The Carrot + the Stick of Collections

by admin on November 24, 2020

As long as debtors have been late with payments, collection activities have largely followed the same basic script: Ask nicely, ask forcefully, demand, threaten, charge-off. Most creditors rely on outbound calling strategies to do the heavy lifting and simply view their letter strategy as a compliance tool.

For the most part, this strategy has been effective for creditors. But with debtors becoming increasingly savvy at filtering, blocking and avoiding calls—combined with increased regulations and fines for improper calling methods—creditors need to evaluate ways to improve their techniques for engaging with delinquent customers.

Today most customers have multiple credit card accounts, student loans, auto loans, mortgages, and more. Once a customer goes delinquent with one creditor, chances are they’ll be delinquent with others. The challenge is how to break through all the noise and get your fair share of the limited and shrinking payment pie.

Bringing a marketing mindset into the mix can dramatically improve results. A tried-and-true advertising and sales principle from the 1800’s still resonates today: AIDA. It’s is an acronym for Attention, Interest, Desire and Action. Like the marketer, the collector needs to:

*combine breakthrough creative with compelling headlines to grab the debtor’s attention

*use subheads and bulleted copy to gain interest

*create desire by developing offers and reinforcing necessity

*reinforce a strong call to action

Rather than serve one party’s need to collect, a marketing orientation focuses on satisfying the other party’s (i.e., the debtor’s) needs. By identifying and leading with those behavioral drivers, collectors can connect with debtors in a whole different way, and generate better results, faster.

Convergence Group has taken a leading position in helping organizations improve their collections process and the customer experience. Using sophisticated data analytics, strategic creative, carefully managed selection criteria, and end-to-end program execution, we help collectors hone in on critical motivators that compel action.

1.) What if the initial collection letter, usually designed to look intimidating, looked more like a personalized, customer benefit direct mail letter?

2.) What if the “offer” was placed prominently on the page, in the sweet spot where the reader’s eye lands first? (Direct mail gurus call this space the Johnson Box.)

3.) What if you could use data analytics to determine what types of “offers” are most likely to resonate with specific debtors? And when is the best time to present these offers?

By implementing and executing these proven strategies  we’ve helped clients ramp up their collection efforts—and their ROI. We’re getting results in situations that were headed toward near-certain charge-offs. And suddenly, the prospect of selling uncollectible debts for pennies on the dollar is dramatically reduced.

Interested in learning more about our innovative marketing-driven collections solution? Call us at 302-234-4901 or email us for a free consultation.

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