Maximizing Productivity and Effectiveness of Collectors

Collections is a key area of any credit granting organization, and organizations often invest in processes, technology and strategy in an attempt to increase the efficiency and effectiveness of this area. Unfortunately, organizations tend to forget the most important factor in collections – the collectors who make contact with customers every day.

This series of tips explores the various aspects that have been found to be invaluable in improving the performance of the collections area by focusing on the development of collectors.

Behavior Styles
A key aspect of collections training relates to behavior style. The behavior styles that collectors are inclined to use include:

Passive Collection Styles – Passive collectors are categorized by an inability to control the collections call.
They find it difficult to openly express their needs, are apologetic and soft and they are prone to hesitation and long pauses during the call. Customers tend to be frustrated and aggressive and take control of the call and bully the collector into a poor negotiation. As a result of this, collectors struggle to meet their collections targets and often have longer than acceptable average call times. In other words, they are less efficient and less effective.

Apart from the damage the company sustains as a result of these collectors, the collectors themselves feel frustrated and worthless.
Aggressive Collections Style – Aggressive collectors are characterized by a tendency to be disrespectful and hostile to customers.
These collectors tend to alienate customers by constantly interrupting, using sarcasm, shouting and being generally disrespectful. They tend not to listen or show any interest in the reasons for a customer missing a payment. Customers will often set up promises to pay which are subsequently broken as they did not set them up with a good understanding of the reason for a missed payment. Apart from this, many customers will be incensed by the treatment at the hands of such collectors and will move their accounts elsewhere.

In early stage collections, this is very damaging to the long term profit of the organization as most customers in this area are long term profitable customers. Although in the short term these collectors may seem to be collecting well, their higher proportion of broken promises and their alienation of good customers can lead to an overall disadvantage to the organisation.

Apart from the damage the company sustains as a result of these collectors, the collectors themselves feel emotionally drained and guilty.

This tip discussed two of the three broad collections styles. Both of these styles are ineffective and are damaging to the collections effectiveness and overall strategic value of an organization. Next month’s tip will discuss the third collections style which leads to an overall increase in the strategic value of an organization by improving collections efficiency and effectiveness as well as customer service.

Paul Shortridge is a Senior Consultant at PIC Solutions, the largest customer management solutions company based in the Southern Hemisphere. He has over 5 years experience in the financial services industry. Previously with Nedcor as manager – innovation in retail credit, he headed up a team that successfully rolled out projects to reduce risk, increase revenue and reduce costs across all credit and transactional products. In this role, he implemented initiatives that increased revenue by R100 million and introduced their 8-second home loan pre-approval process. As lead consultant at London Bridge Group, Paul was responsible for the business lead in large scale project implementations as well as assisting the sales team with expanding their market in South Africa. He holds a BSc and MSc in Chemical Engineering from the University of Cape Town.