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Segmenting BHPH customers can improve collections by focusing on specific needs and risks. Instead of treating all borrowers the same, grouping them by payment habits, risk levels, and communication preferences helps you work smarter, not harder. Here's how segmentation helps:
Next Steps: Use data tools like machine learning to refine segmentation, create tailored plans for each group, and train staff on new strategies. This approach not only improves collections but also strengthens customer relationships.
Grouping BHPH customers effectively depends on understanding their key traits and behaviors. This approach helps shape strategies that work best for collections.
You can segment BHPH customers based on three main factors:
Using these categories helps improve collection efforts in measurable ways.
When done right, segmentation leads to better use of resources and improved collection results.
It's important for dealers to regularly update their segmentation criteria. Adjusting strategies to match changing customer behaviors and market trends ensures collections stay effective while maintaining positive customer relationships.
Today’s BHPH dealers use advanced data analysis to create precise customer segments, revealing patterns that might be hard to spot manually.
Clustering algorithms powered by machine learning can uncover natural groupings within customer data by analyzing multiple factors at once. These factors often include:
Machine learning processes large datasets to detect subtle patterns. For example, it might reveal that customers making partial payments early in the month differ in risk profile from those paying in full later.
These insights go beyond algorithms, as analyzing clear payment trends can further refine how customers are segmented.
Machine-driven insights pair well with traditional analysis of payment trends. Here are key patterns to monitor:
Research shows 63% of debtors fall into five categories based on their willingness and ability to pay, financial habits, and behavior. This helps predict shifts in risk levels, allowing dealers to act accordingly.
Key patterns to watch include:
Using segmentation data, it's possible to create tailored collection strategies for different customer groups. These plans rely on specific insights to address the needs and risks of each segment.
High-risk customers demand close attention and structured strategies:
It's essential to make personal contact within 24-48 hours after a missed payment.
For medium-risk customers, a balanced approach works best:
This approach helps maintain relationships while ensuring compliance with overall portfolio goals.
Low-risk customers require less oversight:
Frequent, positive engagement helps maintain good payment behavior.
The effectiveness of communication depends on the customer's risk level:
| Risk Level | Primary Contact Methods | Frequency | Follow-up Timing |
|---|---|---|---|
| High Risk | Phone calls, certified mail | 2-3× weekly | Same-day escalation |
| Medium Risk | Email, text messages, calls | Weekly | 48-hour follow-up |
| Low Risk | Email, automated notifications | Monthly | Standard cycle |
"Personalized contacts enhance collection outcomes"
Track how customers respond to different communication methods and adjust strategies as needed for better results.
Once you've identified your segmentation strategies, the next step is to put them into action with a structured setup and clear guidelines.
Segmented collections must comply with FDCPA and FCRA regulations. Start by creating a strong data governance framework. This includes secure data storage, clearly defined access protocols, and regular compliance audits. It's also essential to implement strict privacy controls to manage access, maintain records, verify consent, and protect sensitive information.
With data governance in place, the focus shifts to technology. The right tools are key to managing segmented collections effectively. Some must-have solutions include:
"The Collections Advantage tool that we've implemented has allowed us to go from more of a 'dialing for dollars' kind of recovery effort to a more targeted, queuing workflow pipeline, so it's a much more efficient process." - Mike London, Manager, Delta Community Credit Union
Collection platforms should update data frequently. For example, Experian processes over 1.3 billion updates each month and refreshes its data daily. This level of accuracy is crucial for effective customer segmentation and assessing risk.
Once your data and technology are aligned, it's time to prepare your team. Training should cover both technical skills (like understanding data privacy, using CRM tools, and applying segment-specific strategies) and soft skills (such as conflict resolution, customer service, negotiation, and cultural awareness).
Training isn't a one-time event - it should be ongoing. Schedule regular refresher sessions and updates to keep up with any changes in regulations or processes. Be sure to document all training completions for compliance purposes.
"Experian's greatest strength is their people - their salespeople, the marketing group, the sales group, the support people. They're not trying to sell you a product. They're actually trying to be a help to you." - Mike Cushing, Executive Vice President, Fourscore Resource Capital
Finally, track performance and hold regular coaching sessions to reinforce skills and strategies. This continuous feedback loop ensures your team stays effective and up-to-date.
Improving segmentation can significantly enhance collection performance. Data shows that customized strategies lead to better results, with top-performing companies nearly achieving a perfect score on the Collector Effectiveness Index.
Here are the core elements that drive success:
"If you want to maximize your recoveries, you've got to be banging on the phone. Collections is all about phones".
"If you have a weak leg in collections, you're dead. I don't care if your ACV is $1,000".
By building on these principles, you can refine your collection strategies for better outcomes.
To maintain and improve portfolio performance, prioritize these actions:
Sustained success requires approaches that adapt to changing needs while keeping the customer at the center. Organizations that consistently evaluate and improve their segmentation strategies are more likely to achieve higher recovery rates and retain customers.
More than a decade of Ivan's career has been dedicated to Finance, Banking and Digital Solutions. From these three areas, the idea of a fintech solution called Debepxert was born. He started his career in Big Four consulting and continued in the industry, working as a CFO for publicly traded and digital companies. Ivan came into the debt industry in 2019, when company Debexpert started its first operations. Over the past few years the company, following his lead, has become a technological leader in the US, opened its offices in 10 countries and achieved a record level of sales - 700 debt portfolios per year.
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