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Receivables Management in E-Commerce: How to maintain the Customer Relationship after the Purchase

In a highly competitive market such as online retail, companies are sometimes spending huge amounts on customer acquisition (CAC). However, these only pay for themselves if the Customer Lifetime Value (CLV) is correspondingly high. The fact that the market is competitive, as shown by the numbers: Of the 47 million online buyers in Germany alone, 40 percent of sales went to the top ten e-commerce retailers. In 2017, the online trade recorded 58.4 billion euros in sales, the forecast for 2018 is 63.9 billion euros. Economists continue to expect strong growth over the coming years, in particular as a result of the ongoing digitisation of retail and the associated digital consumer behavior. At the same time they expect higher growth for the giants in the market, while smaller providers are more likely to act as losers. This makes it all the more important for all players in the market, including those in the backend or back office, and thus in customer service, to be in a digital state of mind.

Growing Online Market with constant Payment Defaults

The share of bad debts is around 14 percent here in Germany. Around a third of e-commerce sales are made via the purchase on account. But not all unpaid claims come from unpaid bills. Return debits and credit card charge backs also lead to unpaid claims.

Particularly consumption intense industries are affected by defaults, this is confirmed by current poll numbers of the Federal Association of German debt collection companies, short BDIU. Right at the forefront is online trading. 55 percent of debt collection companies consider e-commerce particularly prone to defaults, followed by 50 percent in the utilities sector, and 44 percent each in the gym and craft sectors.

Nearly half of companies rate their degree of digitization as high to very high, while only 18 percent have established a digitised process in the dunning process. This low percentage is almost absurd, if you look at how many companies know that digital dunning leads to lower late payments: There are 49 percent! [4]

Modern Customer Communications Approach in six Steps

Gentle but effective dunning processes should create a positive customer experience in the digital era. Only then will the customer, in whom you have invested so much in the “frontend”, continue to be maintained. Our recommendation for the way to digital processes in receivables management:

  1. Culture: Customer-centered receivables management requires a new attitude towards the end customer. Anyone who uses the term “debtor” today did not understand it.
  2. Data: In order to respond to the needs of customers, data is essential. One way to get better records is to incentivize the customer, e.g. with the delivery also the mobile number. Of course, this must be done in accordance with the General Data Protection Regulation, but this is possible.
  3. Communication: The use of digital channels ensures customer proximity. Thus, email, SMS or messenger reach younger customers in particular.
  4. Timing: Customers should always be reminded early in the dunning process. A first interaction should already be done with a positive payment reminder, ideally before the due date. The earlier the customer is approached in the dunning process, the higher the likelihood of securing the customer relationship.
  5. Landing Page: Digital news should always include a link to a responsive website. This shows transparently the demand, allows the direct contact by chat, email or telephone. To settle the outstanding amounts, the site should also offer a range of payment options to make payment easy and uncomplicated.
  6. Automation and Optimization via Artificial Intelligence (AI): Smart processes save the workforce, achieve better results and lower process costs. For example, an AI allows customers to be addressed as needed through individual timing, adjusted tonality, or choice of communication channel. A businessman, for example, achieves automated technology better in the early morning or late evening, rather via email and in a neutral tonality. On the other hand, a young student is more likely to read text messages during the day. The AI ​​tracks the successes and adapts automatically self-learning to customer groups and specific customers.

 

[1] Statista, 2017

[2] EHI, 2017

[3] bevh/Statista, 2017

[4] EOS/Kantar 2017