You only have to take a quick look around you to see how many people are glued to their mobile phone. Instant messaging is everywhere. More people in the world now own a mobile phone than a car. And with 90% of people keeping their mobile within arm's reach at all times, SMS messaging is one of the most effective way to reach your customers.
When it comes to credit control and collections though, we believe this pervasive platform is severely overlooked. Traditional business has been very slow to take up the opportunity. That is surprising, because when you compare it with other channels, SMS texts are by far the most answered platform. And SMS messages is more discreet and private than an email or phone call.
Comparing the results from communication channels
In our customer interactions as we implement our credit collection software in many, varied industries, we see that the most significant collection effort is done over the phone. When you consider how many people no longer answer their phone, screen their calls, and don't return voicemail messages, telephoning is actually very difficult and time-consuming.
Emailing is also well used in collections. However emailing can be hard for businesses to cut through the volume and get your message heard. Emails communications suffer with a low 25% open rate. And the response rate can be slow or low.
Sending invoices and reminders through traditional postage ('snail mail') methods has an even lower response rate, and is severely slow.
We do see that SMS offers an immediate and interactive communication platform for businesses to connect with their customers. Our real life experience is showing that SMS response time is six times quicker than email. With their phone being "on the person's body" almost all of the time, you can get to your contact person wherever they are. And they are 4 times more likely to respond to a text than a normal email. Doesn't it bug you when they do that in the middle of a meeting? But that is the proof that people do respond quicker!
Our experience implementing SMS Texts for collection
A number of our customers have discussed the SMS option but were nervous to step away from the more traditional methods. They wanted us to share our experiences and learnings as a result of multiple implementations of using SMS in credit collections in Australia and New Zealand.
Firstly we aim to ensure that we can measure performance, uptake and success. Partnering with SMSGlobal and their experience of over 10 years in this field allowed us to track how well SMS proactive and overdue reminders work. Their statistics are showing that 95% of our SMS messages are opened within three minutes of delivery, and the average response time is just 90 seconds.
Emails, in contrast, take an average of 90 minutes to elicit a response – and that’s only counting the ones that are opened in the first place.
After SMS introduction, we have reached out to our customers' customers for their feedback, surveying their responses to invoice reminders on different communication formats. When receiving communications regarding finances, our younger audiences and our smaller enterprises indicated that 85% would prefer to receive this in SMS form, and more importantly, would be more likely to action the message than if it was delivered through an email or voice call.
Short, sharp and concise, SMS messaging can therefore be a great way to engage your customers and produce a positive response – in many cases, earlier payment of invoices.
Having implemented SMS collections a number of times, there are a few things to consider
Make sure it suits your business style and audience.
We have found great success in industries such as transport, construction and catering. Our contacts are out on site or away from their emails, but always carry their phone. They appreciate the timeliness of the messaging.
Profile your customers
Text messaging is not appropriate for all types of customers. Corporate customers don't appreciate it, and email works better for large organizations with dedicated Accounts Payable teams.
Give your customers the choice
Having said that, don't pre-judge. People immediately associate "instant messaging" with "younger generation". Unsurprisingly that is true, but the uptake from busy older people is just as high.
Vary the delivery method based on the stage of collection
SMS messaging lends itself to more informal, earlier collection reminders. As the days outstanding increases, the more formal traditional methods become more appropriate. Make sure your collection system can cater for that.
Use SMS for proactive collection
Offer your customers a "friendly text reminder". This is even more appreciated if you are alerting them before a penalty charge is incurred.
SMS is perfect for Payment Schemes/Payment Arrangements
If the customer is paying off a number of invoices in instalments, it works well to send a message the day before each instalment is due, or slightly overdue.
Don't send SMS messages during the night, weekends and on holidays
It is difficult enough when you receive a SMS reminder to pay your bill, but no-one appreciates one that wakes you up at two in the morning! Make sure you have the ability to send SMS messages in a controlled, delayed fashion. For example, only start sending at 8.30 am on working days. Of course this is industry dependent, and a later well-timed SMS could actually achieve a better response and earlier payment.
Make sure you clearly identify yourself
SMS services sometimes send out using rotating mobile numbers, which look generic. 160 character message limits apply (and generally that is how you are charged- per 160 character message). Make sure your system allows them to be strung together into a reasonable message. Don't make it too long though.
Make sure you have a reply capability and process that works
It the customer receives a text, they will respond by text. How will that text response get back in to your collections systems. Will you be able to deliver that text to the appropriate credit controller? How will you the respond to that customer's response?
Have good visibility and process around bounced and incorrect Phone Numbers
Make sure your SMS provider can alert you when deliveries fail or are not opened. Make sure you know how you will be alerted if the SMS failed, e.g. iIf it was sent to an inactive mobile phone, etc.
Let the SMS message help you create a sense of urgency.
Text reminders help create a sense of urgency that reinforces the importance of timely payments. Make sure you include due dates and other useful information to persuade customers to submit their payments on time.
Check the legalities
These SMS messages count as normal collection contacts. How often are you allowed to deliver them, are you allowed to include the AMOUNT DUE, AMOUNT OVERDUE and other information. All of those considerations still apply.
Monitor your communications channels to compare how they are working
Make sure your SMS provider has simple intuitive metrics such as delivery time, delivery status, response rate, costs, etc. Use this information to determine the effectiveness of your strategy.
Ideally that will include 'time of day' tracking.
Embed a Pay Now link.
When you are comfortable, take the technology to the next step. Embed a PAY NOW option, to make it easy for customers to pay.
Many enterprises and companies dealing with credit collection have already proven that, handled correctly, and addressing the correct customer base, SMS is a very effective communications channel. It is definitely worth spending the time to consider it.
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