Maximizing Productivity and Effectiveness of Collectors

Collections is a key area of any credit granting organization, and it is common for organizations 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.

The first three articles in this series focused on behavior styles and explored the most effective collections style – assertive behavior – and its common characteristics. Article 4 started our discussion on negotiation. That article discussed the first two (of ten) ways of improving a collector’s negotiation techniques. This month’s article explores the next tip in negotiation.

Negotiation tip 3 – Know your customer

In any negotiation situation, it is extremely important to know the person you are negotiating with. In collections, that equates to understanding the customer’s risk profile, current and previous levels of delinquency and their previous promise history.

This information can usually be obtained from the collection system. This system should hold the risk profile classification usually in the form of a "risk grade", the total number of times the customer has been delinquent, the total number of promises previously kept and the total number of promises broken. By using this information, the collector will be able to understand who they are dealing with, and also what type of communication approach would be appropriate for this customer.

For example, a customer that is in collections for the first time and is a low risk type should receive a "basic assertiveness" call. This is where the collector makes a straightforward request for payment.

On the other hand, a customer who has a history of being in collections and who has broken many promises in the past should receive a "strongly assertive" call. The collection agent should also be wary of the customer making false promises as the previous history indicates a tendency to make promises and then not keep to them. In these instances, the source of income should be confirmed to ensure that the promise-to-pay is realistic.

Understanding who you are negotiating with ultimately allow collectors to engage in better quality negotiations which should increase their promise kept rate.

In next month’s tip, we will continue discussing ways of improving a collector’s ability to negotiate.

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.