Telecom collections continue to be one of the largest drivers of delinquent accounts placed with collection agencies. While traditional landlines for residential and business usage continue to decline, mobile telecom usage continues to soar at an all time high. Over the last several years we have also seen mobile phone users jump from one provider to another with a lax in telecom rules looking for the best deal on the latest device or how they can save a couple extra bucks on their monthly charge. Delinquent telecom account costs are generally incurred due to early termination fees (ETF) that include monies owed on the contracted mobile device along with a stipulated contracted fee if the contract is terminated early.
Once the telecom accounts go into collections, a solid strategy must be in place in order to create a profitable and sustainable collection model. The strategy should address several main items that include segmentation, skip tracing, dialing strategy, and letters.
The segmentation aspect is critical in the collection of telecom accounts due to the larger placed volumes associated with them. The first phase of the segmentation should relate to the identification of “contactable” accounts, those accounts in which the phone numbers on file have the highest probability to reach the consumer. There are several service providers in this arena and the trend of identifying “contactable” accounts continues to become more prominent. Once those accounts have been identified it is then important to score the accounts based on propensity to repay. The score can be a credit or demographic-based model. The main factor is just to find a score that shows valid separation amongst score bands along with being a score with which the operations and strategy team is comfortable.
Due to the nature of a telecom account, the overall skip percentage in which an account is placed with no valid phone number is very high. Odds are that the consumer does not have a residential landline with which a quick directory assistance search will be able to help. Odds are even better that the consumer now has a new mobile phone number. So it is important to implement an effective and efficient skip tracing strategy on telecom accounts. Stick to vendors that are reputable and have a proven track record of providing mobile phone numbers back as part of their standard process. In addition, look at vendors that specialize in the return of employment data. Once a consumer’s account is found to have valid employment data, it should also move the account up the segmentation chain.
Once the telecom accounts have gone through a segmentation and skip tracing process, a well thought out and developed dialing strategy is the next step toward gaining successful results. The dialing strategy is also the most difficult aspect of collecting telecom accounts. With the Telephone Consumer Protection Act litigation continuing against collection agencies in full force, advanced technology such as predictive dialers does not play a substantial role in the dialing strategy of telecom accounts. With over 90% of adults owning a cell phone and the vast majority using it as their primary phone, the lack of express written consent for the mobile phone numbers being dialed greatly limits the opportunities collectors have to resolve delinquent telecom accounts with consumers. This is why it is critical to have a solid segmentation strategy in order to ensure collectors are manually dialing and putting the right amount of effort to the accounts with highest propensity to pay.
Letters are also another collection measure that should be used on telecom accounts. Given telecom accounts have a high likelihood of not having any valid phone numbers and the fact the collection industry is handcuffed in using advanced technology to call mobile phones, good old fashioned mail delivery is a direct link in hopes of getting the consumers attention and repayment. While letters in and of themselves are not the most effective way to collect, it is the next best option when all else fails to correspond with the consumer.
One of two outcomes happen in regard to telecom collections and collection agencies. The first outcome is the collection agency knows what it is doing and ultimately creates a sustainable and profitable business model. The alternative is the collection agency gets in over its head, doesn’t have the resources or strategy in place and ends up failing. The reality is that while telecom collections may be more difficult than other types of collection portfolios, collection agencies can be very successful in this arena with the right segmentation and strategy in place.
Nick Jarman is COO at Delta Outsource Group, Inc. He also serves on the Board of Directors for ACA International.