Imagine a lender that invests heavily in digital outreach to contact more delinquent borrowers. Within weeks, carriers throttled their text messages, and their email domain was blacklisted. Why? Outdated consumer data. A strong debt collection data strategy is no longer optional. A good strategy is the difference between connecting with consumers and being silenced by carriers, regulators, and spam filters.
The High Cost of Outdated Consumer Data
Around 30-40% of a creditor’s consumer contact information in their CRM goes stale or inaccurate each year. On average, roughly one in every three contact points (across email, address, and phone) will be inaccurate within a year. As accounts age, become delinquent, charge-off, and are either sold or outsourced to a third-party debt collection agency, data decay becomes an even greater challenge.
Inaccurate data creates unnecessary legal, regulatory, and reputation risks, decreases the effectiveness of omni-channel communications, and ultimately means fewer consumers engage, self-service, or resolve balances on their accounts.
Email Decay: Why Cheap Isn’t Always Cheap
Email may seem inexpensive, but bad email addresses cost more than one might think. Industry research indicates that consumer email addresses degrade ~22.5% per year, resulting in lower email delivery rates, higher bounce rates, and increased risk of email domain/IP reputation damage with internet service providers (ISPs) and email service providers (ESPs). Unused and dormant emails become spam traps, used by ISPs and ESPs to evaluate a sender’s reputation. A company’s ability to send any email at all, including to valid email addresses, can be severely restricted for weeks or months once the sender’s reputation is damaged.
Phone Numbers: The Moving Target
Industry studies (from FCC, CTIA, and carriers) show that 20-25% of U.S. consumer change their phone number each year. The FCC estimates that about 35 million numbers are reassigned annually in the U.S. (roughly 100,000 per day). People switch carriers for promotions, cheaper plans, or better coverage. Even with number portability, many still accept a new number. Life events such as divorce, separation, job loss, or relocation can also trigger new numbers. Some people abandon numbers after too many robocalls, spam texts, or if they are victims of harassment or fraud.
You wouldn’t run email on a dirty list. The same standard must apply to SMS and dialing, because carriers, regulators, and attorneys grade you on precision, not effort.
For contact centers, inaccurate, reassigned, mislabeled (cell vs. landline), and unused telephone numbers create several problems. Calls or texts to wrong-party contacts can trigger TCPA, FDCPA, and CFPB violations or lawsuits. When carriers (AT&T, Verizon, T-Mobile, etc.) detect high rates of wrong-party complaints, opt-outs, or undeliverable numbers, carriers can: throttle delivery (slow down your SMS sends), block messages outright at the network level, or flag messages as spam/junk, which negatively impacts delivery rates. Carriers can also suspend or terminate the use of dedicated short codes or 10DLC (10-digit long codes). When this happens, all messaging from the number stops, and the company loses its registered sender reputation.
Debt Collection Data Strategy: From Collector to Marketer Mindset
Effective data enrichment strategies today are a shift from “set it and forget it” data strategies and a collector mindset, and towards a marketer mindset. Key performance indicators (KPI’s) like call attempts and right party contact rates are expanded to focus on consumer engagement metrics, channel attribution, and ROI and brand/reputation management.
Today, effective data enrichment to reduce risk and optimize omni-channel and self-service engagement requires:
- Multiple data providers: Ensuring the right coverage and more effectively identify and correct bad or inaccurate data
- Engagement metrics: Open/click rates, SMS opt-outs, self-service portal logins, etc.
- A/B testing: Ongoing champion-challenger testing for iterative and continuous improvement
- Attribution: How to measure engagement, dollars collected, and ROI by data vendor/communication channel
- Reputation management: optimizing data and communication strategies to boost sender reputation to maximize communication delivery
The Cost of Inaction
Every month you delay reviewing data, which means fewer payments, higher costs, more risks, and missed opportunities to engage with more consumers for a measurable impact on your business. A complimentary TEC Data Assessment takes under an hour, benchmarks your current state against industry best practices, and validates whether your current data strategies are fully aligned with your company’s priorities and goals, or identifies gaps to fill and opportunities to pursue.
If it’s been more than three (3) months since you last reviewed your data strategy, now is the time. Contact me at will.turner@tecsg.com to schedule a complimentary data assessment.
