Plenty of companies use data to turn leads into sales, or turn one-time clients into repeat buyers through targeted marketing. But when some of those sales inevitably turn into past-due accounts, those same companies often drop the statistical analysis and move to a more primitive–and less effective–one-size-fits-all approach to bill collecting.
“I realized how lacking debt collection was in comparison to other parts of the business in terms of technology,” says Ohad Samet, the cofounder and CEO of TrueAccord, a data-driven debt collection agency, who previously worked in risk management at an e-commerce company. “It should be a more pleasant experience that doesn’t ruin the relationship between the company owed money and the person who owes money.”
TrueAccord’s machine learning platform, which launched September 16 with funding from Khosla Ventures and Max Levchin among others, lets the company crunch numbers on a scale not available to small businesses and freelancers with only a few late-paying clients each. And that is already leading to insights–for instance, it’s found that debt collection emails sent on Thursdays and Fridays are the most effective.
TrueAccord shared these tips for businesses looking to optimize the effectiveness of their own billing.
Part of the inspiration for TrueAccord came when Samet accidentally forgot to pay a credit card bill on time. He didn’t dispute the charges and was willing to pay, so he didn’t appreciate being hounded by an aggressive, largely automated collection system.
“I didn’t enjoy that,” he says. “I started thinking about all these people who cannot pay and what they must be going through.”
First off, says Samet, it’s important to understand where a delinquent customer’s coming from. Is the payment delayed because they’re unsatisfied with the service they received, because they don’t have the money, or simply because of an honest mistake?
“A large part is getting them to actually tell us what happened,” he says. “Predominantly when someone doesn’t pay, it’s not that they want to hurt you, it’s for other reasons.”
TrueAccord generally reaches out to customers via email and invites them to log in to see the outstanding bill in question, file a dispute, or set up a payment plan.
“The digital generation prefers email, text message, IM more than just making a phone call,” Samet says, adding that about 30% of the service’s web traffic comes from mobile devices. “If someone really wants to talk, they can call in, or they can ask to be called.”
A blog post recounting his credit card experience mentions how bill collectors often robodial from unfamiliar numbers at inconvenient times, then play automated and generic messages asking customers to hold for an actual operator.
“Online communication responds to people,” says Samet. “It works with people’s preferences.”
Some modes of communication, such as SMS, aren’t ideal for initial communication, since it’s hard to insert all the legally required information into a text, but they’re still useful for following up, he says.
TrueAccord uses a variety of data points to target different styles of collection messages to different customers, says Nadav Samet, the company’s cofounder and CTO (who is not related to Ohad Samet). For instance, the company’s message to a young debtor might focus on the importance of proving responsibility, he says.
“Maybe that wouldn’t be the same language you would use to speak to a 40-year-old mom,” he says.
One example email targeted at a younger audience is written from the perspective of an unpaid bill. “I’ve been sitting here listening to breakup songs and eating ice cream because I feel like you’ve been avoiding me,” reads the bill. “Maybe life just got busy and you meant to pay me but got distracted?”
TrueAccord tries to write the letter in a voice that customer can relate to, says Ohad. “A very young, fun person is not going to get a great response from an older professional.”
TrueAccord recommends companies be clear about what’s owed, how the charges originated, and what the customer should do next, says Ohad.
“We strongly recommend that you have a reiteration of the breakdown of the charges and what caused the charges,” he says.
It’s also important to convey what the company calls a “sense of urgency” to motivate customers to act quickly.
“We recommend that you give an actual deadline with an explanation of what’s going to happen after the deadline,” says Ohad.
And, when possible, giving the customer a variety of payment options, from check to wire transfer to online form, makes it more likely that a bill will get paid.