It’s 2024, and things need a bit of shifting in the industry. Don’t get us wrong, top financial institutions have built highly optimized and efficient processes and teams, no one can beat them, keeping in mind the constraints within which they work. Call and Collect, the go-to strategy for lenders the world over is highly constraining, and we’re here to explore the why and what’s next!
Have you ever noticed the Rates of Right Party Contacts (RPC) taking a dip? It’s not just you. This trend is making waves, and consumer complaints are on the rise to spice things up! What’s causing this shake-up? Let’s break it down.
Outbound calling, our old trusty method, is facing challenges head-on. But fear not! We’re not here to dwell on the problem. Instead, let’s navigate the evolving consumer behavior maze and discover some fresh approaches.
The Changing Dynamics of Consumer Communication
In recent years, consumers have witnessed a proliferation of communication channels, from text messages and emails to social media and instant messaging apps. This diversification has led to a decline in the significance of traditional phone calls, especially unsolicited ones. The younger demographic, in particular, tends to prefer digital communication, making outbound calling a less favorable method for engaging with consumers.
Declining Right Party Contacts (RPC)
Right-party contact, a metric crucial to the success of debt collection efforts, refers to successfully reaching the intended debtor or decision-maker. Unfortunately, the RPC rates have seen a steady decline.
This decline can be attributed to a multitude of factors, with consumers becoming increasingly adept at avoiding or screening calls through caller ID, call-blocking apps, and other tools.
As per the report, there were 4.9 billion robocalls and 2.25 billion scam robocalls in the given period. As consumers become more adept at identifying and avoiding unwanted calls, the traditional outbound calling strategy loses efficiency. Add to that, the prevalence among new customers, to regularly update their numbers, either to avoid your calls or simply to get a better offer.
Regulatory Restrictions and Compliance Concerns
Regulatory scrutiny and consumer protection laws have tightened significantly, further contributing to the decline in outbound calling effectiveness. Telecom regulations and laws the world over , mandate obtaining explicit consumer consent for marketing messages and calls, thereby restricting avenues to connect with your customer.
Laws often also govern the frequency and timing of debt collection calls to protect consumers from harassment and intrusion.
As per a report, In February 2023, the Government of India banned 94 lending apps flagged by the central bank- RBI for reasons, around borrower harassment.
Such laws and regulations have forced financial institutions and debt collection agencies to reevaluate their strategies and explore alternative, compliance-friendly methods for reaching debtors.
Increasing Consumer Complaints
One of the most significant red flags for outbound calling for debt collection is the increasing number of consumer complaints. The aggressive nature of outbound calls often leads to heightened frustration and resentment among debtors. This not only tarnishes the reputation of the financial institution but also raises legal and regulatory concerns.
Reasons why consumer complaints are rising-
➔Aggressive Collection Practices
➔Lack of Empathy and Understanding
➔Lack of Communication Transparency
➔Failure to Validate Debts
➔Privacy Violations
➔Regulatory Non-Compliance
As per research reports, the largest consumer issue in debt collection was the attempt to collect debts that were not owed, comprising about one-third of all complaints in the collection.
A significant number of them express being wrongly targeted due to sharing the same name as the alleged debtor, despite not being the correct individual.
Furthermore, these consumers often find that their efforts to rectify these cases of mistaken identity are either dismissed or disregarded by collectors.
Shift Towards Digital Communication
Declining RPC rates, shifting consumer preferences, and increased consumer complaints, call for fresh thinking, and embracing a digital-first approach can effectively address some of these key challenges.
At Datacultr, we have seen our clients benefit, once they have gone digital, clearly, digital drives efficiency and Datacultr drives digital.
By integrating Datacultr’s digital communication methods, clients not only expand their reach but also reduce the likelihood of consumer complaints linked to intrusive outbound calling practices.
How Does Datacultr Help?
Datacultr boasts a range of features designed to effectively address these challenges through digital communication. Some features are as follows-
Rich Engagement Templates
The Datacultr platform provides a range of engagement templates that enable Right Party Contact, 100% times. Financiers can use these templates to build their entire staircase, right from sending timely reminders to key milestones that customers may be approaching.
Digi-Calls
Digi-calls are nothing but Digital Calls that ALWAYS reach your customer by directly contacting the device, removing the need to call a phone number, that are often outdated and causing huge wastages, but at the same time creating an impression among collection teams that they have completed a critical task.
These calls eliminate the necessity for agents and infrastructure, reduce wastage, streamline the process and reduce costs. This innovative solution enhances customer engagement and communication while offering an economical communication strategy. This increases right-party contacts by 5X while reducing your overall costs.
Pre-Due Digital Messages
Pre-due digital messages are rich and personalized reminders, that may be sent right before due dates reminding them to maintain enough balance in their accounts or offering a single click payment options. The purpose of pre-due digital messages is to help individuals stay organized, prioritize their payments, and ensure that they meet their deadlines effectively. Datacultr clients have seen an increase of 5 percentage points in on-time payments when they start using this module.
So, Kickstart your recovery efforts now by adopting an automated digital approach to consumer communication. Begin your journey with Datacultr, which provides a range of communication options tailored to reach your customers effectively.
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