Breaking the Default Cycle

In the midst of this economic downturn, millions of people are experiencing and coping with payment delinquency for the first time.  These individuals are not accustomed to having to make decisions about which bill they’re going to pay or if they will pay it on time.  As a result, they often don’t know how to talk to the companies they owe money to, or they are simply too embarrassed to discuss the situation.

This leads to the business challenge of managing the massive increase in overdue payments, a challenge that is not just about the short-fall in revenue but also the additional costs associated with encouraging consumers to bring their accounts up to date.
By leveraging consumer engagement communications (EC), companies can help their customers avoid or break out of the default cycle.  It can be as simple as changing the timing of communications and enabling your customers to respond with an immediate, electronic payment. Sending proactive outbound notifications via phone and SMS to customers before they get a bill is another emerging trend for businesses. 

For example, one of our clients, Physicians Care of Virginia, saw a reduction in delinquent accounts from 3,700 to 2,100 – a decrease of 43%. In just six months, the practice collected $1,675,004, which represents a more than $560,000 increase in collections.

Automated voice calls and messaging have made huge advances in recent years with companies now able to automatically broadcast from twenty to millions of voice calls and messages in a matter of hours, all tailored to individuals and their situations.  For example, in the very early days of a customer’s late payment cycle, a soft female voice pleasantly suggesting that a payment has been overlooked has a much better impact than an assertive and direct request for payment by a male voice.  Moreover, calls and messages personalized by name create a sense of engagement.  Making contact is one thing; engagement is another – as it is engagement that helps drive consumers into action to get in touch with their debtors to discuss or to pay outstanding payments.

Companies such as TeleVox, that provide hosted engagement communications (EC) services, work with businesses of all sizes to create and deploy outreach campaigns that are 100% delivered by technology in a highly engaging, personalized and managed way – high technology with a human touch.  Campaigns can range from polite and friendly reminder phone calls and voicemails, sent on a massive scale but still personalized to each customer; to a campaign which automatically escalates in frequency or sense of urgency depending on the response from the customer and which could include a range of message formats from phone calls to voicemail, email, sms and even old snail mail. 

One of our utility clients, Georgia Power, is a prime example of how automated outbound messaging can increase revenues. Since they began automating delinquent payment reminder calls, Georgia Power is on track to save approximately $1.5 million in eliminated disconnects per year. The increase in cash will significantly impact the company’s bottom line and outbound calling campaigns have marked a vast improvement in the collection of delinquent payments. Georgia Power now averages a cure rate of more than 60% within three days of customer contact. Since automating their customer contact, Georgia Power has experienced a 45% increase in “promises to pay” that are kept.

Remember, you’re not alone.  Collections have proven to be one of the most challenging areas for businesses of all sizes.  More than a million businesses last year went into bankruptcy; around 8% of US monthly mortgage payments are presently in arrears; delinquency on utility bills is nearly 20% higher than this time last year; and with credit card default typically tracking to unemployment ,currently at a 25+ year high – the statistics are very sobering indeed.

How is your business intervening with customers early and helping them avoid or get out of a cycle of default?