Getting in touch with overdue borrowers is tough. Getting in touch with millennial overdue borrowers is even tougher.
“They don’t use landlines. They may change their address and not update the email,” said Michael Collins, senior vice president of lending and F&I solutions at Dealertrack, during the latest Used Car Week conference in Scottsdale, Ariz. “One thing they do have, is smartphones.”
With smartphones ready to go, how can lenders improve collection processes when targeting millennials?
We asked Max Haynes, founder and chief executive of Car Loans Inc. – a finance and loan servicing provider that employs gamification and apps in pre-collection processes – to share a few tips.
1. Engage with them, before the problem occurs.
Customers need to know about the importance of on-time payments, and what it can do for them, Haynes said. This applies to any borrowers, but millennials in particular, since many of them are first-time borrowers. “You should have multiple points of contact — phones emails, apps. We obviously prefer apps, with push notifications,” he said. “Mail is my least favorite. I see lenders spend resources on creating fancy mail pieces; millennials don’t open them.”
2. Create a simple payments method.
“Making payments has got to be simple,” Haynes said. A common mistake from lenders is having a payments page with multiple “required” fields. “It should be as simple as: ‘what’s your phone number? how much are you paying? click here.’” Having someone on standby to answer any payments questions is also important. “Through online chat or texting, rather than phone, of course,” Haynes added.
3. Make it fun.
“Why would anyone want to do anything that’s not fun,” Haynes said. Collections and fun may not belong together, but engaging customers with rewards, for example, can potentially decrease the number of overdue borrowers, he explained. “At Car Loans, we use gamification, but it doesn’t have to be that.” Fun and easily redeemable rewards for timely payments – such as Starbucks lattes or Amazon gift cards – will keep your customers updated and engaged.
