The pursuit of multiple communications methods has grown as direct mail becomes more costly and increasingly ineffective, said Ken Patterson, director of credit advisory services for Mercator Advisory Group.

The declining environment makes managing delinquency communications essential, Patterson added. To manage those communications, creditors, collectors and financial services firms need to realize that people in different stages of their lives prefer different communications methods. While young adults prefer texting and e-mail and may not own a landline telephone, older consumers prefer traditional telephone or other forms of communication.

Additionally, these different communications channels have become siloed in financial services and other firms as workers have become more specialized, according to Patterson.

But that leads to a lack of customer information that leads to a lack of effective communications because many people use multiple channels, Patterson said. "Fifteen to 20 percent of customer contact records are out of date." A similar percentage of records do not have e-mail or mobile phone information for customers.

Having all of that contact information is essential as collections, charge-offs and delinquencies continue to increase, Patterson said.

"Fifty million accounts are becoming delinquent," Patterson said. "Twenty to 25 percent (of these debtors) prefer to be serviced via the online channel. We will likely see similar figures for the mobile channel as well. Collections is interesting because it is leading to a multichannel blending [of contact methods]."

But for those channels to be effective, automated or human methods have to be used to collect other customer information (i.e., e-mail address, cell phone number) when a contact is made, Patterson said.

By adding texting to telephone communications, one financial services firm increased its collections by 117 percent, Patterson said, referring to an example reported earlier by insideARM ("SoundBite Launches Integrated Communications Platform," May 20).

"Delivering the right message on the right channel can be a competitive advantage," Patterson added.

Barclayscard US had similar improvements in collections when it added multiple communications channels to its collections efforts, said Josh Tonderys, senior director, customer support strategy and operations.

Barclays, a SoundBite customer, is trying to further refine its collection efforts by examining which customers are most responsive to automated messages, Tonderys added. That research is ongoing.

http://www.insidearm.com/go/arm-news/the-future-of-collections-is-multi-channel-contact-web-panel