Customer Centric Collections

Many organisations, including banks, offer their customers multiple credit product offerings. If a customer defaults on a number of these products, there are often numerous collections areas all trying to collect their money from the customer. Marketing offers are sometimes sent to a customer who might be receiving collections calls for another product.

Intuitively, it makes sense to look at a more customer centric collections model where an organisation collects only once on a person who has defaulted on multiple products. This series of tips will discuss some of the issues that should be considered when looking at this approach. In the previous tip we looked at ways to improve a collections strategy by looking at a customer on a more holistic level. This month’s tip will consider the operational issues that affect customer centric collections.

Operations
If a collector can collect all outstanding amounts across all products with a single phone call instead of multiple collectors with multiple calls, there is a clear cost benefit. This will also lead to a customer service benefit as the customer is not being exposed to a number of different calls with differing tones and approaches.

However, there are a few factors to consider before adopting this approach:

1. Is it worth it?

It is important to understand how many customers actually do have more than one product that is delinquent at any one time. It does not make sense to invest a great deal of effort and money in something if it only affects a minuscule part of the arrears book. For example, if only 10% of clients in arrears have other products elsewhere in arrears, it is operationally more effective to collect on a product specific level but accelerating or decelerating at a collections strategy level.

2. What are the product collections differences?

There can be a considerable variance in collections approaches for different products. Collections for transactional products such as credit cards tend to be very different to collections on an asset based product like a home loan. There are differences in negotiation pathways, threats of non payment, outstanding values and client perceptions.

Next month’s tip considers some of the practical implications of making a single call on multiple products.

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.