In November 2022, United States credit card debt hit an all-time high of $930 billion, and over-spending has become concerning for lenders.
With the holiday retail season wrapped up, creditors must deploy a focused yet empathetic collections strategy when engaging with consumers in debt. Read below for some of our best recommendations on how to recover consumer debt after the holiday season.
Self-service offers consumers control over their own debt, making it much more likely they will engage with the repayment process. This offers consumers a time and repayment method or installment plan that suits them best, also avoiding what consumers may consider embarrassing conversations with creditors and debt collection agents.
Leveraging machine learning/AI.
By utilizing software with machine learning and AI capabilities in your collections process, you can stay on top of your consumers’ behavior and contact them in the most effective ways possible.
ML/AI can personally tailor messages and tweak its tone based on a person’s age or demographic, while some of the best AI tools can craft messages that mimic a consumer’s chat style based on chat history.
AI can also be used to analyze data from different sources and uncover specific insights about a consumer’s credit history, making it easier to spot at-risk accounts and flag potential non-paying or late consumers.
This reveals areas where you can productively improve recovery operations and find better solutions, as well as increased right-party contact. Machine learning and AI capabilities remove any “hit or miss” collections approach. Instead, it will be effective, tailored, and right—the first time.
Collections agencies must ensure that every message sent appeals to every past-due consumer individually. This personalization is impossible with common one-size-fits-all approaches. Segmenting consumers into a variety of factors, including demographics, contact preferences, behaviors, and repayment amounts is a great way to start. Once you understand your consumers in a more segmented way, it will be easier to create a working collections strategy and appropriately tailor the messaging, increasing repayment success rates.
It’s important to get a kickstart on your collections approach as the wave of holiday debt arrives. Here at TEC Services Group, we have a team of experts ready to figure out what strategy best fits your business. Ready to start? Give us a call: 941.375.0300