Increase Your Collection Yields: A Guide to Optimising Collection and Recovery Returns

The most recent release from the Experian Consumer Default Index (CDI) provides a worrisome overview of the financial well-being of South African consumers. As outlined in the report, Consumer Price Inflation (CPI) remains persistently elevated. Fuelled by surging fuel costs and substantial increases in food prices, the CPI remains at distressingly high levels, well beyond the target range set by the South African Reserve Bank.

Neil Roets, the CEO of Debt Rescue, shared findings from their own research, underscoring the severity of the situation. According to their study, a significant portion of the population, approximately two-thirds, is contending with insufficient nourishment. An alarming 66% of survey participants reported skipping meals due to financial constraints.

With this much pressure on consumers, credit providers and collectors are faced with the difficult task of collecting monthly payments, and as the statistics stand, it is highly likely that a consumer will be defaulting on at least one account in the near future.

The key to surviving in this climate is to ensure your payments are prioritised over others.

However, that is what everyone else is also chasing…

So how do you improve collection yields?

Part 1 of 4: Prioritise the customer experience: Your debtor is still your customer.

It's imperative to shift our perspective regarding customer service representatives. Every single interaction a consumer has with your brand significantly contributes to their overall experience and perception of your company. This perception plays a pivotal role in determining whether they become or remain your customers. A positive customer experience can wield immense influence, transforming a satisfied customer into a loyal brand advocate.?

Every single interaction a consumer has with your brand adds to their experience and impression of your brand or company and this perception plays a key role in whether they become or continue to be your customer.

?Usually, by the time debtors enter the collections stage, the client’s experience has plummeted by default. With collections, there is always a fine line that we must walk to ensure we maintain a positive relationship with customers. Ultimately the intention of any interaction with a customer should be to secure more business from them in future despite the negative event of debt collection. By giving more thought to customer experience in the collection stage of the customer lifecycle, we can improve the probability of repayment and future business or referrals.

So, how do we work towards retaining client satisfaction?

• Personalisation

We personalise the customer experience in order to win and retain business, but it can also be a game-changer in collections.

Personalisation can help to minimise the negative impact of debt collection and increase the probability of payment and future business. Personalisation can be as small as using the customer's first name in their notification SMS; email messages or when they log into a self-service portal. Rather than a standard communication strategy, use their preferred communication channel (SMS, call, email, WhatsApp), as well as personalised payment terms and treatments based on their profile.

No matter how small the degree of personalisation one takes, the impact can be incrementally positive.

• Don’t cause unnecessary disruption

Your customers do not want to be disrupted, and your debtors even less so. By calling or communicating with debtors at a time that has proven to be successful in the past, you are increasing your chance of reaching them, but it is also probable that this is the optimal time they want to be phoned. Think about it: if you are a morning person, and you get most of your work done in the morning, you will ignore your phone calls. However, in the afternoon, when you are more receptive to conversation, you will answer. By analysing previous call data, you can contact debtors at the time that appears to be most convenient and the least disruptive to them.

• Remember previous interactions

Moreover, while we are looking back – if you can reach the customer at the same time as you did last time, then you can remember the conversation, right? Keep a record of the past interactions your agents have had with a customer and enable your agents to access those records instantly during a call, without the need to search through historical logs. This information will equip the agent to handle the call better, but could also help the debtor either recall previous facts or build on an existing relationship.

With technology, we can also equip the agent with previous call sentiment analysis, this will guide the agent as to what words or phrases are optimal to use. This is also another reference to personalisation.

• Show empathy and understanding

It is important to show compassion and position yourself as if you are there to help rather than to judge and punish the customer for falling into arrears. Change your collections approach from consequence to incentivised and understanding. Educate your customers to help them manage their debt, and present them with all the options for paying you back. Understand that your customer might be going through a difficult time, and they need all the information you could give them.

Be empathetic and don't treat every call like another task – be aware that you are dealing with real people who have lives and things they need to manage: just like you.

The fact that they are behind in payment is hopefully a short-term situation, and your goal in collections should be not only to recover the debt but equally as important to maintain a positive customer relationship that can lead to future revenue from that customer. You need to ensure your agents understand this, from when you first hire them.

In Part 2, we will delve into Workforce and Environment, so keep an eye out for the next part.

Written by Perry De Jager Practice Area Head (Collections and Recoveries)