Letters are a better form of communication to consumers
Evolving regulations and new technologies are prompting changes in the collections industry. One major shift in industry strategy is the move away from phone calls to letters as the preferred method of contacting consumers. Letters have proven their value at all stages of debt resolutions and for all types of debts. Utilizing letters instead of traditional phone calls offers benefits to both the collection agency and the consumer. Research and experience tell us clearly that consumers prefer, and will respond more positively to, letters over phone calls. In addition, regulations limiting call attempts makes it necessary to put more emphasis on letters as a preferred communications method. For over thirty years Radius Global Solutions has successfully used balanced communication plans incorporating extensive analytics and a comprehensive letter strategy for resolving consumer debt.
There are letters and then there are effective letters
Although virtually every agency uses letters as part of the collection process, the success or failure of this method depends heavily on specialized knowledge and experience. Sending a letter sounds like something anyone can do, but it’s the method and strategy behind letters that produces results. Let’s start with the basics.
Messaging: The message of the letter must be carefully crafted and tailored to the specific consumer based on a robust and proven analytical methodology.
Differentiated: It’s important to use unique envelopes and letter styles to break through the clutter of communications people receive on a daily basis. A piece that stands out is more likely to be opened and to get a response.
Multi-channel response: Letters should offer multiple communication and payment options allowing the consumer to respond in the method they prefer.
Preferred method of contact by consumers
Research demonstrates that mail contact is a preferred method by most consumers. The larger use of e-mail or text messages is also viewed favorably. Phone calls, cell or landline, although heavily used, are much less popular among consumers. Using a preferred method of contact results in significantly fewer consumer complaints and improved customer experience.
The benefits of using letters: Better response…
When a consumer receives a letter, it is a form of communication with a shelf life of days or potentially even weeks or months. Even after the letter is initially read, it may be left on a table and revisited at many points in time. The letter not only provides information regarding the outstanding debt, and options to communicate with the agency, it outlines numerous avenues available for a consumer to resolve their debt. This may include, but is not limited to, a link to a payment web site, a phone number to reach a call center to pay by phone using an IVR (interactive voice response) solution, an address to mail in a payment or a phone number to talk with a collection agent. The letter also provides a way to communicate any disputes or to gain more information on their debt. With a letter in hand, a consumer has the option of resolving their debt without going through an agent. If the consumer chooses to talk with a collection agent, the letter provides contact information ensuring the consumer is routed to the department assigned with supporting that consumer’s account.
Letters are also highly efficient at driving web-based responses from consumers:
• A letter is the primary source directing a consumer to a payment web site to self-resolve their account. 70% of consumers who resolve their account on the payment web site do not talk to a collections agent on the phone.
• Consumers ages 18-49 utilize the web payment option at a higher propensity than consumers age 50 and above.
• Account balances of <$2000 yield a higher response to letters and utilizing the payment web site than higher balances.
• 20% of payments made on the web site are during non-call center hours. The payment web site offers 24/7 flexibility for consumers to resolve their account.
A letter can be designed to say exactly what needs to be communicated. When a consumer receives a letter, it is a document that contains the appropriate account information and all required disclosures. All of this has been reviewed and approved by counsel. There is no risk of a live collector saying something that will generate a complaint, harm the client’s brand or cause a compliance issue.
Traditional vs. new strategies
The industry trend is clear; the traditional call approach will be used less and less because of regulatory changes and credit grantor restrictions. These changes are due to the increased number of complaints from consumers. We have seen credit grantors place restrictions on the number of rings, number of attempts placed to a phone number and the total number of calls placed to an individual. We have seen, and will continue to see, changes to state guidelines and TCPA language. These regulatory changes and credit grantor restrictions will continue to reduce phone calls to the benefit of a letter strategy until the number of complaints decline.
How Radius Global Solutions incorporates letters into its communications strategy
Letters are a key communication strategy for Radius Global Solutions in helping consumers resolve their debts. Radius Global Solutions has continually refined and improved its letter strategy over thirty years and has invested heavily in the analytical process to ensure successful letter strategies and consumer communications. When compared to outbound calls, letters clearly outperform in terms of successful account resolutions.
As the bar chart below shows, only a very small portion of outbound calls generated by Right Party Contacts ends with the consumer resolving their account, while the majority of inbound letter generated calls result in a successful account resolution.
A successful letter strategy requires a commitment to the process and to establishing the infrastructure to ensure quality, test and control, and successful monitor tracking. An organization utilizing letters to reach consumers must be able to answer the following questions: What letters work? What offers work? Who responds to letters?
Letters are only successful if they reach the intended consumer. Ensuring the correct consumer address is utilized is critical to the success of letters as a balanced communications strategy. This requires strong data vendor partnerships, frequent testing to ensure address information content is comprehensive and accurate, and utilization of the postal services’ data cleansing capabilities of consumer addresses.
With over 30 years of experience and proven results, Radius Global Solutions’ balanced communication approach, and in particular its letter strategy, offers the consumer a clean, concise and preferred payment option. The letter provides consumers with clear methods to communicate any dispute or to gain more information about their debt. With continued regulatory review of call tactics and restrictions on call attempts made to a consumer, a well-managed letter campaign is proven to be financially effective and less obtrusive to the consumer.