can help you achieve your goals – request a demo.

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