Collections executives often struggle to balance fairness with effectiveness when implementing collections strategies. While the technology of collections has evolved over the past 35 years, one thing hasn’t changed – customers don’t always pay their bills on time but they still expect fair treatment when you remind them of the fact. Embracing digital communication and self-service technology can help cure delinquency without damaging your customer relationships.
These are also questions I’ve been trying to answer for most of the past 35 years, ever since I got my first job as a collector at a furniture rental company.
If that conjures up images of a boiler room operation, you wouldn’t be far off. The collections department was housed in a walled off section of the furniture warehouse, with a dozen reps manning 3X5 foot desks equipped with a phone, a bucket of customer history cards and a printout of the delinquent accounts each rep was responsible for. And I do mean responsible – this was a cradle to grave operation. I was measured and paid on my ability to keep my accounts current, and if I couldn’t get a customer to pay, I was expected to repossess the furniture.
If you’ve ever tried to wrestle a hide-a-bed sofa out of a 3rd 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 the threatening note, something I would hand-write at the bottom of the pre-printed friendly reminder letters I sent if I couldn’t get the customer on the phone. My personal missive said something like “don’t let the friendly tone of this letter deceive you. If I don’t get your payment by the 15th, I’ll be out with a truck to take our furniture back.”
While this approach might have helped keep me out of spinal traction back then, when I think about it now, I cringe. It may have been an effective way of meeting my short-term goals, but I certainly wouldn’t call it fair. And beyond that, I failed to consider the negative impact on my company’s overarching objectives.
You see, my job was not just to keep customers paying. It was to keep them happy and paying, and since you are still reading this, I expect that describes your job as well.
Obviously, many things have changed in collections since I sent my last nasty note back in 1983. The phone gave way to the predictive dialer, the printout and history cards moved on-line, and cradle-to-grave responsibility morphed into early, late and recovery stage specialization.
That’s why I’m encouraged by the increasing adoption of enhanced digital communication and self-service channels in the collections operations of many leading credit grantors. These innovators are finding that friendly reminders sent via interactive voice and text messages, emails and push notifications are more effective than dialer calls, cost less, and all but eliminate the risk that a rogue collector will add something inappropriate to the communication.
Brian Moore, senior principal, industry solutions of Nuance’s Enterprise division, brings more than 30 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 the TCPA, FDCPA, TSR and other regulations impacting customer engagement.