As we step into 2025, the shift towards digital has transformed into more than just a trend. It is set to become the standard everywhere.

Borrowers today expect quick and easy, digital-first interactions, be it banking, servicing or collections. The days of traditional collection methods are slowly fading, as more agencies recognize how going digital can significantly improve outcomes. 

It is projected that by this year itself, over 70% of debt collection agencies will begin to utilize AI and machine learning technologies.

Adapting to this shift doesn’t require a complete overhaul or heavy investments. It starts with rethinking the way we approach borrower engagement. We need to consistently keep pace with evolving expectations and make small, meaningful changes to optimize digital collections. 

We’ve made this guide to highlight five actionable strategies that will help you adapt and thrive in this new environment and get started on the journey of making your collection efforts more effective, efficient, and borrower-friendly.

Optimize your audience segmentation 

Always segment your customer base, and optimize collections treatment according to them. If you have been sending generic bulk emails to customers and not getting the response rates you expected, or your emails have not been getting delivered, it is because this method treats all accounts as one and the same. 

While there are more email deliverability risk factors involved here, bulk emails are a major reason why your engagement rates have been consistently low, or your SMS blasts have not been getting a good response rate. Generalized bulk emails ignore critical customer differences and contain a lack of personalization. Hence, borrowers often perceive these messages as irrelevant and alienating, which in turn leads to lower response rates and reduced payment collections. 

Quick win: In order to stop targeting individuals who may not be receptive to the content at the given time, manually group accounts based on some simple criteria, some of which are listed below.

• Last contact date: Separate "Recently contacted" vs. "Unreachable" accounts. Segmenting accounts as such helps prioritize follow-ups and improve communication strategies. While Recently contacted accounts can be nurtured with personalized messages to encourage repayments, unreachable accounts require alternative outreach channels or escalation to re-establish contact.
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• Account age: Group newer accounts for proactive outreach and older ones for follow-ups.
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• Balance size: Focus tailored messaging on accounts with higher balances.
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•  Payment history:  Identify accounts with consistent payments in order to offer structured plans. Focus on those with missed payments to provide flexible options.
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• Communication preferences: Tailor messaging by grouping borrowers based on their preferred contact channels, such as email, SMS, or phone.

Our input? Use basic tools such as spreadsheets or use your CRM to maintain and update each segment. It’s a proven method to potentially increase engagement and payments without any additional costs.

‍How Prodigal Helps:  We work with you to understand your portfolio, existing digital strategies, and interaction data to create a tailored channel strategy. This ensures you reach your accounts through the channels they’re most active on, hence maximizing engagement.

Refresh your email and text templates

Overused content templates can often lead to borrower fatigue and lower response rates. Replace long, generic templates with concise, actionable ones. 

Quick win: Create three new templates with varied tones and structures.

1. A friendly reminder template
2. A sense of urgency template (e.g., deadline-focused)
3. A personalized payment plan template

You could even experiment with different subject lines and call-to-actions, like "Settle Your Balance Today" versus "Choose a Payment Plan That Works for You.". 

Focus on every word adding value to the customer and aligning with their perspective. Fresh and engaging communication increases the likelihood of responses.

How Prodigal helps: Our library offers more than 360 expertly crafted email and SMS templates designed for collections. These templates are based on industry insights and tailored to your portfolios. It makes it easier to refresh and customize your communication according to your requirements.

Experiment with right-time to contact strategies 

Did you know that there are certain timings in a week that work better for increasing borrower engagement?

Yes, in fact even certain days of the week work better in terms of engagement, such as midweek days like Tuesdays and Wednesdays. 

Quick Win: You can start by testing basic time slots, such as sending messages during lunch hours (12-2 PM) or evenings (6-8 PM). Track the engagement manually over 1-2 weeks to identify patterns, timing is everything. 

How Prodigal Helps: We can help you automate right-time to contact recommendations by analyzing historical data and borrower behavior. Our AI eliminates the guesswork out of outreach, maximizing the likelihood of payments by aligning with the preferences of your borrowers. This ensures that messages are sent at optimal times, maximizing engagement effortlessly.

4. Incorporate personalized payment plans

Generic payment requests often miss opportunities to connect with borrowers, especially in fast-growing sectors like Buy Now Pay Later (BNPL). With the BNPL industry projected to grow at a CAGR of 20.2%, reaching approximately $160.2 billion globally by 2032, lenders are witnessing an increasing need to engage borrowers in meaningful ways to ensure timely collections.

Quick Win: Offer three simple payment plan options in your messaging.

1. lump sum settlement
2. monthly installments, and
3. bi-weekly installment plan

Clearly outlining these plans in your email or text templates shows consideration for the borrower’s financial situation, a crucial factor in the BNPL space where borrowers often prefer short-term, flexible repayments. This approach can foster trust and boost your response rates.

How Prodigal helps: We can dynamically adjust payment plans based on real-time borrower data, enabling agents to present options that align with individual financial situations. Using Prodigal's affordability model, we design personalized payment plans according to borrowers' financial situations. For example, gig workers, can opt for flexible weekly or bi-weekly payment options aligned with their paydays, all while adhering to your internal policies. This personalization enhances efficiency and improves payment outcomes.

5.  A/B test for engagement

Have you been blasting the same messages to all your accounts? You might be missing out on major opportunities for boosting engagement and refining communication. 

Quick win: Start with a simple A/B test by creating three audience segments.

• Segment A gets one version of your message.
• Segment B gets another version with slight variations, like different subject lines or call-to-action placements.
• Once the results are in, deliver the winning version to Segment C, ensuring your most effective message reaches a broader audience.

For example, test subject lines like “Action Needed”  vs. “Let’s Settle This Today” or place your call-to-action at the beginning vs. the end of the message. Track responses, and apply the winner to future campaigns for better results.

How Prodigal helps: We make A/B testing easy by automating the process and providing detailed insights, which in turn helps you to be confident in refining your messaging strategies. We handle A/B testing and refinements, optimizing subject lines, CTAs, and offer structures to ensure your campaigns resonate with borrowers and deliver peak performance effortlessly.

Transform your digital collection for success in 2025

As you can see, improving digital collection efficiency doesn't require a complete overhaul of your processes. With these quick, actionable strategies, you can make significant strides in borrower engagement and payment outcomes. 

Remember, efficiency is all about working smarter, not harder. You can watch your results transform once you start implementing these. Interested to see how Prodigal can simplify your journey? Let’s have a quick chat, no strings attached.