Consumer debt levels place pressure on contact centres

Ballooning consumer debt means that many South Africans are being forced to make a choice between covering basic living expenses and paying off debt.

November 9, 2012

Ballooning consumer debt means that many South Africans are being forced to make a choice between covering basic living expenses and paying off debt.

A growing debt bubble can easily burst when unforeseen circumstances impact negatively on a family’s income levels and savings. Rising fuel prices and unexpected medical bills or unemployment can create a debt collection scenario, comments Pommie Lutchman, CEO at specialist contact centre solutions- and services provider, Ocular Technologies.

“It is ironic that many of the most affluent developed countries are on the list of those facing the highest consumer debt. A recent ACNielsen survey of consumers in 38 markets revealed that 28 percent of USA respondents indicated that once they have covered their essential living expenses they have no cash to spare.”

Consumers, by choice or from necessity, are buying on credit and the rise in consumer debt is creating increased demand on the debt collections process. Lutchman says an environment is being created where creditors are initiating the collections process by contacting indebted customers.

“This scenario is leading to pressure on contact centres and their managers to maximise contact centre efficiency and effectiveness, a challenge that requires continual analysis of contact centre performance and agent efficiency. Companies can no longer afford to focus only on the money they are owed, they have to also look at individual debtors.”

Lutchman adds that consumer behaviour is invariably hard to predict and those who are behind in payments can be even more difficult to forecast because of multiple past-due creditors and competing consumer priorities.

“Hence companies looking to optimise their collections process use credit bureau scored, risk scoring models and any other attributes gathered or captured from past customer interactions to help ascertain the risk level of any given account. It all boils down to a single question: “what is the likelihood of repayment?”

True risk assessment has to take into account environmental variables that may prompt a person to stop paying, so there is a complex need to understand the debtor. Creditors need to consider factors such as when payment can be expected, is the person a chronic debtor and what risks are attached to writing off the debt.

“Knowing that a person is consistently 90 days behind payment can be key business intelligence providing insight into what is likely to happen next, helping creditors to better assess and manage the overall risk with past due date accounts.”

An efficient collections process is always an important goal. Lutchman says talk times, after call work, penetration rates and Rands collected per hour are necessary measurements to gauge business process efficiency.

“Judging the effectiveness of the collections process is more difficult and business process managers need to fully understand their contact centre metrics within the context of overall business and financial goals. Parameters include the percentage of promises to pay that are kept, roll rates and cure rates.

“Some measures are even harder to quantify. Is effectiveness enhanced when collectors are directly connected to customers, or can collectors overcome objections and sell debtors on paying a specific debt before paying other creditors? Is it better to call during work hours or after hours and what are the rates at which the correct person is actually contacted?”

Strategic management ensures an efficient and effective collections process, providing the greatest chance of engaging past due date customers and improving rates of contacting the right individual. Customer profile data can provide leverage with the right tools and technologies by establishing the best times to call, which enhances success in contacting the right person while also boosting agent productivity.

Real-time analysis of available information helps to achieve effective strategic collections management. Lutchman points out that true data analysis involves more than building new contact centre reports. Key performance indicators such as right-party contact rates and kept promise to pay percentages by agents as well as lists, campaigns and portfolios all play a role in providing true effectiveness measures to track collections success.

“Performance scorecards containing efficiency and effectiveness metrics allow evaluation of agents, teams and overall contact centre performance impact meaningfully on the effectiveness of the collection process. A performance data warehouse that automatically populates performance scorecards is needed to measure the KPIs that drive successful collections initiatives and optimise collections efforts and best practices.”

Lutchman believes analysis and understanding performance trends over time boosts business health by allowing strategies to be adjusted in real time for the fine-tuning of operations as required.

“Optimised operations automatically gather data from multiple sources and create an ongoing performance data warehouse with trend analysis capabilities. Although collections contact centres predominantly make outbound calls, they also generate inbound traffic. Handling both outbound and inbound calls requires critical decision-making to effectively balance call volumes and achieve excellent service and optimised agent productivity.”