The millennial generation, which includes young people born between 1980 and 1995, is the largest generation in American history and differs greatly from previous generations. They are the generation whose debt load is increasing the quickest.
The average millennial consumer has around $27,251 in non-mortgage debt, which includes credit cards, revolving credit or installment loans, student loans, car loans, and/or personal loans, according to Experian’s 2020 State of Credit report. The average mortgage balance for millennial house owners is $232,372. Over 50% of millennials have at least one bill that is 90 days past late.
For businesses trying to collect a debt from these young folks who prefer to communicate digitally and have short attention spans, debt collection can be a substantial difficulty. With a large percentage of Millennials being in debt today, businesses need to remember the following best collection practices when collecting debt from this demographic.
1. Provide digital solutions
As a business owner, you must keep in mind that millennials are among the first generations to have grown up with instant access to the internet and a multitude of digital tools, from the first online messenger to the most recent, cutting-edge apps that let them do nearly anything online.
In fact, according to a number of statistics, millennials spend more than 7 hours each day online, and the majority of them prefer to manage their finances online. Hence, offering online payment capabilities through a web portal or mobile application might be profitable for the firm. Millennial debtors are more likely to make consistent payments using this digital strategy.
2. Personalize your collection approach
Personalization is a millennial favorite. That might be a useful strategy for attracting and holding this generation’s interest. Using automation technology like artificial intelligence and machine learning to create individualized, personalized experiences and make sure people feel appreciated, personalization should be used to interact with them.
When it comes to debt collection, personalization can take many different forms, including targeted messaging, preferred channels, or even online payback programs that are appropriate for the customer’s situation. By examining demographic, behavioral, and transactional information like past repayment history, businesses can offer their clients customized messages and payment options. This enhances customer experience and response, which eventually yields better outcomes.
3. Appreciate the value they place on time
Companies should be mindful of how highly millennials value time and how impatient they are with debt collection. Even though almost every millennial customer is in default, they rarely pick up the phone. They want you to get in touch with them in their preferred way, on their schedule, and according to their terms. Make sure your communication with them is effective by putting a plan in place. If your plan involves making calls, make sure you communicate well on each call while also keeping it brief.
Use simple personalized language with text messages or emails that are direct and easy to understand for them. Moreover, as customers today are more digitally aware and are engaging on more digital channels than ever before, they expect a seamless transition from one form of service delivery to another. So, providing omnichannel engagement to customers and integrating all touchpoints for a seamless service is essential.
4. Provide self-service options
Because they seek a rapid transaction without any interruption and don’t want to contact with a debt collector, over a quarter of millennials, prefer self-service when paying off debt. The millennial generation was raised in a world where technology was pervasive. They rarely have to wait for information; thus they are less patient when it comes to the tiresome process of speaking with an agent to pay a debt.
The Millennial generation is also the most self-educated in history, so they would anticipate self-service options for practically any task they encounter, including debt collection. For instance, a digital portal through which customers can log in, check their debt status, and pay their debts online without the intervention of collection agents is a great self-service option for collecting debt from millennials.
5. Have a compassionate approach
Due to the higher cost of studies and the diminished chances of finding a stable, well-paying job with benefits, the majority of millennials feel that their path is more difficult than that of their parents and grandparents. So, using digital tactics alone may not be sufficient since they lack the empathy that only human interactions can offer.
No customer wants to be treated like a number. Consumers expect companies to be understanding, to pay attention to their problems, and to suggest solutions. Using human agents supported by digital capabilities is a fantastic way to solve this problem. So, trying to be sympathetic and diplomatic when collecting debt from millennials can be very effective.
The millennial generation is one of the hardest to collect a debt from. However, using a digital debt collection service with call center support can be helpful as businesses strive to find innovative ways to recover money owed by this generation. A top debt collection agency in the USA employs best practices in debt collection and takes a specialized, digital-first strategy to recoup the debt from millennials. With the help of their ground-breaking omnichannel platform and “contact optimization” machine learning engine, in the near future, they will be leading the way in digital debt collection. First-party and third-party collections, and business process outsourcing services for various industries, including healthcare, automotive finance, and more, are their area of expertise.