Americans are in more debt than ever before, with consumer debt levels setting a record at $14.3 trillion in the first quarter of 20201. In fact, CCM’s Financial Impact Survey revealed 70% of Americans are concerned about paying their bills on time and 38% have been behind on bills within the last two years. With the US economy in a state of recession due to the impacts of the COVID-19 pandemic and uncertainty regarding future stimulus from the government, financial concerns may get worse before they get better.
For business owners, the reality of this situation is that the old way of debt collection is no match for the new financial challenges of today’s consumers. The solution? A new approach to collection–one rooted in empathy, collaboration, and problem-solving. Here’s how:
- Redefine Account Management
Whether you’re managing collection in-house or working with an agency, the way you manage each account can have a major impact on revenue recovery. Especially during difficult times like now, treating each customer with respect and empathy is the first step to building trust. Establishing this foundation can help you get to a productive place more quickly.
Tip: Assign each account in collection with a dedicated collection account executive. This creates a better end-to-end experience for your customer, so they can build a rapport, and avoid having to repeat uncomfortable or embarrassing details to multiple collectors. Especially if you are managing many customers in collection, working with a reputable collection partner who follows this approach can help alleviate the administrative and time burden from your staff.
- Introduce a Consultative Philosophy
There are many reasons a customer may have missed a payment, from a simple banking error on their end to significant financial hardship. Seeking first to understand why an individual didn’t pay their bill sets you both up to have a judgement-free conversation that gets to the root of the problem quickly. A consultative approach empowers your collection team to collaborate with consumers to find long-term payment solutions, not just quick fixes that don’t address the core problem. Prioritizing this approach can require more resources upfront, but if done correctly, can help customers stay on top of their finances in the future.
Tip: Develop a guide for your collection team that matches common issues from customers with the appropriate solutions that should be explore. For example, for a customer who says they just forgot to pay their bill, you could make it a standard response to offer auto-pay options, if possible. A collection agency should be well-versed in all possible scenarios and can help educate your team on best practices.
- Prioritize Education
Especially during this difficult time, you could be encountering customers who are experiencing financial hardships for the first time. In addition to treating these individuals with compassion and actionable options, your collection team should use this opportunity to provide educational opportunities wherever possible. Helping your customers understand not just the collection process, but what they can do to stay in good standing with your company can assist them in navigating repayment now and avoiding it in the future.
Tip: Develop a digital financial literacy and education library that all of your customers can access. Providing access to tools like this can help empower better financial decision making, even helping individuals stay out of the collection process in the first place. Working with a collection agency who already offers this resource will ensure that you’re providing information that meets all legal and regulatory requirements.
There has never been a better time to implement a compassionate approach to collection. With many Americans in increasingly challenging financial positions, this approach is more likely to resonate on a personal level and result in better recovery for your company. To learn more about how you can implement a people-first collection strategy, contact our team of experts at https://capitalcollect.com/get-started or by calling 866.272.4035.