Mention the word “collections,” and the stereotype that comes to mind for many customers is the unpleasant phone call that arrives during dinner or as they’re settling in to relax and watch TV for the evening.
All of a sudden they get the word reminding them of a past due payment. To most, such news comes as an unpleasant shock and an embarrassment. Others, who may know full well they’re behind on payments, can become defensive.
Either way, it’s a sensitive moment, and always a challenge even for skilled personnel who are trained in the art of collecting outstanding debt from late payers.
What if there were ways to easily defuse such moments and transform collections outreach from a dreaded function into a vehicle for generating customer loyalty and actually increasing payments?
For many companies, what might seem like a wild idea is, in fact, a business reality. With the right approach – treating collections as a customer service issue – it’s possible to turn the business of collecting payments into a highly successful and low-cost customer loyalty program that prevents hostility and alienation, makes customers happier than ever to do business with you, and even generates new revenue during the collection call.
In essence, you can get what’s owed and at the same time convert late payers into valued customers with increased lifetime value to the company.
How to make your customers love collections: The trick is to embrace a service-oriented attitude from the start, setting a positive tone that colors and strengthens the relationship. Simply follow these three pointers:
• Use Software Tools to “Know” Your Customers. When it comes to collections, make IT your best friend. Widely available software systems, including business intelligence and predictive analytics tools, can help you quickly analyze the unique personal purchasing and payment habits of every customer your company has ever done business with.
• Once interconnected to customer databases and back office systems, such programs provide a detailed portrait of the customer so that you can pinpoint what they typically purchase, how much they spend, if that amount has increased over time, if they pay on time consistently or ever late, their preferred channel of communication with the company, and in general if they constitute good candidates for collections. Armed with the right IT tools, you can quickly prioritize your bets for recovering past due payments.
• Start Slow and Easy – and Politely. When you set out to contact the late payer, the key mission is to create an open channel of communication and get the customer on your side.
Many times, people simply forget a due date. Rather than call and press a demand for payment, try contacting the customer indirectly, for example by email and text. The message should be simple:
“Can you call at your convenience to discuss options to pay your recent invoice? Thank you!” By beginning with a simple, polite reminder, you avoid creating a judgmental atmosphere that makes the customer uncomfortable. Furthermore, by asking them to communicate at their convenience, you eliminate pressure. If the customer’s failure to pay on time is due to simple forgetfulness, they will likely appreciate the contact and the polite way in which it was put – and pay right away.
• Get What You Came For? – Then “Collect” Another Sale — Now that you have the payment in hand, don’t stop – pull up that priceless customer data you pulled from IT to see what else might be of interest to this prospect.
Remember: Thanks to your cordial tone and helpful attitude in helping them avoid an embarrassing moment, the customer is already on your side. Now build that friendliness into loyalty, leveraging data that reveals their precise interests and predictive analytics programs that even prompt you with just the right offer to make – and at just the right price.
Whereas customer typically dislike uninformed cold calling, research indicates that intelligent cross-sell/upsell efforts based on knowledge of the customer not only succeed more often, but can also win higher customer satisfaction and loyalty.
In other instances, for example, if a customer has fallen behind in paying, but is definitely worth keeping, the same IT systems can direct you to offer plans that make it easier to pay. By helping the customer out of a tough spot, smart companies can win him or her for life and increase their value over the tenure of the account. Furthermore, the customer is more apt to remain loyal when competitors come knocking.
Of course, there is never any “one size fits all” approach. Collections departments will invariably come up against chronic late payers or non-payers who are immune to a company’s best efforts to foster a strong and fair business relationship based on trust and loyalty. When that happens, it can be best to let such hard cases go.
The important thing is to be able to see the differences between customers, know the appropriate treatments for each – and never to follow a blanket approach with all when it comes to collections. By casting collections as a service, you will win and keep more of the right types of customers over time.
Joel Lewis is vice president of program management for collections at Convergys. He is responsible for the acquisition and management of a portfolio of collections clients.
