What can your data tell you that your debtor won’t?
The Changing Nature of South African Collections:
Without belaboring the topical conversations of a technical recession, the indebtedness of the South African consumer or the stark realities of South Africa’s household income statistics, the simple fact remains: A significant (and growing) number of South Africans have borrowed money or bought goods on credit and are failing to repay their debt obligations.
If we know this as fact, the challenge then comes when an overindebted consumer must make a simple decision:
- Who do I choose to pay? and then,
- Why have I chosen to pay them?
Traditional income and expenditure models are increasingly misleading and as a result, if our collections agents are not equipped to ask the right questions, Credit Grantors (You) will probably miss out on an increasingly scarce share of disposable monthly income to go around.
The costs of achieving converted recoveries is also increasing significantly. More calls, more SMS’s, human intervention and general human interventions are squeezing the margins of effort to reward in an already tough and competitive market.
As a market leader in South African pre-legal collections we have been asking ourselves the hard questions for a long time now. We have and continue to apply significant time, effort and resource into the changing landscape of recoveries and how do we best position ourselves and our clients for success? Time and time again we come back to one single truth: The future of intelligent collections lies in intelligent data.
Just think of a few pertinent questions you might want to ask your customers that could help best align your downstream collections in a typical conversation:
- Where are you?
- What are you doing there?
- How often do you go there?
- Have you got any cash with you while you’re there?
In themselves not very exciting questions, but what these simple data points can tell a collections agent may be the difference between a half-hearted promise to pay, and an immediate and convenient payment. For example
I’m on my way to a mall, which happens to have one of your branches
I’m here to transfer money to a relative through Easy Pay
I come here twice a month, once when I get my salary and once when I get my share of our informal vendor sales.
I don’t send my formal salary home; I’m using the cash from my vendor business to send home.
These are all questions your data probably has the answers to, if you know how ask the right questions. What we are finding is that increasingly probing questions are needed to unpack when, what and how much a debtor or customer can really afford or are willing to pay. Without the assistance of additional data to probe and question, this is an increasingly costly and time-consuming endeavor. One that can unfortunately be more hit-and-miss than exact science.
Partnering with our clients to influence more than just traditional collections strategy is a business imperative for SSDA. Marrying our on-the-ground, real time collections expertise with your customer acquisition strategies and rich metadata, is the first step to intelligent collections. It’s no longer just about the right time to call. It’s about the right number to call, the right network to call on and understanding that by calling a debtor when they are at the grocery store transferring money through an EasyPay facility… that’s probably when your most likely to get them to pay you too. SSDA are also investigating a strategy where we pilot female Zulu agents age 20 to 30 to speak to a female Zulu customer of a same age. We believe this is one of many valuable cultural nuances not explored fully in our rainbow nations.
By collaboratively defining data capture fields and modeling customer transactional behavior, together we can significantly increase the accuracy of predicting when a customer is most likely to be receptive to a collection call, the contact number they will be using at the time of the call and when we are likely to convert that call into a payment. This is again something we are seeing more and more; We can have the correct number for a debtor but it’s one of a few numbers and the timing of calls is imperative to talk time and conversion. Alternatively, using our payment portal which allows debtors to log onto in the middle of the night with their Facebook credentials.
For the increasingly high number of consumers with less formal income streams and expenditure behavior, how can we augment primary data with secondary through social media channels, apps, push notifications, etc.? Don’t be misled, this type of intelligent data usage may be available but is still in its infancy in our market. However, the superhighways of data usage tomorrow are tested and refined in the green fields and on the whiteboards of today. We need to start partnering better with our clients to test and learn how new consumers engage with their debt.
Probably one of the single most important topics we need to address is the reality of technology enabled avoidance. This is a significant disrupter to the South African collections industry and one that, as yet, we don’t have a viable mitigating response to. Cellular spam filters, intelligent email filters and sophisticated schemes like phishing through an ecosystem of communication have educated and allowed consumers to effectively avoid pretty much whomever they choose. Again, an area of collections we are all acutely aware of and actively talking about but haven’t yet resolved. *
The scenarios are numerous and without a strong agenda to discuss and strategy to align with, its tempting to decent into drawn-out meetings with pages of flip-charts akin to navel gauzing and gloomy despair.
Fortunately, there is a powerful and resounding response that’s going to get us fast out of the blocks and ahead on the curves… Data! Data, data and more data. An asset that we have close at hand, one we can see and model, but one that too many of us have guarded close to our chests and been reluctant to share. This is now changing!
In our opinion, the days where strategically aligned partnerships aren’t sharing their data to solve complex problems is tantamount to knowingly sailing into the iceberg. With over 15 years in business and a combined 300+ years of collections experience in our management team alone, working together to share the insights of a complex South African debtor is paramount to our success and yours.
In summary, we are in an exciting, trying and relatively uncharted time. Technology is advancing to promote selective communication. Millennials are technology adopters and non-conformist to our traditional outbound engagements. This combined with an economy where of the 25.8Million active members on the Credit Bureaus, 10.6Million have impaired record.
If nothing so far has struck a resounding chord about the need to collaborate more and become intelligent data users, I’ll leave you with this. Every month, the bureaus add in excess of 3Million NEW telephone numbers to their 25Million consumer records. How often do you update yours?
*Avoidance is not unique to collections, a similar trend is impacting outbound sales, a significant revenue stream for financial institutions and one we must collaboratively navigate.