This article is part of the iA Think Differently series. Written by members of the iA Innovation Council, the series showcases thought leadership in analytics, communications, payments, and compliance technology for the accounts receivable management industry.
COVID-19 has brought widespread uncertainty and confusion to the collections industry. Some states have imposed, or are considering imposing, moratoria on collections activity due to the pandemic. Federal regulators may follow. Collections organizations can use this time to optimize their consumer data strategy. Once normalcy returns, the investment will improve consumer contactability, right-party-contact rates, and revenue per dial.
Consumer information is the backbone of any outreach effort. Higher accuracy brings better results. Conversely, during a time of stressed resources, inaccuracies in customer information may inflict an outsized impact on operational efficiency and revenue-per-dial.
Most CRMs are out of date
Every year, 60M people change their addresses, 45M change their phone numbers, and 2.1M legally change their name. On average, 5%-15% of typical CRM records go out-of-date in a single month. This impacts all phases of collections: when accounts go delinquent, the duration of delinquency, and in the days prior to delinquency. At each phase, the collector with the most current consumer information has the best chance of reaching the consumer and collecting.
In the weeks after collections activity is allowed to resume, collectors may find themselves in a blind race. If a consumer misses payments on multiple loans, they may start to hear from multiple collectors in short order. These consumers may spread partial payments over multiple loans or strategize as to which loan receives full payment. Either way, the risk of partial or incomplete payment is greater for collectors slow to make contact. Outdated customer information slows that outreach; a period of days and several outreach attempts will pass before it’s clear the information needs updating, during which time another collector may take payment instead.
Consolidations and acquisitions compound the problem. Consumer data held by an acquired company doesn’t readily update when it’s integrated with the acquirer’s databases. A parent company may inherit multiple records for the same consumer. Siloed records could co-exist for years. Most organizations have no formal data governance framework or budget dedicated to data integration. Bringing data together into a single, current view is often difficult and expensive, yet doing nothing invites the risk of non-compliance and operational waste.
Consumer records can contain multiple phone numbers. One number may be associated with the consumer’s employer. One or more may no longer be associated with the consumer at all or may have been ported from a landline to a cell phone, presenting a risk to TCPA compliance. One may be the consumer’s primary number. Without knowing which is which, agents or systems will waste dials and resources, and increase regulatory risk.
The cost of data decay
A commissioned study conducted by Forrester Consulting on behalf of Neustar (Why Consumers Won’t Take Your Outbound Calls, July 2019) found that over 60% of respondents believe “lack of contact data” was “critical” or “important” to addressing challenges in contacting customers over the voice channel. These challenges impact the top and bottom lines: 48% of firms experienced increased operational costs and 43% lost productivity. A tolerable annoyance during a bull market, inaccurate customer information may become an existential threat during a downturn.
Unemployment has skyrocketed. Business in multiple industries has ground to a halt. COVID-19 may spark a recession. These trends may accelerate the rate at which consumer contact information changes, either from moving residences or changing phone information. Collections organizations that assess the quality of customer information currently on file and understand in real-time the accuracy of their CRM sources will be better positioned to anticipate what’s coming.
Refresh and deepen consumer data
Now is the time to implement a strategy that ensures that customer information on file is consolidated, complete, and dynamically updated. If an audit of consumer records reveals related information is spread across silos, connect the records. It’s easier to match identifying information to unique, persistent customer records. This will expedite subsequent updates and repairs to customer databases as changes occur.
Second- or third-party consumer data enhances this effort. Referencing multiple authoritative data sources makes it possible for databases to corroborate and absorb changes as they occur. Because those changes are continuous, automated CRM updates must likewise become a continuous part of the business process.
This isn’t easy to develop or maintain in-house. Data integration topped the list of enterprise challenges in a survey of 1,400 business and IT professionals. In Forrester’s survey, 67% of respondents say that technology vendors are critical or important to solving the challenges discussed earlier.
A trusted data solution may be one of the most effective ways to mitigate the current environment of uncertainty. By proactively cleansing, repairing, and filling in the gaps across customer records, such a solution ensures the most accurate and complete view of each contact at all phases of collections: in the days leading to delinquency, entering delinquency, and until the account becomes current.
Regardless of what disruption COVID-19 brings, collections organizations retain control over how they manage their CRMs. Honing an accurate view of customer information now will enhance customer outreach when normalcy returns.
Todd Meeks is Product Management Director at Neustar, which offers free data analysis for organizations to understand the quality of their current data and provides insights for operational data improvements. To learn more contact: firstname.lastname@example.org.
About the iA Innovation Council
The iA Innovation Council is a collaborative working group of product, tech, strategy, and operations thought leaders at the forefront of analytics, communications, payments, and compliance technology. Group members meet in person several times each year to engage in substantive dialogue and whiteboard sessions with the creative thinkers behind the latest innovations for the industry, the regulators who audit and establish guardrails for new technology, and educators, entrepreneurs and innovators from outside the industry who inspire different thinking.
2020 members include:
Absolute Resolutions Corp.
AllianceOne Receivables Management
Capital Collection Management
Crown Asset Management
Enhanced Recovery Company
Healthcare Revenue Recovery Group
NCB Management Services
Phillips & Cohen
Professional Finance Company
Radius Global Solutions
Spring Oaks Capital
State Collection Service
The CMI Group