Collections contact strategies

Pega Collections™ uses Pega Customer Decision Hub™ (CDH) to drive contact strategies, making collections another supported customer journey, alongside retention or cross-sell. Next-Best-Action-Designer is the targeted functionality within CDH that you use to define collection engagement policies and to associate actions.

The following screenshot shows the Collections business issue on the Taxonomy tab of Next-Best-Action Designer:

When defining contact strategies, it is important to consider not just how effective the treatment is, such as a letter or phone call, but also its cost-effectiveness. A phone call can often cost between $5 and $15. Such an expensive treatment should be used judiciously within a strategy. If a payment can be prompted with a $0.50 e-mail or text message, then those treatments should be considered first.

In traditional or legacy contact strategy design, you often see cases or customers grouped or segmented by risk. In this context, risk usually refers to credit risk and represents the probability of the customer repaying the debt. For example, a "high- risk" customer represents the highest probability that the customer will not repay the outstanding debt.

In traditional contact strategy, these high-risk customers will usually be receiving accelerated actions. For example, they may receive first notice that they have missed their payment within a few days of the due date. This contrasts with the low-risk segment, where the first communication may come after some prolonged time period, such as 10 to 15 days after the due date. This is because low-risk customers have a high probability of self-cure (repaying the debt unprompted), making early contact redundant. In fact, contacting this group of customers too early might create a negative impact, as they may see this as bad customer experience and close their account.

When designing contact strategies, it can still be useful to group cases into risk categories as a starting point to designing a dynamic and AI-driven contact strategy plan. For instance, if the risk profile of customers follows a bell curve, with the highest volume falling into the 'medium' risk category, it is good practice to start designing contact strategies with medium-risk customers as the primary audience. This will answer the question: How do I want to reach out to the majority of my customers? "High-risk" and "low-risk" actions can also be included within the list of all actions, and Customer Decision Hub can then validate the best application for such actions. This allows Customer Decision Hub to validate the application of actions against risk predictors to test any preconceived and potentially biased approach about how all customers, not just high-risk and low-risk, respond to specific types of actions.

For more information on how to define and manage actions in Pega Customer Decision Hub, see Defining and managing customer actions | Pega Academy.

For more information on how to define and manage customer journeys in Pega Customer Decision Hub, see Defining and creating customer journeys | Pega Academy.