Credit Services Association (CSA), the UK trade body for the collections and debt purchase sector, has published a new report on ‘Embracing technology: the growth of digital communications in the collections sector’. The report finds that, while firms expect to either explore or adopt new communications technologies in the coming years to give customers a broader range of options to engage and discuss their debt, there are still several barriers to acceleration of digital comms.
Aside from cost and regulatory issues, the challenge of ‘customer wariness’ is one that should not be underestimated. Back in 2013, we carried out an in-depth piece of research on behalf of the CSA into online consumer and stakeholder perceptions of the debt collection industry. We found that, while good practice was improving in the build up to FCA authorisation, the reputation of firms in the sector was holding back progress. There was a ‘vicious circle’ whereby customers were resistant to the main role of collections – making contact/opening dialogue to resolve the situation – due to fear and scepticism about the credibility of firms in the industry.
Fast forward to 2019 when we did a smaller scale repeat of the research, there had been a significant improvement in how firms were perceived by consumers and stakeholders online, with the sentiment on online forums and Google search results shifting from mostly negative to largely indifferent or positive. This was down to industry developments in response to tougher regulation, plus implementation of our report recommendations around customer-centric brand communications. Recognising the long-term business case for ethical practice made all the difference. It would be a marathon, not a sprint, but one worth investing in.
Although the CSA’s new report does state that “customer wariness is a notable challenge” when it comes to acceleration of digital communication in collections, this isn’t pulled out in the headlines and the suggestion is that this is down to the diverse customer base with different capabilities (presumably meaning those that are ‘digitally excluded’); the design, ease of use, and reliability of digital comms solutions; and meeting customer requirements. What it doesn’t highlight is a key factor in customer wariness – trust.
This blog isn’t meant as a criticism of the report (which covers some important topics in greater detail); more of a ‘deeper dive’ into one aspect of it which we believe gives collections firms – and their customers – a long-term solution to reaping the benefits of digital engagement.
Collections IS communications
As communications specialists, what struck us most when we first starting working in the debt collection sector was that the primary role of collections is not to deliver a financial service to clients but to engage with customers. Collections is primarily communication. And what was holding the industry back in 2013 (to the detriment of both firms and customers) was the communication strategy and methodology. Back then, the focus was to communicate ‘at’ customers by doing everything possible to make contact. There was little recognition that dialogue is two-way and, with the emergence of the digital world, customers were doing their own research, making their own enquiries, and coming to their own conclusions about the trustworthiness of these firms online.
Meanwhile, firms’ brands and websites were completely focused on talking to the client, not the customer, which just served to create further scepticism amongst consumers and stakeholders. Once firms started implementing our recommendations to build a customer-centric communications strategy both online and off, it was transformative.
It’s all digital
Many customers were doing their online research and making decisions based on online content back in 2013, and we as a start-up marketing business were banging the drum for why ‘digital comms’ was now just ‘comms’. It’s now 2022 (aka the ‘post Covid-19’ era) and, while there are some that are still digitally excluded, there are very few areas of life that are not influenced by and intertwined with the digital world. All communication is digital in some sense. People not only want a choice of communication channel; they want the same experience regardless of the channel.
When social media came about, many PR and marketing agencies tried to ‘go digital’ but it wasn’t about the tech; it was about applying best practice comms principles to a new platform. The same goes for digital collections. It’s still about how you communicate and engage, and the perception of your brand will have a huge impact on whether customers are willing to enter into dialogue with you in the first place. Furthermore, use of digital channels poses risks, especially when it comes to personal financial information, making trust more paramount than ever.
A holistic brand communication strategy for collections firms in the digital age
To the collections firms on a ‘digital journey’ who are thinking about investing in new technology and building apps; we urge you to get your brand communications strategy right first. The investment will be wasted if you are not seen as a trusted brand. And that means ‘being’ who you say you are. Walking the walk and talking the talk before then consistently rolling out multi-channel digital communications solutions.
A key part of building trust in the digital age is being seen as digitally-savvy. Klarna may eventually fall foul of regulation of ‘buy now pay later’ but in the meantime, it continues to build a large and loyal customer base as a brand that is seen as knowing what it’s doing in the digital world. Many collections firms still look archaic. A shiny new app accessed via a tired-looking website with 1980s branding isn’t consistent and rings alarm bells. The customer journey is multi-faceted and even those who are prepared to use digital tools may still want/have to speak over the phone or need to receive a letter at some point in the process. If these communication methods are outdated and the experience is disjointed, it will erode trust.
If you don’t have a clear, authentic, and consistent brand narrative, tone of voice, and customer experience, digital communication channels will fall flat. This starts with listening to and understanding what your customers want. It’s not new, it’s basic comms principles applied to the digital age.
It’s time to stop being scared of social media
There are some new players in the market like the Digital DRA who are doing most of the above and doing it very well. They are the ‘challenger banks’ of the collections world and the more well-established firms could learn a lot from them. However, even they aren’t fully embracing social media.
As the CSA report states: “Use of social media as a communications channel remains problematic, particularly for the collections sector” and it certainly is fraught with regulatory, privacy, and other issues when it comes to engaging directly with customers. However, it is naïve to think that not having a Twitter account (even Digital DRA who are very active on LinkedIn aren’t on Twitter) means that your brand reputation is immune to the Twittersphere. People will still complain about you there if they have a bugbear, you just won’t hear/see it. Likewise on Facebook and elsewhere: If your customers are there, you need to be, at least in some guise.
The benefits of having a presence that signposts to the appropriate channels and demonstrates a willingness to listen and respond will outweigh the risks in the long-term. For most of our B2B clients, there is little case for use of Facebook and other more personal channels, but it depends on who you are trying to engage with. All of this needs to be approached with caution when dealing with such a sensitive subject matter but it should all be up for discussion and ongoing review as part of your brand communications strategy. The digital world is ever evolving and it is easy to get left behind.
I hope this provides some food for thought for firms struggling to fully embrace digital communication. Customer wariness comes with the territory when it comes to collections but this will only change with a long-term concerted effort on the part of the industry to be open to engagement and development.
Interested in finding out more about what we have to offer? We’d love to engage with you.