Finding a good third-party agency partner is tedious and time consuming. But as delinquencies rise and the volume becomes too much to manage in-house, working with an agency partner could be the best way to increase revenue on delinquent and charged off accounts. At the very least, it’s a crucial part of a well-balanced collections strategy.
We asked leaders from the most respected third-party debt collection agencies what they wish their clients knew about third-party collections and what they wish they could tell prospects.
Here’s what they said:
When it comes to digital strategy, your agency partner knows best.
For understandable reasons, there has been some hesitancy on the part of lenders and creditors to allow their agency partners to use emails and text messages to reach their customers. But since the roll-out of Regulation F, lenders and creditors should trust their agency partners to make decisions about how to best integrate those methods into their strategy. The agency leaders agreed that we're approaching a time where a collections strategy without texting or email cannot be successful.
Some creditors and lenders still want to control every message a customer receives from a third-party agency at a microlevel, including the language and channel. Agencies cannot successfully integrate an omnichannel strategy if they’re unable to A/B test different messages through various channels at different frequencies and times. Controlling an agency's strategy at that level makes it difficult for them to perform, but also contributes to a worse consumer experience for your customers.
Agency leaders also reported that their creditor clients had some misunderstandings about using texts and emails in collections, specifically that email safe harbors are requirements (they’re not) and that express consent is required for texting (it’s not).
For more on the compliance aspects of digital collections, check out Text Messages From Debt Collectors? Not in My Backyard! and Debunking Three Compliance Myths Regarding Texting in Collections & Recovery.
Compliance & consumer experience should always be top-of-mind at debt collection agencies.
Even if you trust your agency partners, it’s true that the conduct of an agency may implicate the creditor. Creditors must know applicable laws and how their agency manages compliance with those laws to avoid hiring an agency that is unable to satisfy applicable compliance requirements. But your agency partners should always be ahead of the curve when it comes to addressing your compliance concerns.
Leaders at great agencies strike a balance between compliance and innovation, and to do that, they’re always thinking about getting sued and how to prevent it. Experienced agency management will vet any change extensively before it even makes it to their creditor client, so keep that in mind when your agency partners approach you with a new idea.
Before you can trust your agency partner, though, you need to know that compliance is truly a part of their culture, and that can be hard to determine through audits and RFPs.
One way to evaluate if the agency prioritizes compliance and consumer experience is through conversations with the operators. Do they truly understand the regulations that govern consumer treatment? Do the frontline agents take consumer experience seriously?
Another excellent resource for understanding the true culture of an agency partner is checking out their Google reviews. Are customers reporting poor consumer experiences with your agency? If the agency has a bad reputation, consumers are less likely to work with them, and you should be hesitant, too.
Bonus reading: What Customer Experience Do Your Customers Really Want?
Reputation is a two-way street.
Third-party agencies view themselves as extensions of their creditor-clients, so the lender’s reputation absolutely matters.
Consumers don’t want to pay back debts if they feel they didn’t receive value from the lender, or where the lender has a track record of consumer complaints. If the lender didn’t provide the consumer with good value or customer service, the consumer may treat the agency poorly. Agencies are looking at Google reviews and BBB complaints when they consider onboarding new clients, and if you don’t have a good track record, it might be difficult to find a good agency for your portfolio.
During a downturn, preserving customer relationships can be the difference between succeeding and failing. Lenders and their third-party agencies should have goals that are aligned when it comes to consumer experience. For example, when engaging with a consumer, what is the hierarchy of goals, and why? Agencies and lenders should have an identical answer to those questions. If not, the partnership probably won’t work out.
These three pieces of advice should make finding and managing a good agency partner easier. For more advice on vendor management, read our Guide to a Robust Vendor Management Program and find out exactly what you can do to develop a long-lasting, revenue-generating relationship with a third-party agency.
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