It’s a new decade, but the hurdles for collection agencies remain the same as the last, according to new TransUnion-Aite research for the just-released report “The State of Third-Party Collections 2019: Challenges, Trends and Innovations.”
Topping the challenges is communication, with 58% of survey respondents reporting that it is more difficult to contact consumers today than it was five years ago and about a third believing it is “far more difficult.”
Difficulty contacting consumers relative to five years ago
The reason? Legislation and a general shift in attitude have consumers feeling empowered. That means collectors must adopt a consumer-first approach to debt recovery if they want to succeed.
What else does the research tell us? Download the full report for lots of additional insights, but here are some compelling findings about the communications challenge.
Letter and call campaigns are still the tactics of choice
Despite the high cost of direct mail, and a variety of legislation that puts limits on telephone contact, agencies are relying most on letter and telephone campaigns for debt recovery.
That could soon change, given that the Consumer Financial Protection Bureau (CFPB) is proposing to limit the number of calls made to a consumer but would allow unlimited emails and text messages to consumers who don’t opt out.
Many collections agencies are already looking into other ways to communicate with customers, including text messages, ringless voicemail drops and communicating through social media platforms, and, if the CFPB rules stick, we can expect that number to climb. But until new rules are finalized and adopted, the collections industry must continue to rely on traditional methods of communication to interact with consumers.
Right-party contact has “fallen off a cliff”
Regardless the channel, the biggest hurdle for collectors is connecting with the right consumers. Robocalls and scams are rampant, so consumers are skeptical to confirm information before knowing the reason for a call, making it difficult for collectors to start a dialogue.
Some collectors’ calls may not even reach a consumer’s phone if their mobile carrier blocks them, and calls that do go through are likely to go unanswered. Additionally, too many collectors are wasting time, money and resources on idle or uncollectible accounts.
What’s the solution? More powerful ata is a start. With TransUnion’s right-party contact solutions, you gain quick access to actionable contact data, including phone, address and employment information, to help improve your skip-tracing and find the right people fast. That helps enable you to fine-tune your communications strategies — whether you use the mail, phone or some other channel — so you can manage expenses and recover more debt for your clients.
Success story: Olympia Organization
That’s how the Olympia Organization, an Accounts Receivable Management (ARM) business, was able to lift its overall good address percentage on a letter campaign to 89.9%, a big improvement from previous campaigns when more than half of the letters came back undeliverable.
TransUnion’s data helped Olympia find the right people to contact, opening an opportunity for productive communications that brought about great results for the company.
TransUnion can do the same for you. To learn more, visit www.transunion.com/collections or call us at 800-856-5599.
Source: Aite Group Study commissioned by TransUnion: The State of Third-Party Collections 2019: Challenges, Trends and Innovations