Collections Optimization

We all know customers who become delinquent have different individual circumstances:

1. Can’t Pay (e.g. lost job)
2. Don’t want to pay (e.g. merchant dispute)
3. Forgot to pay
4. Never intended to pay (1st party fraud)

We also know that they respond differently to contact methods & scripts.

However, collections departments incur excessive unnecessary costs to execute contact strategies that are:

1. Not fit for purpose
2. Fail to take into account each customers individual circumstances
3. Waste cost

Some departments are still contacting everybody with every channel they have available wasting resources as most of the contact is unproductive and at worst even damaging.

Collections departments might use predictive analytics to improve results, however, this is often focused on the likelihood to roll to higher delinquency crossed with the amount owed to prioritizing the contact strategy.

Collections operations don’t usually look at the trade-off between cost & benefit to maximize the ROI of each collection contact attempt.

Collection departments can save significant costs, increase the collected amount, quicker whilst improving customer experience by re-framing the contact objective:

Does the benefit deliver more payment than would have been collected in the absence of contact by more than the amount that exceeds the cost of the contact? 

Decision science can allow you to compute the marginal value for each individual and each contact.

Use the marginal value calculations to drive your collections strategy turning it from a cost centre to a profit centre

• Who to contact? – Is it profitable to contact this person?
• When to contact? – Is it profitable to contact this person today?
• How to contact? – Is it profitable to contact this person by this channel?
• Offer Repayment Plan? – Is it profitable to move this person to a repayment plan?
• Sell debt? – Is it profitable to sell this debt?

Optimizing every interaction means each customer gets a personalized collections contact strategy that minimizes cost and maximizes value