West Covina, CA-based First Financial Financial Credit Union faced slosing the core of its business. The institution had watched with increasing alarm as $14 million in delinquent subprime auto loans piled up, most over 60 days past due, across hundreds of accounts it services in a region centered 18 miles east of Los Angeles.
The losses had grown to "astronomical" proportions in what was FFCU's largest loan portfolio, says Ann Meister, the credit union's collections manager.
After being brought on board along with FFCU's vp of collections Don Gross, in a management shakeup aimed at righting the operation, Meister immediately spotted the culprits of the ballooning unpaid debt.
First, the collections department was waiting too long-16 days-past the contractual due date to contact its sub-prime customers to get them to pay. Second, and making it needlessly more difficult to make headway in collecting on the loans, collections staff was being forced to manually dial customers, so they could barely get through the volume of calls they had to make.
To correct the problem, Meister decided to automate its outbound calls with a Web-hosted interactive voice message platform from SoundBite Communications. FFCU pools all its accounts on the platform, which is typical of any dialer. But instead of calling at 16 days past the contractual due date, the credit union now calls at between three and seven days for all loans, and three days for sub-prime.
The calls alert customers to their past- due situation, and provide self-directed options, whether it's to speak with an FFCU representative, or to pay. Configured to send automatic personalized voice messages to home phone numbers of FFCU loan customers has allowed Meister to focus much of her collections staff on servicing the incoming calls; she even has had to increase the inbound staff.
The results, however, have been a net plus. Since going live with SoundBite over a year ago, FFCU has collected over 75 percent of its outstanding debt in sub-prime auto loans, due at least in part to using the platform, and has boosted its debtor-contact rate by two thirds.
SoundBite is set up to place calls only to home phones to help protect customers' privacy, and guard the credit union from disclosing its debt information to any third parties. Messages left on voice mail or answering machines don't mention FFCU by name. Instead, a reference number, which is a suppressed portion of the customer's account number, is given. The message will indicate that the customer has received an important call pertaining to a certain reference number and that he should please call a 1-800 number.
Even if customers don't realize that FFCU is the caller, "many times they call us to find out 'Why do you keep calling me?' So we can begin at that point to engage them," Meister says. "After that, they know it's from First Financial."
Users upload the numbers into SoundBite's Web-hosted platform and manage campaigns on-line via a user interface. "SoundBite allows dialer managers like Anne to run IT the way they want," says Carol Ferrari, SoundBite's vp of marketing.
Other interactive voice services, like those of Concerto Software's DaVox platform, will send calls to both business and home numbers. Yet FFCU's "hit rate" for live contacts, according to Meister, "is probably equitable to DaVox at about 30 percent."
Other competitors active in IVR include Aspect, Avaya, Cisco, Comverse, Edify, Envox, Genesys, HP, IBM, Intervoice, Microsoft, Nortel, Nuance, Syntellect, Unisys and VoiceGenie.
Recently, self-directed payment and collections options have moved into on-line banking channels. Such products can enable consumers in credit card or other debt to work through their problems on-line without having to deal directly with a collections officer, which can be embarrassing. Platforms like InCurrent, from Chantilly, VA-based Online Resources, provide Web-based calculators and other services to help customers figure out payment strategies.
"Some, though not all, of those benefits will transfer over to IVR," says Ariana-Michele Moore, an analyst at Celent Communications.
Getting through the volume of calls has been the main boost in FFCU's collections rate thus far. Between 700 and 900 calls are sent out daily via SoundBite, while Meister and her staff work into second-shift hours to manage the post-work inbound calls; she stays at work up to 7:00 p.m., she says. Yet it's considerably less work than when FFCU had manually call between 1,400 and 1,600 sub-prime accounts in the morning and afternoon each day.
Initial success has led FFCU to add SoundBite campaigns to negative or overdrawn accounts, and to service cars up for repossession. "[We can] save on repo costs if we can talk to that customer and work something out," Meister says.
FFCU has also crossed SoundBite into customer retention to see if members want to finance other cars. Initial hit rates have hovered around three percent. The process is being retooled. Still, Meister says, "that's not too bad for the first try."
