The collection business has an exceptionally high churn rate compared with other industries, approximately 90% annually, according to industry sources.
Many factors – including the steady march of regulations and intensified competition – have combined to expose the truly negative impact of high turnover on profitability, not to mention its effect on long-term performance and job satisfaction of collectors.
There is widespread recognition that inadequate training and education leads to low staff retention, which perpetuates poor performance overall. The result is a lose-lose environment for both the employee and the company.
Conversely, experience shows a genuine investment in employee training and education yields a virtuous circle: consistently higher standards of performance lead to more mutually successful customer outcomes, which foster long-term success of collectors and their employers.
The Training and Education Investment
Teaching employees to effectively recover debt starts with showing new and current employees how valuable the role of collections is to the financial industry.
A survey conducted in 2008 by PricewaterhouseCoopers LLP for ACA International showed that the collection industry as a whole returns more than $40 billion in debt annually to creditors.
This is equivalent to an average annual savings of $354 for each American household that might otherwise have been imposed as price increases to cover the lost debt. The collection business is widely viewed as intrusive and insensitive, owing no doubt to the fact that collection agents by definition turn up only when there’s a problem, adding to an already stressful situation.
Moreover, for too long, the nature of how collections have been conducted has left the door open to abusive practices. Even though the average collection agent approaches his or her work in earnest and acts in good faith, collectors are maligned as a group owing to the bad behavior of a relative few within the profession.
All of these issues have their roots in an approach to training and education of collectors that has seen minimal enhancement since the earliest days of the business. This inherited approach is woefully simplistic and reflects a shortsighted point of view aimed at getting new hires out of the classroom and on the phones as fast as possible.
This sink or swim approach emphasizing rapid ramp-up at the cost of imparting quality training has been seen as unavoidable.
The problem is that operating in such an environment most collectors sink and employers never recoup the cost of hiring and training. Reversing the high cost of collector turnover requires that we see the collections lifecycle as a complex relationship with specific drivers that can be identified and analyzed.
To succeed, collectors must be equipped with highly differentiated skill sets to recognize those drivers and myriad dependencies and successfully act on them through appropriate collector education and development.
There are many approaches to fostering these skill sets.
Education needs to be “continuing”. The most comprehensive approach is one that comprises a host of elements, quality assurance tools, credit report analysis, listening skills and negotiation techniques – all with an underlying goal of an optimal customer experience.
Collectors must be trained to integrate and use the right tools at the right time. This is based on the belief that collectors are not simply impersonal intermediaries. They are consultants and negotiators who must be adept at problem solving. This is why particular emphasis should be placed on several mission-critical areas:
Collectors must become experts at reaching the customer. The skills that are commonly associated with detective work are central to the success of a collection professional.
The ability to draw connections between disparate pieces of information and intuitive bits of intelligence are essential. Locating someone whose information is inaccurate or non-existent is a skill that verges on art. Nonetheless, it can be taught.
No one sits by the phone eagerly anticipating a call from a collections agent. In our profession, we are contacting customers at a very stressful time, when personal assets are stretched thin.
These calls are tough. That said, our job is ultimately to help individuals through a difficult time, serving as consultants and problem solvers as much as negotiators.
A skilled, well-trained collector must be able to determine the ability to pay based on numerous factors. That involves training collectors to be excellent listeners, able to assess the situation not only by what the customer is saying but by what they’re not saying as well. These are subtle, nuanced skills that are both taught and intuitive.
Collectors must remain thoroughly on top of compliance matters. If we do not do everything possible to ensure this is the case, we run the very real risk of being exposed to potentially serious ethical and legal consequences.
Compliance rules and guidelines have grown more complex than ever. The challenges associated with keeping up with these changes and appropriately integrating them into customer interactions has become a central part of collectors’ jobs.
Competing with the rigors of keeping up with compliance are the steep demands of keeping up with changes in technology. Compared to the rate of change in compliance and consumer protection, which has evolved gradually over a period of decades, changes in the realm of technology have continued to materialize with dizzying speed over just the last decade.
Among the most rapid developments has been the transition of customer-collector communications from voice channels to email and web-based channels.
These changes are having a profound impact on efficiency. One such area in which we are leveraging leading-edge technologies designed to optimize customer-collector communications is artificial-intelligence-based voice analytics. Voice analytics includes products that can analyze calls at hundreds of times the normal speed of unaided human call analysis.
Tools of this kind analyze the frequency of specific words, pitch, tone, sentence structure, repetition, silence and more. All of this is combined and analyzed to produce a highly accurate picture of a specific caller.
This information is extremely useful in a number of ways, including: assessing collector performance by scanning for required language, ensuring quality assurance compliance and accurately estimating a debtor’s probability of paying, which saves time and valuable resources.
Training and education is an essential part of the foundation for a collections firm. Ensuring that employees are provided with the right tools at the right time in their careers is crucial in creating successful long-term employees.
In addition to investment in tools and technology, innovation in training and education can be fostered by encouraging training professionals to explore and experiment with new ideas, methods and approaches to the discipline, which will go far in helping them maintain a competitive edge.
This will inevitably lead to a highly motivated, skilled group of individuals who then cascade the same knowledge across the system. This waterfall approach ensures that everyone shares a common vision and comes to see change as a positive force.
Today’s collections eco-system is intensively solutions-driven, with considerable customization aimed at structuring payments to meet the specific needs of individuals, sometimes in unexpected ways.
Delivering that degree of customized service demands a committed collection staff that shares management’s vision. An ongoing investment in training and professional development is essential in cultivating that vision and that caliber of teamwork.
Arjun Mitra is senior vice president and Jennifer Ciganko-Kiray is learning director at Firstsource Solutions.