Why the Best Time is NOW.
Up until a few weeks ago the economy was ticking right along, and everything was rosy on the collections front. But signs of inflation and economic uncertainty are looming and a rise in the likelihood of consumers defaulting is potentially just over the horizon. Which begs the question: When should you start thinking about upgrading your collection capabilities? The answer is a resounding “Now!”
At Katabat, we pride ourselves in our ability to deploy our standard platform in a matter of weeks (12-18 typically). But to take full advantage of a sophisticated Debt management and collections system like Katabat’s Unified Collections, deployment isn’t what takes the most time.
What you and your team need to plan for on your decision horizon is:
- Research and vetting
- Internal alignment around expectations and solution design
- Building the cross-functional team to drive the implementation
- Data sourcing, preparation and consolidation
- Strategy and ruleset development
Depending on the complexity of your organization, these stages can take several months and sometimes more to complete.
“The best time to build a raft is before the flood.”Anonymous
But the most critical step of all comes after deployment: Strategy Optimization. The whole point of having a sophisticated omnichannel collections platform is the ability to find the optimal sequence of channels and treatments that will provide the best collection rate at the lowest cost. And that takes time and a thought-out process.
The Power of Testing Collection Strategies
It used to be that the collection process was grueling yet simple. Dialing for dollars was and still is a numbers game. The more calls you make, the more you collect. Or not.
Today, with voice all but disappearing from the collections landscape, and the number of new channels at your fingertips, collections take on a new layer of complexity that must be managed and optimized with care.
One of the powerful features of the Katabat platform is the ability to test various collection strategies against each other to find the most profitable and effective actions. A/B Testing, or Test/Control testing, typically involves trying a new strategy alongside your “Business as Usual” approach and comparing the results. It allows you to design, compare, identify, and deploy the optimal collection strategy for each customer persona.
This can include varying the number of touchpoints in a sequence, combinations of email, text and other channels, the wording used, and the settlement offers you’ll be presenting. Sometimes, small differences can lead to millions in savings down the line.
Start from a Position of Strength
A key benefit of working with Katabat is the depth of our industry expertise. You don’t start from square one, you start from a position of strength. But that’s just the beginning. No two organizations are alike, each catering to different market segments, risk profiles and offering different product portfolios. You’ll need to move from a tried-and-true starting point to a customized approach that’s exactly right for you, your organization, and your customers.
Collective Intelligence Augmented by Machine Learning
One of Katabat’s key differentiators is the use of Machine Learning to search for optimal strategies. Our models are pre-trained, what we like to call “Smart out of the box”, but these models will evolve as they analyse your customers’ behavior. Training the model is a continual process that will start to pay off with time.
After a year or two, they will look significantly different from what they were at the outset. The sooner you start feeding data, the sooner you will enhance the algorithm’s ability to present the right message through the right channel to each of your customers, while preserving the customer relationship with just the right tone and messaging.
The Cost of Inefficiency
The time to test strategies is when things are going well. When your collections portfolio is small, and the cost of inefficiency is low. You can test various scenarios with minimal risk of downside impact on the organization’s profitability. And take the time to fine tune the strategies for maximum ROI.
When testing several approaches, some will perform well, some will not. So, delaying your ability to optimize until delinquencies are high means you’ll needlessly sacrifice revenue instead of preparing for the storm and being fully optimized when the dam breaks.
Consider “the freeze”
In many seasonal industries, there are times of the year when no tech can be maintained, modified, or deployed. This is done to avoid potential issues that would impact the organization’s ability to operate.
Think of the retail sector: the holiday rush from Black Friday to the day after Christmas represent anywhere from 28% to 35% of annual sales. Accordingly, it is prepared at least six months in advance.
Your business may not impose a “freeze” on IT systems, but there’s an important message here. You don’t implement new solutions when things are hectic. You do it when things are slow to minimize impact on systems, operations and ROI.
One last word about People.
Adopting an Omni-channel collections strategy is a quantum shift in culture and process. And in doing so, you’ll have a seismic impact on collection rates and ROI. Take the time to prepare your team for the transition. Give everyone a chance to understand the shift and how to manage it.
Take the time to build a solid transition and deployment team. And ensure that everyone is properly trained and supported. The more experience they have with the platform before delinquencies rise again, the more responsive they will be to changing needs, demands and market conditions.
So, as you can see, the best time to implement a Debt Management and Collections System is literally now, when things are quiet. Taking care to prepare for a more prosperous and productive future that is inevitably right around the corner. And speak with a Katabat platform specialist about you plans for the future today.
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Katabat is the leading provider of debt collections software to banks, agencies, and alternative lenders. Founded in 2006 and led by a diverse team of lending executives and leading software engineers, Katabat pioneered digital collections and has led the industry ever since. It is our mission to provide the best credit collections software in the market and solve debt resolution from the perspectives of both lenders and borrowers.
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