Creating Text Messages that Pay

I’m old enough to remember how surprised I was when I first started seeing articles about people using their cell phones more for texting than for calling. Of course, that predated the iPhone, Android, and the nearly universal embrace of smartphones.

It’s been more than a decade since Stanford University released its study on the addictive nature of iPhones. That study of 200 Stanford students found that “69 percent said they’re more likely to forget their wallets than their iPhones.” And it found that “A quarter of the students said they see the iPhone as an extension of their brain or being.”

So . . . it isn’t shocking now to read headlines like “Phone Calls Make Younger Americans Anxious,” or “Survey Finds Millennials Hate Making Phone Calls More Than Any Other Age Group (Including Gen Z).”

This same attitude is becoming engrained throughout our culture. How many times have you texted rather than called, or considered texting to see if it was a good time to call? Even doorbells are giving way to quick texts from the curb: “Knock-knock. I’m here.”

Texting: A Powerful Tool for ARM

For ARM, society’s move from the real-time communication of the phone to the more relaxed two-way conversation of texting, represents an opportunity to develop deeper and more effective lines of communication with the often stressed parties with whom we must interact. Surveys continually find that those who prefer texting like it because it allows a slower, more measured, pace of communication. Rather than filling the void of a phone call to avoid dead air, users can consider the contents of a message, and think a bit in formulating their reply.

If you were on the receiving end of a collection action, which would you prefer?

It all seems a bit post-modern, like we are giving up the telephone to go back to sending and receiving telegraphs. But there is plenty of research—and simple reality—to this trend. People want a less rapid, perhaps more thoughtful, form of communication. Even dating—that most intense process of communication—is being taken over by texting. A recent Medium article declared: “With technology almost inseparable from the process of finding and building a relationship, the dating game is unrecognizable from days past. Unspoken rules dictate the usage of messaging and apps to communicate with potential romantic partners.”

Creating Relationships that Pay

The CFPB’s recently released updates to the FDCPA “Clarifies that newer communication technologies, such as emails and text messages, may be used in debt collection, with certain limitations to protect consumer privacy and to protect consumers from harassment or abuse, false or misleading representations, or unfair practices.”

The power is in using something like text messaging to not harass, but to harness the innate power of text messaging to create a relationship with the debtor. Someone who is terrified to pick up the phone is far more likely to respond—at their own pace—to a well-constructed text message. Forbes published an article noting:

  • Text messages have a 98% open rate, while email has only a 20% open rate.
  • 74% of respondents report an improved overall impression of businesses that interact with them via text messaging.

Of course, the messages need to be well-crafted, and focused on the known circumstances of the person being contacted. Loss of work? Unplanned medical costs? Recent divorce? Let them know you acknowledge their circumstances, care, and would like to work together to help them emerge on the other side.

Maybe something like this:

“Thanks for sharing about losing your job in our recent phone call. Sounds like a very tough time for you. Employment is supposed to be picking up, so I hope you can benefit from that.

I’d like to collaborate with you to see if we can come up with some kind of a plan that would work for you. I’ve looked into our programs and think I’ve found one that would work well for you . . .”

Or, whatever other approach you might like. As personalized as these are, they could be pre-minted according to recorded hardship or other factors. Ideally, they could be further customized by agents. But even if they are pre-formed (and carefully applied) they can serve as a point of entry to begin what can be a closer relationship with the person with whom your agent is working.

While it should go without saying, communicating through text messages, as with all other consumer communications, will need to be compliant with the new CFPB requirements, as cited above.

The good news is that the ability to use well-crafted text messages can open a new and efficient avenue for consumer interactions. If texting is effective for dating, it should be especially powerful for opening a channel of communication and a strengthening of relationship between agents and those they interact with.


Alison Sorel is a Product Manager and VP of Collections Solutions Strategy at Katabat. Alison is responsible for our Machine Learning product offering in addition to partnering with the broader product team on our Simplification and Innovation initiatives. In her 20 year career in financial services she has served in roles in Credit Risk and Collections managing Strategy, Analytics, and Business Line Technology. Alison has a BS is Statistics and Biometry from Cornell University. When not working, Alison can be found in Connecticut going on adventures with her husband and two sons.

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