Addressing Consumer Preferences through Omnichannel Debt Collection

“One thing I love about customers,” Jeff Bezos wrote in his 2018 annual letter to shareholders, “is that they are divinely discontent.”

“Their expectations are never static – they go up,” he continued,  “It’s human nature…People have a voracious appetite for a better way, and yesterday’s ‘wow’ quickly becomes today’s ‘ordinary.’” Bezos concluded: “I see that cycle of improvement happening at a faster rate than ever before…You cannot rest on your laurels in this world. Customers won’t have it.”

As consumer preferences have shifted and evolved, some industries have kept up. Others have rested on their laurels. Those industries fuel the  “divine discontentment” that Bezos wrote about. Unsurprisingly, debt collection – an antiquated part of consumer finance – is one of those industries.

The current collections system undermines consumers’ ability to resolve their financial challenges on their own terms in a compassionate, transparent, and effective manner. At January, we’ve heard countless stories about undelivered medical bills, surprise delinquency notices on credit reports, and unreachable contact centers. We believe that outdated technology systems that fail to gather, share, and maintain data introduce risk and inefficiency for lenders while provoking poor experiences for borrowers.

These systems – designed in large part around the needs and regulations of yesterday – are at the root of these challenges. There are steps all creditors can take to make their collections more effective and rebuild trust.

The Regulatory Environment

Overdue changes to decades-old laws are finally shifting us to a world better able to accommodate these preferences. Take, for example, Regulation F (known as “Reg F”), a reform to the Fair Debt Collections Practice Act. Reg F governs the cadence of contact allowed with consumers, information sharing requirements, and channel usage, ultimately giving consumers control over when and how collectors may contact them. Such regulatory changes – however positive – are forcing financial institutions to rethink how they engage with consumers to improve both borrower satisfaction as well as their bottom lines.

Omnichannel Debt Collection: An Overview

That’s where omnichannel solutions come in. Omnichannel solutions empower consumers with the ability to choose where, when, and how to engage with financial institutions, other creditors, and collection agencies. Unfortunately, seamless consumer experiences delivered through omnichannel solutions are still the exception, not the norm.

At January, we envision a world where borrowers aren’t forced to speak with an agent in a contact center about how to regain financial stability. A borrower’s reasons for their current financial challenges are often deeply intimate. Forcing borrowers to describe these matters in gory detail with strangers on the other end of a phone call can lead to dehumanizing, traumatizing experiences. So, wondering how to improve debt collection? We believe that to improve the humanity of the experience in collections, more companies need to invest in omnichannel approaches that remove human contact center representatives as necessary parts of the debt recovery and resolution equation.

At January, we’ve seen that an omnichannel approach to the debt collection process relying more heavily on digital communication (i.e. email and SMS), works and works well. It’s led to industry-leading borrower satisfaction, compliance, margins, and overall effectiveness. It also reclaims a bit of humanity in the collection process. Research from McKinsey confirms that our experience fits within a larger trend: a banks’ use of digital communication channels increases payment rates of borrowers in late delinquency by 30%.

Our Approach to Omnichannel Debt Collection

Digital Communications

We’ve focused on delivering actionable content through digital communications with the effect of improving borrower engagement. As spam calls deluge all of our phones these days, tailored digital communications ensure that consumers receive and review important communications, rather than inadvertently block them with any host of spam blocking applications.

Holistic Consumer Engagement

We’ve adopted a holistic and tailored approach to consumer engagement with the effect of improving our compliance and operational efficiency. A holistic approach to engaging with consumers enables us to add, update, monitor, and enforce all communications to ensure that they comply with federal, state, and local regulations as well as the needs of our partners. So many compliance violations arise from accidental missteps by contact center representatives, since these individuals may forget specific jurisdictional-level laws in ways computers don’t). Reducing human-led communications allows agencies to minimize the time spent on transactional interactions (e.g. confirmation of payments) where they are vulnerable to making administrative mistakes or worse. It liberates representatives to focus more on tailored, empathetic messaging capable of helping borrowers out of financial distress.

Comprehensive Reporting Methods

We’ve leveraged comprehensive and detailed reporting methods to make better strategic and tactical decisions. We collect, clean, and analyze data from all of our interactions with consumers, such as email and text campaigns, to better understand what resonates most with particular borrower cohorts in ways that are compliant with the Equal Credit Opportunity Act. In tandem, we collect information on what sorts of tasks occupy our agents’ time and effort. Collectively, the analysis of this data enables us to make better decisions around our labor needs, outreach strategies by cohorts, unit costs (e.g. letter spend), and so much more.

Omnichannel's Results for Us

Overall, these practices have enabled us to scale faster by reducing our labor needs and unnecessary expenses associated with them. At the same time, they’ve contributed to our bottom line by allowing us to redeploy labor on work that is truly value-additive.

Our success so far validates this approach. Consumers frequently write positive feedback about us in an industry long-plagued with discontent. One wrote that they “wished every debt collector was as great as January.” Another said that: “January may be a debt resolution company, but more importantly, January is the most helpful and considerate friend that gets you out of debt,” continuing to write that “instead of ignoring creditors/collections agencies, like I usually do, I actually felt compelled to allow January to really help me, and they really came through.”

“January is there for you any day, any month, all the way through December,” they concluded, “I'm just surprised and grateful that there's a company like January that exists.”

Testimonials from consumers like these inspire us to continue investing in technology to drive forward our mission of helping borrowers regain financial stability. Omnichannel is an example of a technology that has worked wonders to this end, optimizing operations at the same time that it reclaims humanity in the collections process.

That said, we believe our company’s commitment to balancing the long-term interests of consumers and creditors through continuous experimentation has been our greatest remedy for alleviating the divine discontent found within the collections industry.