Financial services companies currently face the highest card default and charge-off rates in more than 20 years, and uncollected debt is expected to grow through the end of 2009. As debt rises and internal resources shrink, the job of collections increasingly falls to customer care.

Collections can be a sticky subject for customer care operations. Ordinarily focused on creating positive customer experiences and retaining those customers, contact centers often struggle to find the right approach for asking delinquent customers to pay up.

Traditionally, financial services companies have outsourced collections and recovery efforts to a service provider focused solely on collecting payments, which often damages the customer experience and relationship that the parent company has worked so hard to build and manage. In these trying times, companies will benefit from being creative about how to collect more, earlier in the process, from the contact center and maintaining the all-important positive customer experience.

Here are four suggestions for improving the collections and recovery efforts of contact centers:

Make softer calls.
When making efforts to recover past due payments, it’s important that your customer care center not act like a collections agency. The connotation of debt collector is more negative than that of a customer care representative; use that to your advantage. It’s imperative that you stay focused on improving customer relationships. A well-trained customer care representative should guide the discussion, keeping both the customer’s unique situation and the company’s interest in mind.

Show empathy for your customers. Many of your customers are struggling with large debts that may seem insurmountable. Many feel hopeless, and simply opt to not pay any part of their debt. Customer care’s job is to change the customer mindset on repaying these debts, recovering as much as possible in the process. By creating a manageable payment plan, rather than demanding payment in full, you are seen as a partner focused on helping the customer work through a tough situation. Also, by guiding the customer to a more manageable plan, the company will recover more than by simply demanding the full sum, which a customer will not be able to pay.

Use channels preferred by your customers. According to Convergys research, 44% of bank customers have been online to do business in the past six months and 38% of card customers have been transacting online. Approximately 30% in both channels have used an automated system. Why not leverage a low-cost channel like web or e-mail for recovering past due payments where these contact avenues are legally permissible? By matching the experiences customers want with these cost-effective channels, you will able to collect more, using fewer company resources.

Reach out earlier. Rather than waiting until an account is 30 days past due, engage with the customer as early as three days after a missed payment or even before customers are delinquent when it is observed that they may be in financial distress. Understand your customers’ needs and behaviors, and then translate those into successful transactions, either through live agent or automated channels that motivate your customer to pay more, sooner.

Successful collections and recovery processes will not only increase your company’s cash flow, but will also improve relationships with your customers. Sometimes it’s helpful to remember that we’re all in the same boat. Your customer care agents can relate to their customers’ situations. Customers most likely want to pay on their past due accounts, they just need help to get started.

It’s up to the company to change customer mindsets about the collections process and make the most of a bad situation. Turn these uncomfortable conversations into mutually rewarding experiences for the business and the customer. Especially during tough economic times, companies need to view collections as a part of their relationship management strategy.

Andrea Ayers is president of Customer Management at Convergys, a company focused on technology-backed relationship management and customer care services.

To comment, contact Darren Waggoner at Collections & Credit Risk at 815.463.9008 or by e-mail at: darren.waggoner@sourcemedia.com. Your feedback will help shape our ongoing coverage.

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