EXUS Collections & Recovery Blog

3 Ways Collectors Can Better Communicate with Customers

Posted by Nikos Lambrou on Mon, Dec 21, 2015 @ 10:00 AM

13067235434_915c0a318f_z.jpgWhen consumer behavior changes, businesses must change with them. The collections and recovery business is no different. New technology has altered how consumers resolve obligations. Banks, telecoms, utility companies and third-party agencies that do not adapt to this trend risk losing market share.

Previously, debtors might have acted in the following ways: 

  • They had one debt obligation and a relationship with a single lender.
  • They relied on companies to provide information and consultation—there was no easy, independent way to find reliable research and opinion on service and product quality.
  • They were only reachable by phone and direct mail. 

Today’s debtor looks a lot different: 

  • They have multiple obligations with multiple lenders.
  • They’re turned off by interruptive communication—they want to talk to a business’ representatives when they’re ready, since they can find the research and opinion they need—without pressure or a sales pitch—online.
  • They may not have a landline or even a physical mailing address, preferring to communicate via mobile, social media, online channels and apps. They have the power to choose which conversations they have over which channels.


What does this mean for collectors? It means we’ve entered the age of the collaborative consumer, in which collections professionals must earn the consumer’s trust and cooperation—not just cold call them—to arrive at a desirable settlement outcome. The way to do that is through better communication with customers. 

When collectors improve their communication habits and methods, they improve collections results, self-cure rates and kept promise ratios. Why? Because when modern communication methods map to modern debtor behavior, responses are more likely, settlements become easier to reach and customer relationships are preserved.

Here’s how to communicate more effectively for better collections results.

1. Apply Progressive Pressure 

Not all stages of the collections process are created equal. And each of these stages requires a different type of communication tone and approach. Before you communicate with debtors, consider which of the four collections and recovery stages they are in, so that your message is framed correctly. The stages are:

  • Soft—The initial stage where you’ll want to communicate in ways that preserve the customer relationship and prevent cases from moving into delinquency.
  • Pre-Litigation—The focus is still on relationship preservation, but with a progressive increase in pressure to reach a settlement.
  • Litigation—Pressure increases as organizational priorities shift from preserving the customer relationship to loss prevention.
  • Recovery—The highest pressure stage where communication is squarely focused on asset recovery.

2. Segment Customer Portfolios

Once you know your phase, it’s critical to segment portfolios. Portfolio segmentation breaks up the loans and obligations on your books into groups with common characteristics. This is a key way to gain greater insight into risk across your portfolio, especially if you use a specialized collections solution to do so.

When you segment portfolios by the right criteria, you’ll be able to tailor your communication to your customers’ unique debt situations. This makes it much easier to communicate the right offer at the right time. 

To start, segment your portfolios by a variety of static and behavioral metrics. Static metrics include product type, customer exposure or account balance. Behavioral metrics might be kept promise ratio or last time since max bucket.

3. Define Centralized Scripts for Communication 

Once you’ve segmented customers, it’s time to communicate with them. Do that by defining centralized scripts for your collectors.

Scripts should be created for multiple channels, including phone, email, social media and mobile. These scripts should take into account a customer’s profile and level of delinquency. Just because these scripts are centrally defined doesn’t mean they should be repetitive. But they should cover the following basic areas of communication:

  • Introduction.
  • Discovery phase.
  • Involvement phase.
  • Incentives.
  • Appropriate replies to arguments.

Implement these three strategies, and you’ll be well on your way to improving collections performance by speaking with customers on their terms. What other strategies do you use to better communicate with customers? Let us know in the comments. 

Get Customers to Communicate With Your Collectors

What if you could get customers to communicate with you on their own terms, and effectively move themselves toward a settlement? It’s not just possible, but probable, when you implement a self-service collections solution. Find out why you need one in this free guide.

Image Credit: torbakhopper via Flickr

Nikos Lambrou

Written by Nikos Lambrou

Topics: Collection and Recovery Operations