The Ultimate Guide to Communicating with Credit Union Members During the Past-Due Process

Strong communication in collections is essential for maintaining robust relationships with members and ensuring effective outcomes. Miscommunication can often do more harm than good in a collections effort. In this blog, we’ll explore best practices for communicating with members about past-due accounts, including sharing the member’s perspective, using plain language, being compassionate, personalizing your communication, and using analytics to build better communication strategies.

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• Understand Their Unique Circumstances
• Make Your Outreach Personal
• Perfect Timing and Frequency
• Optimize Your Templates Regularly
• Offer Real Solutions and Help
• Leverage Data to Improve
• Train and Support Your Collections Team

Understand Their Unique Circumstances

When a member is past-due, there’s often a deeper story behind their financial difficulties. Understanding that their delinquency might be due to significant life changes helps frame your approach. For example, a job loss could lead to financial instability, a divorce might disrupt their financial planning, and health issues could result in unexpected expenses. Being aware of these potential scenarios allows you to tailor your communication and support accordingly.

The Importance of Empathy

Empathy is more than just being kind—it’s about genuinely understanding and sharing another person's feelings. In collections, empathy means recognizing the stress and anxiety a member might be experiencing and responding in a way that shows you care about their situation. When you demonstrate empathy, you acknowledge their struggles, which can significantly reduce their defensiveness and open up a more constructive dialogue.

Building Trust Through Acknowledgment

Acknowledging a member’s situation validates their feelings and shows that you are not just another faceless entity chasing payments. This validation is crucial in building trust. Trust is the foundation of any strong member relationship, and in collections, it can make the difference between a cooperative member and a confrontational one. When members trust that you understand and respect their situation, they are more likely to engage positively and work towards a resolution.

Setting a Positive Tone

The initial interaction sets the tone for all future communications. Starting with empathy and understanding helps create a positive and collaborative atmosphere. It reassures members that you are there to support them, not just to collect a debt. This positive tone can lead to more productive conversations, where members feel comfortable discussing their challenges and exploring solutions.

Practical Strategies for Collections

• Active Listening: Give members the space to explain their situation without interrupting. This shows you value their perspective and are there to help.
• Personalized Solutions: Offer solutions tailored to their specific circumstances, such as flexible payment plans or temporary relief options.
• Continuous Support: Follow up regularly to show ongoing support and reassess their situation as needed. This ongoing engagement reinforces your commitment to helping them get back on track.

Make Your Outreach Personal

Customize Your Messages for Each Person

Personalizing communication based on member data leads to a more effective approach. Use information such as payment history, account activity, and communication preferences to tailor your message. Addressing members by name and referencing their specific situation makes the communication feel less generic and more relevant. For instance, mentioning a recent payment they made or acknowledging a significant event in their account history demonstrates that you understand and care about their unique circumstances. This level of personalization can significantly improve member engagement and responsiveness.

Multiple Communication Channels Used

Members have different preferences for communication channels, so it’s crucial to use various methods to reach them. Employing a mix of phone calls, emails, and text messages ensures you can connect with members in the way they prefer. Each channel has its benefits:

• Phone Calls: Personal and direct, allowing for immediate interaction and the ability to address concerns or questions on the spot. They are ideal for complex or sensitive conversations where tone and nuance are important.
• Emails: Detailed and documented, providing a written record that members can refer back to. Emails are excellent for explaining payment options, sending follow-up information, or providing detailed responses to inquiries. With the right technology vendors, you can automate your outreach and include links to an embedded payment portal for a simplified user experience. This not only streamlines the process for your team but also offers a convenient and user-friendly option for your members to make payments directly from the email.
• Text Messages: Quick and convenient, ideal for short reminders and urgent notifications. Texts are highly effective for brief updates, payment reminders, and immediate call-to-action prompts due to their high open and response rates. You can even include payment links to improve your chances of collecting. 

Perfect Timing and Frequency

Making the Balance Strike Right

Timing and frequency are critical aspects of effective communication. Contact members at a reasonable frequency and during business hours to avoid being intrusive. Space out follow-up communications to give members time to respond without feeling harassed. Our recent survey found that members would prefer more frequent reminders about upcoming bills to help them stay on track.

Automating Follow-Up

Automation can significantly streamline follow-up communications. Automated messages, personalized and sent at optimal times, ensure consistency and maximize response rates. Despite being automated, these messages should remain personalized and compassionate to maintain a strong relationship with the member.

Optimize Your Templates Regularly

Regular Review of Standard Templates

Keeping your communication templates up-to-date is crucial for maintaining their relevance and effectiveness. Regularly review and update these templates to ensure they meet current standards and address members’ needs accurately. Look for areas where improvements can be made, such as clarifying messages or incorporating new policies.

