Greater Performance by pivoting the Scorecard runway

Increasing recovery performance from your bad debt portfolio can be just a simple tweak.

As we continue to deliver best in class results for all North America, we wanted to share with you our secret, that's not so secret.

The incremental liquidation to recovery rates has been the result of one small adjustment, with profound benefits.

So what changed and how can this help creditors in our industry today?

We shifted our perspective on the "value of time".

Today, many industries still use scorecards and performance reports that have been unchanged for decades.

Personally, I think our world moves a lot faster when it pertains to accounts receivable management. More activities occur in less time, yet one of the most important parts of our business did remain stagnant. Scorecards.

On average, for every day that goes by on bad debt, a creditor can lose $8 of the principal balance in a consumer's propensity to pay. Time is key, as AR starts to expire like a glass of milk left on the table-top.

So why do many still use scorecards and performance models from the 1990's? An opportunity for creditors to get more recoveries in less time is by changing outdated measurement periods, (the runway).

Many creditors still use assignment periods of 12, 24 or 28 months per tier.

Even though incremental gain of dollars collected by batch declines just after 120-days.

One can easily see long winded measurement periods offer little to no value when gauging roll rates by product.

In fact, a champion vs. challenger use case showed -

Keeping bad debt for an extended period of time with any one collection supplier was negatively impacting the overall recovery rate %.

And it makes sense, a collection agency isn't going to continue to pour limited resources with the same intensity 4-months later after the initial placement.

Ask any collection supplier and most if not all will agree, resources today are more scarce than they were 20-years ago. Aside from far higher operating expenditures, client commission rates for agencies have significantly dropped.

The resources invested by a collection agency on your business, does have limitations.

So where is the opportunity?

A creditor can easily increase their overall recovery rate by slicing up their long winded measurement periods and create more penetration, by avoiding having one agency exhaust resources over 12-28 months (per tier) as many creditors still do.

One could, (as an example), have six tiers of different agencies in shorter 120-day measurement periods. Agencies recognize the first 90-days of placement is what will matter the most. Hence, why they pour out all those resources within the first 3 months before tapering off.

Why not have greater penetration from more than one supplier over the same runway?

Our best in class performance has proven benefits from this pivot in strategy.

While many things have obviously evolved in our industry, creditor scorecards in many cases still remain unchanged.

Need a quick win? Revise long winded and outdated measurement periods. Give it a try, run a pilot or champion/challenger. Have your file placed with a new collection agency after performance peaks and tapers off after 120-days.

Your roll rates will get a spike where normally they'd start to decline, impacting your overall liquidation and benefiting your dollars recovered.

Peter Manianis

Vendor Manager 3rd Party Collection Agencies

Mobility Marketing – Strategic Planning & Execution

TELUS | the future is friendly

Mobile: 778.877.6198

peter.manianis@telus.com

How to help prevent the use of filler words in a talk-off?

Effective communication is at the core of any business within the accounts receivable management industry.

Every Friday we meet as a group to look at new ways in enhancing our talk-off techniques.

In our recent training class we discussed the over use of: Filler words

What are filler words?

Everyone has their own filler word nemesis.

For some it might be a few misplaced ‘um’s or ‘ahh’s’ and others it might be a consistent overuse of phrases such as ‘ya-know’.

From a Sales, Service or Collection perspective what filler words convey to the listener could be perceived as a lack of product knowledge or confidence which is impactful.

For example - If you walked into a Mercedes dealership for a very expensive purchase on a vehicle, but when asking a technical question, the salesperson responded with a lack of confidence and an ‘um’ every time before answering, you may be less likely to invest in such a heavy purchase, right?

Filler words are a signal on what we are saying is getting ahead of what we are thinking or even worse, the sales rep is just guessing.

Three tips to help mitigate the use of filler words:

1. Accepting Imperfection

Perfectionism is the enemy of personal growth, its ok to make mistakes. When we learn to live that we are fallible but eternally capable, success is much easier.

2. Reward Yourself

Put in place a reward that you will give yourself when delivering a good talk-off with a dramatic reduction (or even elimination) of filler words. Managers should make this a priority with staff.

3. Create Positive Habits

The use of filler words can easily become an undesirable habit. We can best circumvent this by taking action in three parts:

· Pause more - doing so will allow you to think about what you will say next without filling the space with words.

· Slow down – this technique will help minimize words that don’t have value.

· Hear recorded calls with your manager - A great way to develop a sense of awareness of filler words is to record yourself, you’ll be surprised how often they surface.

I hope you’ll explore these methods to minimize your use of filler words, remember, it’s not perfection we seek on any learning journey but progress. Let us know how it goes in your comments below.

Peter Manianis

Vendor Manager 3rd Party Collection Agencies

Mobility Marketing – Strategic Planning & Execution

TELUS | the future is friendly

Mobile: 778.877.6198

peter.manianis@telus.com

Build strong mutual benefits by discussing the RFD (reason of delinquency) with past due customers

Rapport is the foundation of any great relationship.

Having something in common with another person instantly builds a connection. So why is it so important to build rapport with a customer, especially when they're past due?

Rapport drives direction to motivate mutual benefits between two parties. Collection agents will better connect with customers when the reason of delinquency (RFD) is established.

Sounds simple right?

Yet, countless times the RFD doesn't even surface by agents when speaking to consumers.

One of the most over-looked key questions during negotiations, is simply understanding what led the customer to fall past due.

Listening to a consumer’s story of events that transpired offers a chance to connect as people, it humanizes the call and allows one to genuinely empathize with the customer’s circumstance.

The best way to build rapport is to use questions that show interest; then, listen closely and respond appropriately.

Today many collection agents reach out to consumers and often blast through a demand for payment, offering quick settlements, then moving on to the next call without really digesting the conversation.

You should look for authentic opportunities to build a bridge with customers.

Promise payments later break, because we never truly addressed the crux of the circumstance that led the customer to be delinquent in the first place. Our ability to convert valuable (and limited) right party contacts diminishes without good rapport.

But unless the agents can establish what the consumers’ needs are, the agent wont effectively be able to tailor a solution that has a sustained outcome.

The RFD starts the conversation towards the desired direction for an agent, payment in full.

Collection managers have an opportunity to embed the most important skill in collections for their staff, which is the talent of effective listening.

Strategically unpacking the RFD allows agents to ask the right questions which will serve to solidify stronger promise to pay conversion rates.

When reviewing call calibrations, there is indeed performance impacts when comparing collection calls absent of any RFD inquiry.

The greatest skill we have is effective communication, which is truly incomplete without the ability to offer sincere listening in tandem to a collection call with a consumer.

Peter Manianis

Vendor Manager 3rd Party Collection Agencies

Mobility Marketing – Strategic Planning & Execution

TELUS | the future is friendly

Mobile: 778.877.6198

peter.manianis@telus.com