Connections Over Collections
Dealing with debt is a nail-biter, be it for a customer who is behind on their payments, or a debt collector who is trying to make a successful collection. That’s why having empathetic debt collection strategies make it easier for both parties to communicate and solve the underlying issue.
No one wants to talk to an emotionless collector who is only concerned about the final dollar amount. A customer who has a positive experience is much more likely to pay up than one who is continuously being hounded by calls and letters. A McKinsey study found that 20% of customers held back from making a payment they were initially intending on making, purely because the collector’s approach was disrespectful or upsetting.
When working on effective debt collection techniques, a company that focuses on customer relationships, rather than tacking on metrics, will add more value to the collections strategy. Instead of zooming in on the net hours or minutes as a metric to measure the success of debt collections, looking at the quality of the call and what the customer says to others about your approach will increase goodwill, thereby improving your company’s brand standing and boosting profit.
How Empathetic Debt Collections Strategies Can Increase Profit
1. Increases Customer Retention
Research shows that it is five times more costly to attract a new customer than to retain an existing one. When you are empathetic and keen to listen to the problems of your customers, you will end up retaining them. This is especially important for credit card and other financial product companies who depend on repeat sales from customers to sustain business.
2. Improves Goodwill
A customer who has had a positive experience, even after defaulting, will leave with a good impression of the company. They are likely to relay this experience to others, improving your goodwill and creating a pool of new customers. If they have a negative experience with executives calling or texting continuously to recoup payments, not only are they likely to stop interacting with your company in the future, they may also pass on the bad reviews to others, ultimately hindering your business.
3. Problem Solving Strategies
A good collections agent is not just adept at negotiating but also has the requisite soft skills to listen to the customer’s problem and solve it. For instance, an attentive debt recovery agent will be able to come up with a detailed and customized plan that suits the customer’s financial situation. This strategy has a better chance of converting the debtor into a paying customer, rather than back-to-back calls or texts pushing for payment.
4. Gives a Competitive Advantage
The McKinsey study (see above) found that 38% of customers, who were approached by a collector genuinely intending to solve their problems, were delighted at the interaction. In a world full of impersonal debt recovery services, being patient and understanding will give you a competitive advantage and improve your recovery rates.
Empathy Not Sympathy
Being empathetic means working with the customer to come to a workable solution. Customers don’t want to be patronized. Instead, they want an effective debt collection technique that will help them repay their debts. Allsec Technologies’ specialized training enables our collections team to work with clients on creating personalized repayment plans. We do not just do what is needed, but we go the extra mile to ensure your customers have a good experience while improving collection rates.
