If a person gets a phone call, email, and text message from the same business, which are they most likely to engage with? Since 98% of text messages are opened by people within three minutes of being received, it’s the channel that has the highest chance to win out. SMS gives digital debt collection strategies a fast, less intrusive, and effective way to engage with customers.
Consumer preferences have shifted dramatically over the past few years with digital communication channels becoming heavily preferred, especially for financial matters. SMS is no longer a sidekick, it’s now a hero of omnichannel collections that businesses should prioritize. Let’s take a detailed look at why more businesses should leverage SMS in debt collection.
3 Reasons Why SMS Works for Debt Collection
When a debt collection strategy is aiming to improve performance, one of the best ways is to open up a new channel by implementing SMS. By comparison, SMS is faster than many other channels, aligns with modern consumer preferences (because it empowers people to engage on their own time), and often encourages faster resolutions. SMS has steadily become one of the most valuable digital tools in debt collection because of three main benefits it offers:
- SMS Wins Over Traditional Channels: Unlike phone calls and direct mail, text messages are delivered almost instantly without causing a significant disturbance to the person receiving it. People can actively choose when to respond to text messages and don’t have to talk with a human agent, which can cut through much of the shame and embarrassment people may feel with collection phone calls.
- Meets Consumer Preferences: More people than ever before want businesses to offer mobile friendly communications that put them in control of the next step. Roughly 65% of consumers prefer SMS for updates on their accounts, billing, and payment reminders, and honoring consumer preferences can increase repayments by up to 10%.
- High Engagement: SMS has one of the highest engagement rates among debt collection communication channels at 98%. With an open rate this high, SMS is a great way for businesses to get their debt collection messages seen.
SMS Helps Shorten the Repayment Journey
In digital debt collection strategies, every added step or hurdle lowers the chance of a person making a repayment. A core benefit to SMS is that it’s easy to include links and create easy access to a branded experience that consumers can trust. As self-service portals continue to grow in popularity, text messages are a great way to connect consumers to this tool. When the next-actionable step is just one tap away on a preferred channel, the experience to make a repayment is much more approachable.
By automating SMS outreach, your business can help ensure that less opportunities are missed by finding the best time and message for each individual account. This channel also empowers consumers by giving them the ability to submit a repayment without other outside factors that make the experience feel pressured. It’s an approach that makes debt collection strategies more consumer-centric and helps messages feel more authentic.
Tactics to Optimize SMS for Debt Collection
SMS is an effective digital channel for debt collection, but to unlock the full potential, there are best practices businesses should follow. There’s more strategy that goes into text messages than just hitting send on mass messages:
- Personalization: SMS shouldn’t be looked at as a “one-size-fits-all” channel. By adding in personalization like an account detail, messages are more trustworthy to the recipient. Personalization adds a level of empathy, while helping to prevent feelings of a message being a scam or feeling “off”.
- Tone and Copy Used: Every person has a tone that they’re more likely to engage with. For many people, an empathetic approach that shows understanding resonates the most, while others might want the message to be concise. The right AI tool can analyze past SMS data to determine the message that has the best chance of success.
- Send Times: The time an SMS message is sent to a person is a key variable in its success. Patented AI technology used by Retain can test to find the optimal time to send a debt collection message for each individual account. This drastically increases the likelihood of messages being sent and opened at preferred times.
- Call-to-Action: SMS debt collection message should include a call-to-action (CTA) to give the person receiving it a clear next step. In many cases, the CTA could be a link to a self-service portal. The key is to make the CTA easy to understand and follow, making the process clear and seamless.
Get Effective SMS for Your Business with Retain
Whether your business wants to start using SMS for debt collection or optimize it to collect more, Retain is here to help. Retain white-label debt collection software offers fully compliant SMS functionality at scale so your strategy works to collect more. Connect with our team to get started.
