CRM Software for Collection Agencies: Who Needs It?

by Isaac Asher
April 19, 2024

A Definition of CRM Software

CRM (Customer Relationship Management) software is an invaluable tool for businesses of all sizes, across all industries. It helps them to better manage customer relationships, track customer data, and analyze customer activity. By leveraging this data, businesses can provide better customer service and create personalized experiences for their customers. CRM software is essential for maximizing customer loyalty and driving growth.

Overview of how CRM software can benefit collection agencies

While the needs of collection agencies often overlap those of any industry, there are certain requirements for a CRM software to be truly useful in this rapidly changing industry. Because of this, CRM software for collection agencies must be both flexible and scalable.

Being flexible, in this case, means the software should conform to the needs and processes of the agency, and not the other way around.

Being scalable here means it should not significantly increase in cost as you increase the number of clients or staff.

This writer has always felt that charging per seat is akin to penalizing the agency for growing, which doesn’t benefit anyone.

Further, it’s important for any CRM for collection agencies to be able to store custom data. We often focus only on the base metrics such as date of last placement, current recovery rate, year-over-year recovery rate, etc. For our industry, we need to consider special demands of clients, and other unique data that should be stored at the customer level.

Pro tip: when shopping for a CRM software, make sure the platform allows you to create your own custom fields. Watch out for any platforms that charge you per seat.

 

Advantages of Using CRM Software for Collection Agencies

Improved customer service

In any collection agency, just like other industries, we can consider 80% of your revenue comes from 20% of your customers. This means, by definition, the remaining 80% of your portfolio provides only a small portion of your revenue.

It is all too easy to forget about the smaller clients who don’t bring the big dollars individually when the bottom line is looking so full (thanks to your top 20%).

CRM software for collection agencies will virtually guarantee that your lower 80% of your portfolio is treated with the same care, attention, and dignity as your larger clients. There’s nothing more attractive to a client than when they feel like they are your only client.

CRM software can make that happen across your entire book of business, while the best CRM software can put it all on auto-pilot.

Improved debt collection process

One part of collections that is different from most other industries is the use of contests as part of the regular course of business. We need to motivate our collectors to continue to produce more in order to fight the doldrums of what can be a very repetitious job. A happy collector is a more productive collector, and more productive collectors are good for business all the way around.

The best CRM software will allow you to interact with your staff as well as your clients. If a platform offers even basic gamification for your collectors, it should be considered as a very strong selling point as gamification software can be extremely expensive. Understanding that CRM software is not designed for gamification, if it includes something that addresses this issue, it’s definitely a “nice-to-have” feature.

Increased efficiency & productivity

By organizing and automating your back end operations, you can virtually eliminate process waste or duplication of efforts. Many agencies are spending a lot of time, money, and resources on automation and AI-enabled platforms to drive their production.

Have you considered how you could use artificial intelligence and automation in your back end operations?

How much would it cost you to hire someone a specialist in collections who understands your agency, and never takes breaks or vacations?

This is unrealistic, of course.

Even if you found a top industry professional to fill a similar role, they would still be prone to human errors, and would require a salary beyond what most agencies can afford.

What if you could have someone watching over your agency 24/7, waiting for any situation you specify to happen for any of your clients? When they find the specific condition, they will perform a certain set of actions based on your instruction.

They will do this all day, all night, every day, whether you log in or not.

Think about that for a moment.

Enhanced data management & reporting capabilities

Using a CRM application can expose trends in your data which you previously didn’t notice or understand. When you start really looking at your agency from a 30,000-foot view, trends and patterns appear.

These insights can then be used to extract actionable information so you know how to steer your agency going forward.

You won’t know how to get where you’re going until you know where you are.

Challenges of Using CRM Software for Collection Agencies

High cost of implementation & maintenance

Many CRM platforms are designed for large shops filled with sales teams, which is the opposite of how one would describe the majority of modern collection agencies. Because of this, the platforms are very sales-funnel focused, and they often have a high initial cost.

Once you’ve installed their very expensive software, then you have to figure out how to use their software in your company. There is always a learning curve no matter what software you select; it’s finding one with the shortest learning curve that’s the trick.

Difficulty of finding the right CRM software

Since implementation can often be very expensive (and usually locks you in to a contract), test driving various platforms can become exhausting and expensive quicker than you would think. It’s extremely important to find the right platform for your agency the first time around to avoid the nightmare of changing CRM providers.

Conclusion

How do you find the right CRM software for your collection agency?

We recommend considering a few very important, specific items when selecting your CRM platform:

  • The software should conform to your agency; you should not have to learn the entire platform for it to be useful right away.
  • Pricing: What could cause my bill to change, and am I in control of these factor(s)?
  • Can it be used for staff, clients, and vendors alike?
  • What nice-to-have features does it include?

If you focus on the issues above, it should be easy to spot the clear leader among your choices.

Ultimately, you need a platform that conforms to the way you do business. A steady, consistent bill that will not increase as you grow is necessary. And of course, a single point of contact for your staff and clients, as well as vendors. Gamification for your collectors, and a white-label mobile app with your company’s logo instantly set your company apart. Have you considered how artificial intelligence can help automate your back end operations?

If any of this sounds like you, check out OnePoint for Collections. Learn how this pre-configured solution design just for collection agencies is currently taking the industry by storm.

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