The true value of customer-centric default management

Bill collecting is as old as business itself. Debtor prisons are gone, thankfully, but sometimes it seems like the basic dynamics of debt collection have not changed much since Victorian times. To the customer, repayment demands are often adversarial and off-putting. For creditors, the process of seeking repayment can be as expensive as it is ineffective. Meanwhile, notable collection mistakes have generated eye-popping civil fines and associated reputational damage.

Debt collection doesn’t have to be this way. Most companies want to grant credit. Most consumers want to repay their debts. An enlightened, customer-centric approach to default management can get companies and their customers back on the same side.

Customer-centric default management combines innovative business processes and technology to achieve better financial results and to improve the customer experience:

• Benefits for customers: Rather than being harried, customers gain the benefits of accurate and up-to-date personal account information, the ability to initiate their own repayment actions on self-serve websites, well-informed repayment recommendations designed to help them better manage their debt, and a smaller number of collections contacts made at the time and on the communications channel of their choice.
• Benefits for companies: Companies enjoy both short-term revenue improvements and long-term profitability. They also achieve greater productivity and customer loyalty while remaining in full compliance with rapidly changing government regulations.

Most importantly, customer-centric default management transforms routine collection contacts into valuable customer interactions, each laden with the opportunity to learn, impress and perform, all while collecting a bigger share of available dollars sooner, reducing write-offs and paving the way for robust cross-selling opportunities.

So how is this dramatic transformation achieved?

A proven approach to developing a powerful customer-centric default management capability is based on four principles:

1. Know the customer – Knowing the customer requires seeing the bigger picture. Customer-centric default management provides a holistic, integrated view of the customer’s risk and exposure across the full business relationship. As a practical matter, this level of understanding cannot be created if a company stores its customer data in multiple separate databases, built to support different lines of business. A fully formed customer view, including purchase and collections history and channel responsiveness, is essential for producing customer-specific collection treatments.
2. Develop customer-specific treatments – Customer-specific treatments are based on an integrated customer view, business intelligence and predictive modeling. Treatments may include a variety of repayment recommendations across a customer’s accounts and can be designed to eliminate the multiple, redundant and disjointed contacts that hinder the collections process and undermine customer loyalty.
3. Provide a consistent customer experience – A consistent customer experience is built around greater customer personalization and preferences, including choice of contact channels. The target customer experience, therefore, is not based on the collector’s own instincts or intuition. Instead, it means gathering voice of the customer data and reflecting customer expectations in each interaction.
4. Measure and learn from the results – Effective default management recognizes that borrower circumstances change. A customer-centric default management approach evolves based on strategy testing, analysis, discovery and feedback. The entire life cycle of the customer relationship is used to inform the learning process and is brought into sharper focus through business intelligence and data modeling.

Incorporating each of these principles requires a customer-centric debt management platform solution with sophisticated technology, data and consulting support for building complete relationship views, impact-oriented treatments and workflows, multiple customer contact channels, and iterative, results-oriented data models, analysis and feedback.

Typically, engagements begin with an operational assessment and gap analysis comparing the client’s current-state operations with customer-centric best practices. A customer-centric roadmap then defines the target state for operations, a plan for realizing the vision and a business case to justify the entire effort.

Turning traditional debt collections into a business-focused, problem-solving, cost-cutting, loyalty- and revenue-enhancing activity creates new opportunities for building customer relationships and gaining a competitive edge. With an industry-leading default management solutions suite, CGI Collections360, and more than 350 successful implementations, CGI has tested and proven the above approach and is working with leading companies to drive customer-centric collections. If you’d like to learn more about the advantages of our solution and approach or gain more insight into how customer-centric collections can benefit your organization, feel free to contact me.