Getting a debtor on the line, or to respond to an email, is a hard task. Customers don’t end up in this point if they have money and intend to pay promptly. Therefore, once you do talk to them, it’s important to use that time in the best way possible. There are three things to pay attention to when interacting with a debtor:

• Instill a sense of urgency
• Get the truth
• Counter the excuse

Instilling A Sense Of Urgency

If your approach to getting paid is laid back and non-committal, your debtor will take this approach as well. When you communicate with late customers, you must demonstrate that the issue is urgent and important in order to get their attention and move them to action.

Getting The Truth

Sometimes the truth sounds like an excuse. Your debtors might be in real trouble or they might be tricking you. Asking the right questions will help you determine the facts and act accordingly.

Countering The Excuse

Once you’ve established you are hearing an excuse, you need to counter it in a way that makes sure you won’t need to deal with it again for this debtor.

Did you find this helpful? Download our free eBook “The Top 4 Excuses Debtors Make” and learn more about how to counter common excuses.

Collection operations base their high recovery rates on models allowing optimal utilization of collectors’ time. Since the person to person call is almost the only available too to convert debtors into paying customers, every minute is important. It’s obvious that self-service portals cannot bridge that gap on their own, because they won’t capture intent to pay in exactly the same way.

While we may never be able to move away from making phone calls, the user experience in the collection process can and should be adapted to use behavioral cues to capture payment intent. Thinking of the set of tools as a spectrum, with a high touch phone call on one end and a low touch self-service portal on the other, modern technology allows us to maintain contact with the customer more consistently and longer than before. The key, as discussed in the webinar embedded below, is in designing the experience to use the way we think to capture that intent.

In this webinar about behavioral economics in debt collection, we explore the mechanisms that drive decision in humans, and how to work with these mechanism to identify when a customer is ready to pay, or able and just needs a small nudge. These mechanisms are in the heart of every effective online experience, and they are explained here with their relevance to the debt collection process, with real life examples.

As of Q3-14, more than $6 Billion have been borrowed on Lending Club. The p2p lending platform allows individual investors to lend to consumers for various needs – most often, credit consolidation – and get a hefty interest in return. Most of the loans on Lending Club are paid back, but some of them don’t. We estimate that default rate at 5-7% overall, and naturally much higher when the loans are riskier. Borrowers pay their loans back via a monthly ACH payment, split and applied to all the notes that make up their loans, with the different lenders whose money they got. What happens when the note defaults? How do you see what happened? What is the Lending club debt collection process? Let’s take a look at the Lending Club interface and find out.

Continue reading “What is the Lending Club debt collection process?” →

Both the ACA and Credit and Collection Risk today shared numbers from the latest WebRecon report about debt collection litigation and CFPB complaints. The report and the response to it demonstrate how the debt collection industry works.

Almost no collection agency will tell you how it works to recover debt. Sometimes because its clients don’t care – or don’t want to know – as long as they don’t get in trouble or get sued. With this mindset, it’s no wonder that agencies are almost giddy about this or that type of lawsuit declining to an all time low. Since no other performance metric is shared, CFPB complaints and lawsuits become the number every company optimizes for – since only what gets measured, gets noticed.

Continue reading “Is the number of collection lawsuits the right KPI for the industry?” →

It’s natural to blame your customers for not paying, but before you accuse them of bad behavior, make sure your own house is in order. Rule number one in algorithmic recovery is to approach debtors from a CRM perspective as opposed to a disciplinary one. With this strategy, it’s far more likely you’ll get customers back on regularly paying terms for the long run.

Continue reading “Top 3 reasons you lose engaged customers” →