Did you know that 61% of consumers have been negatively impacted by COVID-19? The greatest increase in bad debt began in March 2020, and as a result, the largest phase of third-party collections is estimated to begin in October of 2020, extending well into 2021.
As things have drastically changed over the last year, the debt collections industry is faced with the challenge of adapting to the 'new normal'. In the face of the pandemic, people desire human connection, reassurance, and convenience. So, how is the collection industry adapting to these needs?
First and foremost, collectors are adapting to heightened human needs.
Showing empathy, validating fears, providing support, and building trust have not always been core objectives for many collection agents, which can have an effect on customer retention. For this reason, consumers often respond to collections communications negatively as they are already on-guard before the framework of the solution can be established. Yet, in the face of the pandemic, people desire connection and reassurance.
In fact, many collectors are taking the advice of Mary Shores, a leader of innovative thought in collections communications, by utilizing empathetic phrases like, "I understand how scary this must be for you." In fact, phrases like these are being shown to drastically increase overall recovery rates.
In addition, technological solutions have also proved to be incredibly helpful during this period of social distancing. In fact, the pandemic emphasized the dire need for omni-channel collections.
Access to self-service debt collection technology such as 24/7 agents, chatbots, and online payment portals is paving the way for the future of debt recovery. Just as these technologies have been changing the communication preferences of customers for years, the will continue to do so post-COVID-19.
Overall, one thing that COVID-19 has taught the collections agency is that agencies continuing to practice traditional methods are going to be left behind as others adapt to the 'new normal'. In fact, agencies that can adapt to the emerging need for technology and the necessity for heightened awareness of human need, recovery rates will rise and play a critical role in the sustainability of the American economy.
Download "100 Years of Collections" to delve into the history of collections dating back to 1919.