How to build the business case for digital collections

Tip 1: set clear objectives

Some creditors want to use digital to reduce the cost to collect by removing unnecessary contact with agents and free up their time to focus on more vulnerable customers that need human, empathetic discussions. Others want to focus on improved customer experience and digital as a means of engaging with groups of customers where it's previously proved difficult, or who simply prefer those channels and don't want to talk to anyone.

The ROI calculation will vary according to the core objectives. And surprisingly, many organisations start their digital projects before they've even taken the time to write down these objectives or considered the views of different internal stakeholders.

Digital objectives might include:

• Align to a broader corporate strategy of automation and/or digital first.
• Increase customer engagement and payment rates through improved customer journeys.
• Improve customer retention.
• Reduce impairment provision expenses.
• Reduce cost to serve, employee headcount and more basic collections activities.
• Redeploy staff into the problem areas, increasing overall performance.
• Obtain better insights into customer status post-COVID impact or assessment of payment holidays.

Tip 2: know your costs

Having a detailed understanding of the existing operational cost to serve is key to understanding the potential ROI for digital initiatives.

The same goes for the costs of digital, whether third party vendors, project resources, training, creating (and then maintaining) your digital/web/mobile applications, digital communications, payment processing, or hosting fees.

Notably, digital initiatives will often lead to operational cost reductions, but can lead to higher costs in different functional areas, some of which will end up winners (lower costs) and others losers (higher costs). A 'whole-company' view is needed.

Tip 3: plan for post-implementation

Continuous testing of digital customer journeys, ideally champion-challenging (with the ability to control, measure and change) is an important part of digital transformation. Also being prepared for tests to fail - "If you don't fail, you are not trying hard enough". Ideally, all these costs should be included in the digital business case.

Don't imagine digital transformation is a 'one-off' exercise - the pace of technological change and indeed changing customer behaviours is now so fast that organisations often feel as though they are running just to stand still. A philosophy of continuous improvement is critical, and this will, done correctly, require its own cost and generate its own valuable ROI.

So where should you start?

Creating a compelling business case for digital initiatives is a challenging task - be too aggressive and your organisation may feel underwhelmed by the results, whilst being too conservative and the business case might not get off the ground.

The arum team has lots of experience creating successful digital business cases for organisations that will provide the first and most important ingredient for digital success.