I recently approached a business to discuss its collections and recoveries operation and they strongly but politely refused. Now, I know from our research that this business has a challenge in debt management. Are they 'burying their head in the sand', I wondered?
We've all done it. For a credit provider, focusing on a shiny new offer for customers is always going to be more appealing than addressing how to deal with overdue payments. Collections is a challenging (I'll come back to this word) area of the business — but it’s not all doom and gloom. This Christmas, we should all be discussing how we can manage the post-holiday peaks. What can we improve by doing this?
- Keeping NPS high. Always forgive but never forget is something I live by. I don't want any of my clients to ignore this statement, as a poor customer experience can have serious, long-term consequences in the world of social media, where nothing is forgotten. So what are your plans to ensure there is no erosion to your formal or implied NPS, because of a poor customer experience? Remember, for every 1 point increase in NPS, churn decreases by 4%. There’s an incentive.
How do you keep customers in collections from hurting your NPS? Customers want to feel special so personalisation is key, from the content of the communication through to the communication channel with timely contact that ties in with customer's expectations. Happy customers mean increased retention with expansion across products and new customers through positive reviews. The great thing about seasonal peak collection volumes is the opportunity to give a huge group of people a great customer experience they just are not expecting. Now that’s differentiation at work.
- Providing cash for business improvement. Improved collections results benefit the business in many ways. That release of impaired provisions or the increase of profit due to lower credit risk can be redirected to innovate and improve any area of growth. It's like an unexpected sparkly Christmas bonus…now where could I use that? (My own options for the Christmas bonus are endless, and the difficulty is where to invest that money!) But be wise — understand what will prevent impairment release in this IFRS9 world and how collections can contribute to the profit line. Again most organisations expect a seasonal peak in collections to be the foundation of bad news — can you position your teams to be the folks bearing gifts?
Collections is challenging. But with the right partner in place, that challenge can turn into an innovative, scalable, transparent solution built for the future.
Let's start that growth cycle from an unexpected place with an initial meeting. Let's talk collections to bring some more sparkle to the business and get the gift of personalisation from analytics and automation. And like most things at this time of year, there is tradition and there is a New Year resolution. Are you truly signed up to this year being like no other? We are and happy to share why and how.