Helping credit customers become more financially literate about credit and debt issues can be difficult, especially when delinquency and collections come into play. But, these difficulties certainly are not due to a lack of resources. Consumers can turn almost anywhere for instant financial information. And, despite all the available information, the answers aren’t always clear for customers.

Lenders and collection agents are well positioned to help consumers make sense of it all. That’s good news! When handled appropriately, consumer finance education can be a powerful tool for increasing receivables, reducing compliance risk, and producing stronger customer relationships.

Findings support a push for more customized education to maintain interest and increase engagement.

But, what’s the best way to help customers navigate a vast information landscape for the right data and guidance at the right time? And how does a consultative approach enhance the customer relationship and ultimately lead to contact success?

This is the first in a three-part blog series on the value of educating credit customers. In this series, we provide insights on customizing your approach to consumer education, making adjustments based on the type of loan, and the importance of a long-term commitment to consumer education.

Why Customize?

ARM professionals increasingly realize that they must design their education and counseling efforts with the understanding that not all debts — and not all debtors — are the same. Regulations require collections agents to inform customers of the amount and nature of a debt, and that’s simply a starting point. There’s a very high bar for ARM professionals in communicating clearly and fairly about the intricate web of consumer debt options, rights, and responsibilities. A customized engagement strategy built around adaptability can present customers with data and options formatted to meet specific needs and circumstances.

As an example, federal student loan programs require entrance and exit counseling sessions covering a wide variety of loans

[i]. A review of howvarious students complete these sessions revealed a ’click dynamic‘ in which students lost interest upon reaching information that didn’t seem relevant to their specific situation. Findings support a push for more customized education to maintain interest and increase engagement[ii].

Getting Started

For an ARM operation to support a consumer education strategy, agent training is a key consideration. Multiple touch points and circumstances call for skilled agents who can adjust to situations. Organizations should train call center agents and the people who oversee chat, text, and other written communication to practice active listening and look for teachable moments. Agents should be able to adjust the sense of urgency to the situation. Sometimes their first job may be to ‘put out the fire,’ with a subsequent pivot to money management skills for avoiding future problems. Agents need to know how to meet consumers where they are — and that takes training.

Agents need to know how to meet consumers where they are — and that takes training.

Finding the Right Balance

For all the benefits of customizing consumer education, collections is still about volume and contact success rates. CRM systems can help you reach the right person at the right time, providing personal attention through one-on-one conversations. However, the key to handling a heavier workload, with highly-tailored conversations, is in organizing your processes. Taking the time to optimize your operations with customer segmentation tools will yield a more efficient call strategy for your agents. Leveraging detailed analytics to identify particular customer segments allows your teams to provide personal attention through more relevant communications.

No matter the industry, a customized education-inclusive approach to ARM strategy, resources, and support can improve customer engagement and lead to more favorable contact outcomes. Once your organization has made a commitment to consumer education, it’s time to think about adjustments based on the industry or loan type that will improve your overall effectiveness. In the next blog post, we’ll address how to tailor credit consumer engagement to the type of debt.