Maximizing the Productivity and Effectiveness of Collectors – Part 3

 

Collections is a key area of any credit granting organization, and it is common for organisations to invest in processes, technology and strategy in an attempt to increase the efficiency and effectiveness of this area. Unfortunately, it is also common for organizations to overlook the most important factor in collections – the collectors who make contact with customers every day.

 

This series of tips will explore some aspects that have been found to be invaluable in improving the performance of a collections area by focusing on development of collectors.

 

Last month's tip discussed the advantages of assertive behavior in collections. This month we discuss three types of assertiveness that can be used in a collections call.

 

Types of assertive behavior
A key aspect of collections relates to training in the correct behavior style. Assertive behavior is effective in collections, and can be classified into three key types.

• Basic assertiveness
  Basic assertiveness is typically the most appropriate start to a collections call where it is apparent from the information on the customer that they did not break a promise to pay and are not a repeat offender.
  
  

  With this style, the collector makes a straightforward statement of their need as well as a reason for the customer to meet that need. For example, "You need to pay $80 to ensure you keep your good record at our bank." This is a very simple statement, it expresses the need, it explains the repercussions of non-payment and it uses positive language (keep your good record).

   

• Escalating assertiveness
  Escalating assertiveness is useful when a collector needs to increase the pressure on the customer, either because they are a higher risk, or a repeat offender, or they have broken a prior promise to pay or arrangement.
  
  

  With this style, the collector still makes a straightforward statement of their need and the repercussions of non payment, but power words are used to make the statement stronger. For example, "You need to pay $80 immediately Mr. Smith. Failure to do so will result in a bad record at the credit bureau and could stop you from getting credit in the future." In this example, power words ("pay immediately") and negative language ("bad record", "stop you from getting credit") are used to escalate the impact of the message. Another aspect of this is that the repercussions of non-payment in this example are more serious than with basic assertiveness.

   

• Empathic assertiveness Empathic assertiveness is appropriate when the customer has given a reason for their missed payment for which empathy is appropriate. For example, a death in the customer's family occurred and the resulting funeral expense is the reason for the missed payment. To shrug such an event off as irrelevant and insist on payment is likely to alienate the customer and lose the account. On the other hand, to over empathise or not request payment is not good collections practice either. A one line acknowledgement statement should be used in this situation and then the payment negotiation should be encouraged. For example, "I am sorry to hear about the death in your family. You are a valuable customer to us and we would like to help you to keep your good record."

This tip has discussed three types of assertive behavior. In next month's tip, we will discuss negotiation techniques and how to improve a collector's negotiation effectiveness.

Paul Shortridge is a Senior Consultant at PIC Solutions, the largest customer management solutions company based in the Southern Hemisphere. He has over 5 years experience in the financial services industry. Previously with Nedcor as manager – innovation in retail credit, he headed up a team that successfully rolled out projects to reduce risk, increase revenue and reduce costs across all credit and transactional products. In this role, he implemented initiatives that increased revenue by R100 million and introduced their 8-second home loan pre-approval process. As lead consultant at London Bridge Group, Paul was responsible for the business lead in large scale project implementations as well as assisting the sales team with expanding their market in South Africa. He holds a BSc and MSc in Chemical Engineering from the University of Cape Town.

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