How AI-Based Language Can Help Engage Customers More Effectively in the Pre-Collections and Early Collections Journey

Delinquency rates on the $1 trillion of debt held by U.S. households were increasing even before the COVID-19 crisis. With over 33 million Americans filing for unemployment between March and May 2020, banks are now preparing for a wave of payment challenges. New forecasts even suggest delinquency rates could be 3X higher than they were at the peak of the 2008-09 financial crisis.

Effective language helps banks and consumers navigate the payments challenge

Language is a key lever for banks to pull as they respond both to the immediate disruption caused by COVID-19 and to the medium-to-long-term economic aftermath. The right words used in the right way can better engage customers who may be at risk of missing payments or falling into delinquency, and can help them get on track before they get too far behind. Through words, financial institutions can communicate with empathy and drive quantifiable performance of messaging. For companies who get this right, there are immediate and significant benefits including:

1. Maximize duration of continued payments through early engagement to reduce delinquency
2. Improve ratio payments (e.g., full, partial, plans) versus missed payments
3. Reduce costs from call center operations, third party collections, and charge-offs 

This article details best practices banks can use to effectively engage customers and address the looming payments and recovery challenge. The findings are based on Persado’s analysis of the language that influences customers to help prevent delayed and delinquent payments.

Banks can leverage AI to find the right words that drive payments

AI-guided, data-driven messages can create better customer experiences, help customers stay on top of their finances, and improve the outcomes of efforts to encourage timely payments. Banking leaders can use AI to create messages likely to engage customers, learn in real time what works and what falls flat, and rapidly iterate based on evidence. 

The outcomes of these language experiments have been higher payment completion and reduced delinquency. 

Persado has already demonstrated the power of finding the right words with nine out of the top ten American banks. Among other applications, the Persado AI platform has generated messages for these clients to use in language experiments with customers that have missed a payment and to help them get up to date. The outcomes of these language experiments have been higher payment completion and reduced delinquency. Learn More: How AI-Driven Creative Delivers Business Impact to Financial Services Firms

Best practices for bank communications

Persado’s experience using language to increase bank payments has uncovered the following practices to drive engagement:

• Give details. People are more likely to react to payment reminders when a message includes the payment due date. Details like that create an appropriate amount of urgency
• Draw attention. Language that taps into the Attention emotion drives more action than Encouragement
• Put customers in control. Customers respond to language that helps them feel like they’re in control of their financial future

How a Fortune 50 bank used AI-based language to impact payment outcomes

One Fortune 50 bank used more effective words both to boost the number of payments it received before the due date and to increase the number of recovered payments from late-payers. The bank started with a general message, which Persado then optimized using its language-generation AI. The top-performing version improved open rates by 8% and customer engagement by 90% compared to the control.

Key changes that produced results:

• Including the payment due date in the subject line
• Adding “Action required” high in the body copy to capture attention
• Placing the call-to-action (CTA) higher in the body copy, and conveying more specific action

What banks should do now

Leverage the right emotions 

Words and word combinations convey specific emotions. “Can I help you?” and “What do you want?” may mean the same thing at their core, but they send a very different emotional message to a customer. At a time when people are feeling sensitive and stressed, banks can use words to express empathetic yet actionable emotions that move customers to act in their own best interest. The most effective emotions right now are positive:

• Achievement — “Good job staying on track,” “You’ve been doing great.”
• Gratitude — “Thanks in advance for paying on time,” “We appreciate your diligence in keeping your account healthy.”
• Attention — “Regarding your account,” “Please review soon to keep your account healthy.”

Give clear, actionable directions Stress has a huge, negative effect on the customer’s ability to process information. Too much detail or long-winded instructions can make customers tune out. Instead:

• Be explicit about what the customer needs to do at each step of the process to make a payment.
• Use clear, digital experience-friendly CTAs like “Continue here,” “View all options,” “Go to your account” or “Press 1 to continue.” 
• Outline steps using 1-2-3 lists that are visually clear and actionable.

Communicate urgency and be mindful Prioritize key pieces of information and word them clearly so customers know what they need to do and by when (e.g. “Please review by DD/MM” or “Your payment is due in 5 days,” etc.). That’s not insensitive. It’s clear, and as the psychologist Brené Brown has written, clear is kind.  When paired with actionable language that focuses on solutions and flexible options (“3 ways you can pay,” “Here’s what you need to do to stay on track,” or simply “You have options”), banks express both Attention and Urgency. Messages like this help customers stay current with their payments, as in: 

• “You can choose a payment date that works for you”
• “We’re helping you stay on track with these easy tips”
• “You could raise your credit score by enabling automatic payments”

What not to do now

Don’t bury special policies or options

When introducing flexible payment options or offering incentives for people to stay on track, don’t hide them under “we’re here for you” or “a message from our CEO” headlines. Put the changes front and center to capture people’s attention. 

Avoid generic language 

If everyone in your market is using the same language, your message won’t get through. Cut through the noise with words and emotions that are unique to your brand voice. 

The path ahead

As income-stressed Americans see their first COVID-era bills coming due, many will be assessing which are urgent and which can wait. Leaders who are proactive about using language to engage customers in the payment and pre-collection journey can positively impact their businesses and, just as important, help customers make financial decisions in their own best interest.