Conducting A/B Testing

A/B testing is an invaluable method for refining communication templates. By testing different variables—such as tone, length, and calls to action—you can determine which approaches resonate best with your members. Analyzing the results of these tests allows you to continually optimize your communication strategies for better engagement and outcomes.

Utilizing Multiple Templates for Diverse Portfolios

Different types of loan portfolios require distinct communication strategies to ensure effectiveness. Tailoring your outreach based on the type of loan helps address specific member needs and improves the overall impact of your messages. Here’s how to approach various loan types:

Credit Card Accounts

• Frequent, Short-Term Communication: Due to their revolving nature and shorter billing cycles, credit card accounts often require more frequent communication. Regular updates and reminders about upcoming due dates can help keep members on track.
• Grace Period Considerations: Highlighting the grace period for payments encourages timely repayments, helping members avoid additional interest or penalties.
  
  

Auto Loans

• Indirect Auto Loans: For indirect auto loans, where the loan is originated by a dealership but serviced by the credit union, ensure clear communication regarding who to contact for payments and any issues. This helps prevent confusion and missed payments.
• Early Payment Options: Offer early payment options and highlight any incentives for paying off the loan ahead of schedule. This can motivate members to stay current with their payments.

Mortgage Loans

• Longer-Term Communication: With longer repayment terms and higher balances, mortgage loans necessitate a different approach. Monthly or bi-monthly communication may be more appropriate, providing consistent but not overwhelming contact.
• Early Intervention Strategies: Given the significant financial impact of delinquent mortgage payments, early outreach is essential. To help members manage their payments effectively, offer detailed information on options such as loan modifications or refinancing.
  
  

Personal Loans

•  Tailored Communication Frequency: Adjust communication frequency based on the term length and amount of the personal loan. Shorter-term loans might need more frequent updates, while longer-term loans benefit from less frequent but more comprehensive check-ins.
• Flexible Payment Plans: Highlight personalized payment plans in your communications. Options such as deferred payments or customized installment plans can help members manage their finances more effectively.
  
  

Student Loans

• Seasonal Communication: Timing communications around graduation periods and the start of repayment terms can be particularly effective for student loans. Send reminders about upcoming due dates and inform members about deferment or income-driven repayment plans.
• Educational Resources: Provide resources and advice on managing student loans, including information on federal repayment plans and forgiveness programs. This helps members stay informed and proactive about their payments.

Offer Real Solutions and Help

Give Payment Flexibility

Offering flexible payment options can really help members manage their past-due accounts. Think about installment plans, deferred payments, or reduced payment amounts over a specified period. When you present these options with empathy and clear communication, it encourages members to take action and feel supported.

Provide Financial Advice and Resources

Partnering with financial counselors to offer resources can make a big difference for your members. Financial counseling helps them better understand their finances and plan how to manage their debts. Providing tools like budget templates and financial planning guidelines shows that you genuinely want to help them beyond just collecting past-due amounts. It’s about supporting their overall financial well-being.

Leverage Data to Improve

Tracking Results with Analytics

Analyzing the effectiveness of your communication strategies is crucial. Track metrics such as response rates, resolution rates, and member satisfaction. Use these insights to make data-driven decisions that enhance your communication efforts.

Continuous Improvement with Data

Regularly reviewing and analyzing data helps identify trends and patterns in member feedback. Use this information to continually refine your communication strategies. For example, if certain messages or channels yield better responses, adjust your approach accordingly. Continuous improvement ensures your strategies remain effective and relevant.

Train and Support Your Collections Team

Continuous Training Importance

Continuous training is essential for a collections team to remain effective and sensitive. Training topics should include effective communication techniques, active listening skills, and strategies for handling difficult conversations. Interactive training methods like role-playing and debriefing as a team on how past accounts were handled can enhance these skills.

Upgrade Your Tech Stack

By bringing in the right technology, you can make your agents more efficient, automate tedious manual tasks, and help reduce burnout. Automation frees up your team to focus on more complex issues, minimizes errors, and streamlines workflows, leading to higher productivity and better outcomes. Creating a supportive environment where your team feels empowered is crucial. With access to advanced tools and software, agents can perform their jobs with less stress. Encouraging a tech-savvy, collaborative culture where team members share best practices and learn from each other makes a huge difference, creating a healthier, more sustainable work atmosphere.

Conclusion

Effective collections communication should be caring, transparent, and personalized, with continuous improvement based on data. By considering collections from the member’s perspective and employing clear language, personalized communication, and data-driven insights, you can foster stronger relationships and more successful outcomes. The Lexop platform can help you achieve these goals. Book a demo below to learn how Lexop can transform your past-due member experience.