Is collections a customer service?

Are there ways to make customers happier with your collections process? The reality is that customer service is just as important – and if not, more important – when it comes to collections. Here’s why collections needs to be considered a customer service.
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Are there ways to make customers happier with your collections process? Are customers less valuable just because they’re past due? Should collections actually be considered a customer service?

Those are the questions I’ve been trying to answer for most of the past 35 years, ever since I got my first collections job in 1979 at a furniture rental company. At the time, the collections department was housed in a walled off section of the furniture warehouse, with a dozen reps manning tiny desks equipped with a phone, a bucket of customer history cards and a printout of the delinquent accounts each rep was responsible for collecting. And I do mean responsible – you were measured and paid on your ability to keep your accounts current. If you couldn’t get a customer to pay, you were also expected to go get the furniture back.

If you’ve ever tried to wrestle a hide-a-bed sofa out of a third floor apartment, then you can guess which outcome I preferred. That’s why I set about developing a set of tactics that I hoped would increase the likelihood my customers would make their payments.  One of these was a hand-written note threatening repossession that I would add to the bottom of our pre-printed friendly reminder letters.

While this approach might have helped keep me out of spinal traction back then, I’m disappointed in myself when I think about it now. I may have come up with an effective way of meeting my short-term goals, but I failed to consider the negative impact on my company’s long-term objectives.

My job was not just to keep customers paying – it was to keep them HAPPY and paying. Clearly my threats of repossession were not going to create a positive customer experience. Unfortunately, even today, such heavy-handed tactics are not uncommon.

Earlier this year, Nuance and Wakefield Research conducted a survey of 1,000 U.S. consumers, asking them about their experience when they are late paying a bill. The survey, “What’s Fair in Collections,” shows that what consumers had to say about the collections experience wasn’t very complimentary:

  • 43% felt they had been called too often;
  • 38% had been threatened with legal action;
  • 22% got payment demands for bills they didn’t actually owe; and,
  • 5% said they had been threatened with physical violence.

Tactics like these might collect a few payments, but they’re also part of the reason why the Consumer Financial Protection Bureau (CFPB) issued an Advanced Notice of Proposed Rulemaking (ANPR) last year. It’s the first step in its process of establishing oversight of collections practices.

Since those rules could impact clients who use Nuance proactive engagement solutions as part of their collection process, we asked many of the same questions in our survey. The bottom line? Customer service is just as important – and if not, more important – when it comes to collections. In my next few posts, I’ll share some of our findings and more importantly, offer suggestions on how creditors can improve customer satisfaction and collections results at the same time.

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Brian Moore

About Brian Moore

Brian Moore, senior principal, industry solutions of Nuance's Enterprise division, brings more than 25 years of experience in financial services, mortgage and collections operations and technology to the company. He is also our resident compliance expert, advising companies on how to comply with TCPA, CFPB, TSR and other customer communications compliance regulations.