When it comes to assessing the efficacy of your collections process, the amount of debt recovered is the most obvious (and most important) metric. But what if there were other metrics along the way that you could use to track the success of your collection strategy?
In this article, we’ll discuss how the shift to digital debt collection processes requires agencies to adopt new ways to evaluate their progress. We’ll make the case for why metrics typically leveraged in digital marketing and sales — such as email and text message open rates, replies and responses, deliverability, and A/B testing of titles, copy, and images, etc. — can be a proverbial gold mine for collections agencies as they look for ways to improve their ROI.
Let’s dive in.
The Rise of Debt Collection Analytics
The importance of analytics in debt collection has been acknowledged for years. As far back as 2018, before Regulation F, COVID, and regulatory changes around student loan and medical debt shook up the industry, research by McKinsey & Company made a strong case for analytics’ power and potential.
The focus of that research was on applying analytics to the pool of debtors. With the correct software tools, agencies could segment their portfolio by degree of delinquency, degree of risk, income, demographic profile, and essentially any other characteristic that was captured in their debtor data. This opened the door to targeted and microtargeted collections, focusing (for example) on debtors who represented the highest likelihood of payment at the lowest level of expended effort.
That approach to analytics won’t be the focus of this discussion. Instead, we’ll look at collection metrics, analytical tools, and processes designed to assess and quantify the results of your digital-first collections strategies and initiatives. While bottom-line figures such as dollar amounts collected and ROI remain fundamental, the insights drawn from these metrics can be used to refine your collections tactics while they are underway, providing course corrections and improved outcomes.
Learning From the Marketing World
One significant change in the collections industry has come from within. Thought leaders within the industry have advocated for centering the debtor as a customer, rather than a culprit. Over a lifetime, many otherwise-good customers will experience periods of financial stress, and companies that retain their business through those down times — the reasoning goes — are likelier to retain it when these debtors’ circumstances improve.
While this perspective applies most directly to first-party creditors, third-party agencies can benefit as well. Those that demonstrate a soft-touch ability to recover funds, without alienating customers, are well-positioned to build long-term relationships with their own clients. Successfully transitioning to digital-first collections and establishing a consumer-centric, less-adversarial paradigm are two of the biggest challenges the industry currently faces.
Treating the debtor as a customer and payment of the debt itself as simply another sale to be made is a lesson learned from the marketing world. Establishing a digital-first process means emulating marketers in their use of email and text messaging, popups, push notifications, and all of the other tools that modern consumers have come to expect. As the collections industry follows marketers’ example in communicating and courting consumers, it will become increasingly important to also learn from the metrics marketers use to determine how well their campaigns are working.
Applying Marketing Tools and Metrics to Collections
The marketing ecosystem isn’t monolithic, and no one set of tools, tactics, or metrics applies across the board or in all situations. A quick search for marketers’ key performance indicators (KPIs) will show many thousands of results, each pushing its own selection of KPIs. Some of those are readily transferable to collections or can be adapted to the collections industry through a change in focus.
A handful stand out as especially important for the debt collection industry, and we’ll offer a brief list here.
Deliverability
This is primarily pertinent to email campaigns at present, though it’s also meaningful in SMS text messaging or (among the most innovative agencies) social media direct messaging (DMs). Deliverability monitors two crucial aspects of email communications:
- The percentage of emails that don’t bounce back—i.e., email addresses are current and accurate.
- The percentage that goes to the debtor’s inbox and is not filtered out as spam or outright blocked by their email provider.
Email service providers typically report on this metric for you as part of their services.
Message Open Rates
This tells you which percentage of your emails and messages, having reached their intended target, are actually opened and seen by the debtor. Note that not all email and text platforms support “read receipts,” which are crucial to this metric.
Response Rates
The response rate measures how many debtors, of those who do receive and read your communications, respond to the message. You may also want to break this out by the elapsed time necessary for a response, so you can measure which messages consistently inspire an immediate or at least a rapid response.
A/B Testing
This is not a metric in its own right, but a tactic that then yields additional information you can monitor. A/B testing means deliberately sending alternative versions of any given communications material to a subset of your debtor pool: your collections message, the email subject line, the first words or sentence of a text message (which will be visible in most apps, and play the same role as an email’s subject line), any graphics or imagery, and so on.
Sending alternative versions to otherwise-comparable groups is a potent tool for crafting messages that land consistently. Over successive campaigns, it can then be used to refine your message for higher performance with each iteration. Note that the results of A/B testing often vary between demographic, cultural, and economic segments of your portfolio, and should be repeated separately for each group you specifically target.
Cost of Acquisition
In sales and marketing, a campaign’s cost is measured against the quantity of new business or the number of new clients it generates. It can be applied to collections similarly, as the cost per response generated or payment made. It can also be applied as a metric to track the cost-effectiveness of your data partners, if framed as the percentage of viable emails and phone numbers furnished to your agency as measured against the cost of your subscription to a given data vendor.
Longitudinal Analysis
Like A/B testing, this is not a specific metric but a strategy for monitoring your project’s success. In this case, unlike A/B testing or the regular monitoring of KPIs like the ones on this list, you’re adding another dimension: time.
Longitudinal analysis follows the rise and fall of your other metrics as seasons, quarters, and fiscal years pass. It’s what allows management to parse out seasonal variations in your KPIs, as well as measure overall trends that might affect your bottom line (how your efforts hold up under differing economic conditions, for example). If your everyday metrics address the success of a given campaign, quarter, or debt purchase, then longitudinal analysis is how you’ll define the success of longer-term strategies.
Where Debt Collection Analytics Meet Marketing Metrics
The two types of analytics we’ve touched on in this article complement each other neatly. Agencies with access to rich, up-to-date consumer data provided by or from the original creditor have the ability to segment their debtor pool at a highly granular level, parsing out sub-groups with favorable characteristics, and prioritizing those. Lower-priority segments can be used as a testbed for new methods and strategies, helping refine your communications — and sharpen your agents’ skill sets — before they’re applied to those higher-return segments of your debtor pool.
These segments are also useful for testing self-serve options, including payment portals and chatbots, before they’re rolled out more broadly. Any successes here can generate additional revenues you’d otherwise have missed, while efforts that fall short don’t compromise your outreach to higher-value debtors.
Metrics Require Data
While all of these tools and metrics can improve your ROI, they rest on a foundation of solid debtor data. Deliverability, for example, is largely determined by the quality of data you receive from your vendors. Your agency’s ability to pivot to emails or texts, for debtor communications, will be compromised if your current vendors are not able to reliably supply current email addresses and phone numbers for your debtor pool.
Unlike many legacy data providers, Spokeo for Business is built from the ground up to furnish rich contact data that fleshes out traditional sources like banking or credit records with open source intelligence, including data from over 120 social media platforms.
To learn more about how Spokeo For Business can fuel your collections process, reach out to our team using the contact information on our Collections and Skip Tracing page. They’ll be happy to answer your questions, arrange a demonstration, or even set up a no-cost trial of the product.
Sources
Outbound System: Email Deliverability Explained: 2025 Guide and Best Tips
Outbound Rocks: Step-by-Step Guide to Running A/B Tests