Success story: Debt collection

SMS is an effective communication channel to manage unpaid portfolios and manage payment claims with a 90% delivery rate. Many companies in the sector use it to notify outstanding unpaid debts, as SMS is one of the most converting communication methods due to its high reading rate, immediacy, ease of reading, etc.

In addition, it allows reaching the user without passing inboxes or SPAM controls. It is a direct channel and has a high impact ratio.

These are the main reasons for its application in debt collection companies, but how do these companies use SMS in their communication strategy? 

What are the uses?

• Sending notifications
• Pending payments
• Payments in installments
• Invoices and payment confirmation
• Contract renewals
• Debt renegotiation
• Promotions
• Feedback
• Certified messages in administrative or legal processes

A case of success in SMS debt collection

As a sample example, today we bring the success story of one of our clients dedicated to debt collection. Their platform helps to automate the collection and collection processes, by sending digital notifications, and to simplify outstanding payments.

To do this, they use SMS. As its director tells us, they convert 68% more than emails and push users to take action. Moreover, SMS creates peace of mind and security for all their customers.

When they receive the personalized notification, they know that it belongs to the company and that it is not a scam, so they end up clicking on the message and paying the amount they owe. It is often a matter of building trust.

Using SMS for debt collection is to have a high probability that the debtor will pay the amount in minutes. It creates a very easy communication flow that helps the user to pay the amount owed in 2 clicks. In a period of minutes to days at most.

In addition, better metrics are obtained in other payment channels such as email because some users read the SMS notification and end up making the payment by email on another device. Therefore, the conversion rate of email or other channels increases by the simple fact of notifying by SMS.

SMS within a multichannel strategy

Without SMS messages, these results would not be achieved. They are key to obtaining these metrics. Thanks to this channel, companies get users to pay debts in greater proportion and to be aware of this information. It is the method chosen by this LabsMobile client because of its high conversion and because the other communication channels that make up its omnichannel and complement its catalog are not as effective.

Whatsapp for example is not a good system for the collection of unpaid debts, as it gives importance to the recipient and this type of messages is not liked by the user. So collection companies end up being blocked or considered disreputable by Meta. The end result is that they are unable to communicate with the members of the receivables portfolio. And this is a big problem. With the SMS channel, on the other hand, there is no such system of reviews and blocking.

Some statistics of SMS in the debt collection industry

The SMS notifying the customer of his debt has a link that leads to a landing page, personalized for each customer. This link to the landing page has an average click rate of 42%. And there the user will be able to solve their payment problems in just 1 click. 

19% of users will pay at the same time. While 67% will pay at another time. And finally 15% will want to refinance, if they can.

On the other hand, if this process is done directly by email, instead of SMS, the link to the landing page with the payment would have a 7% of clicks.

How does SMS work for debt refinancing?

The best thing about using SMS with LabsMobile for debt collection is that you can study the metrics of the messages and analyze the openings and clicks to know if the campaign is working well.

In addition, LabsMobile offers multiple templates of landing pages to make it even easier for the company to send text messages.

With a good database, it is possible to study each type of customer and adapt the type of communication, message and actions for optimal conversion.

The objectives in a recovery campaign

In fact, payment conversion is one of the objectives but not the main one. In most companies it is that the customer is effectively notified and that he knows exactly that he has a debt and for what amount. In some cases it is also necessary to explicitly accept this debt and ask for the reason, which can range from simple carelessness to disagreement with the service provided.

All this information is vital, not only to try to reduce the rate of non-payment but also to reduce it in the future. Moreover, the main objective of this type of action is to preserve the customer, who may have had a one-off incident or non-payment but who may be a recurring customer for years.

In summary, SMS is a very effective tool for the use of debt collection due to its reliability and efficiency. It is also very well received by users.