If your collections operation is like most of the ones I visit, you’ve refined your techniques and strategies over years. From your segmentation of accounts to the tactics you take, you know what works and you stick with it.
That seems like a sensible approach. But I’m going to propose something different.
Why? Because no matter how good things are working for you today, it’s always possible that you’re missing a trick. And let’s face it — nobody’s business is running perfectly. Everyone’s trying to squeeze a few more dollars out of the same team and systems.
The only way to find out if something different will work better is to try a change before you “buy” it — that is, before you make your whole group change to something that might be less profitable.
In banking, this test-and-learn process is called adaptive control, controlled testing or champion / challenger testing. You test a change to your current (champion) strategy on a small, random sample of accounts. You test one change at a time, so you know you can attribute any difference in results to that change. Then you compare results for the same time period from the champion and challenger strategies.
The change you test could be a new way of segmenting your accounts, or a different color envelope for your letters, or a different call script, or a different assignment of actions to particular segments of accounts. You don’t want to bet the farm on something without testing it first, right?
This is Collections 101: Test it!
Within FICO Debt Manager 9, Tags are ideal for setting up your champion / challenger tests. All you have to do is mark the accounts that get the champion strategy with a CHAMPION Tag and all of the challengers with other tags. Results are easy to measure, as the Tags can be used as part of filters (selection criteria) for the reports you wish to use for comparison purposes. The Tags are marked with a date stamp. Through Tags, you can also create an infinite number of sub champion/challengers to try out various of your initial strategies.
For more information on best practices for champion / challenger testing in collections, see our Insights white paper, “How Good Is Your Collections Challenger?”