Optimizing Text Payment Campaigns for Collections Success

In recent decades, credit unions have witnessed a significant shift in how members make payments. From the era of checks and mailed payments to the rise of electronic portals, we’ve arrived at a time when members have countless payment options. Amidst these options, one method has emerged as a clear favorite: text messaging.

Text payment campaigns have revolutionized how financial institutions engage with their customers, offering a seamless, convenient experience. By integrating text messaging into the collections process, credit unions can enhance member engagement and streamline payment processes. But to fully harness the power of text payments, it’s essential to go beyond just sending a reminder. Including a payment link in a text message creates the ultimate collections reminder, enhancing both communication and collection rates.

The Role of SMS in Member Outreach

SMS, or text messaging, stands out as a powerful tool in member outreach for several reasons:

• Immediate Reach and High Open Rates: Text messages are typically opened within minutes of receipt, offering a level of immediacy unmatched by other communication mediums.
• Convenience and Accessibility: With nearly everyone carrying a mobile phone, SMS provides a direct and convenient way to reach members wherever they are.
• Personalized and Direct Communication: SMS allows for a more personal touch, making members feel valued and heard, which is crucial in fostering a positive member experience.

While emails remain vital for delivering detailed communication and formal notices, SMS excels in quick, concise messaging. Members are often more responsive to texts, especially when time-sensitive actions are required.

Enhancing Credit Union Outreach: The Role of SMS in Modern Collections

Integrating SMS into a Comprehensive Outreach Strategy

Relying solely on email or text messages for collections is a limited strategy that often leads to missed opportunities and less effective outcomes. Data shows that combining SMS and email yields the best results in reaching members and prompting timely payments. Integrating these channels creates a cohesive communication plan that maximizes the strengths of both.

Emails are ideal for delivering detailed information, legal disclosures, and payment options, while SMS, with its impressive 98% open rate, offers immediacy and a higher likelihood of being read promptly. Together, they enhance engagement and ensure important messages are received and acted upon. To optimize this approach, consider these strategies:

1. Complementary Messages: Use SMS and email to support each other. Send an email with detailed information about an overdue payment, followed by an SMS reminder with a direct payment link. This dual approach maximizes member engagement.
2. Consistent Tone and Branding: Ensure a consistent tone and branding across all channels to reinforce your credit union’s identity and build trust. This helps members recognize legitimate communications and strengthens their relationship with your credit union.
3. Strategic Timing and Frequency: Plan message timing to avoid overwhelming members while providing timely reminders. For example, send an email followed by a text message reminder, gently nudging members without overwhelming them.

The Power of 2-Way Texting: Real-Time Interaction

While traditional text payment campaigns allow institutions to send payment reminders and links, adding a 2-way texting capability takes member engagement to the next level. With 2-way texting, members can interact with your institution in real time, asking questions, clarifying payment details, or requesting assistance—all within a single text thread.

This live interaction fosters a personalized experience, making members feel heard and supported. It also allows collections teams to address concerns immediately, reducing the likelihood of missed payments and increasing overall collection rates. By meeting members where they are—on their phones and in the moment—2-way texting can significantly enhance the effectiveness of your campaigns.

The Importance of Payment Links in Text Messages: Addressing Phishing and Fraud Concerns

Including a payment link in text messages is crucial for providing a seamless payment experience. Members can complete their payments quickly and easily by clicking on a secure link directly from their phone. However, this convenience comes with the responsibility to mitigate potential phishing or fraud risks. To ensure that members can trust the payment links they receive, consider the following best practices:

• Use a Recognizable Sender ID: Ensure that your text messages come from a recognizable and trusted sender, such as your credit union’s name or a dedicated short code.
• Include Clear Branding: Incorporate your credit union’s logo or branding elements in the message to help members identify legitimate communications.
• Educate Members on Security: Regularly educate your members about how to recognize legitimate texts from your credit union and the importance of not clicking on links from unknown senders.
• Implement Secure Links: Use HTTPS-secured links and consider integrating two-factor authentication (2FA) for additional security.
• Provide a Contact Number: Always include a contact number in the message, allowing members to verify the legitimacy of the text by calling your credit union directly.

By prioritizing these security measures, you can offer the convenience of payment links in text messages while safeguarding your members from phishing and fraud risks.

Ensuring Legal Compliance in SMS Outreach

Legal compliance is paramount when incorporating SMS into your outreach strategy. To ensure compliance:

• Obtain Explicit Consent: Clearly inform members about the type of messages they will receive and get their consent.
• Provide Opt-out Mechanisms: Allow members to easily opt-out of SMS communications.
• Keep Records: Maintain records of consent and all communications to ensure compliance and address any disputes.

Additionally, when using 10-digit long codes (10DLC) for SMS, credit unions must adhere to the A2P10DLC regulatory framework by registering their messaging campaigns and obtaining approval, ensuring that all communications are compliant with legal standards.

Seven Essential KPIs to Measure Success

1. Payment Acceptance Rate: This KPI measures the percentage of payments successfully completed via text. It directly reflects the effectiveness of your text payment strategy and its contribution to revenue generation.
2. Click-Through Rate (CTR): CTR indicates how often members engage with the payment links in your text messages. A higher CTR suggests that your messaging resonates with members and prompts them to take action.
3. Customer Satisfaction (CSAT) & Net Promoter Score (NPS): These two metrics provide a comprehensive view of member satisfaction. CSAT measures immediate satisfaction with the payment process, while NPS gauges long-term loyalty and the likelihood of members recommending your services to others. Both are crucial for understanding member experience and improving your collections strategy.
4. Collection Rate: The collection rate tracks the effectiveness of your text payment campaigns in driving actual payments. This KPI is central to assessing how well your strategy converts reminders into revenue.
5. Cost of Loan Servicing: This umbrella KPI consolidates various cost-related metrics, including Cost to Collect and Cost to Transact. It measures the overall efficiency of your collections process, focusing on minimizing costs while maximizing revenue. Lowering the cost of loan servicing is essential for maintaining profitability.
6. Right-Party Contact Rate: Ensuring that your communications reach the correct member is critical for effective collections. A high right-party contact rate reduces the chances of missed payments and disputes, improving the overall success of your campaigns.
7. Inbound Call Volume: Monitoring inbound call volume helps assess how well your text and email campaigns resolve member inquiries. A reduction in calls while maintaining or improving collection rates suggests that your messaging is clear and effective, reducing the need for additional support.

By focusing on these seven KPIs, adopting a holistic approach to text payment campaigns, and incorporating 2-way texting and strategic email integration, credit unions can improve member engagement, increase collection rates, and thrive in an increasingly digital world.