How to Prepare Debt Collection Operations for Rising Delinquency Rates
- June 29, 2023
- TOPICS:
- Collections & Loss Mitigation
- Performance Management
- Strategy
Recent research shows that 60% of U.S. consumers live paycheck to paycheck. Plus, two-thirds of consumers experienced a financially distressing event. This blog shares how to prepare operations for hardships and delinquencies.
Imagine that you are performing customer listening in your call center and you hear a collection conversation sounding like this:
Agent: Do you think you can make a payment today?
Customer: No – I’m out of work.
Agent: Okay, I will notate the account. Call us if anything changes.
If this exchange makes you nervous, you are not alone. Collectors want to help customers in need, but can they? Do they have the right training? Do they have the right repayment options in their toolbox to offer? Many don’t and the wave is coming. We can get you ready.
Amidst Rising Delinquency Rates, Most Collection Agents Lack the Ability to Engage Beyond Promising to Pay
When collections and recovery activities ramp up, you’ll have precious few chances to connect with customers. So, each touchpoint offers an opportunity to understand a customer’s situation and develop a plan.
Simply taking a “promise to pay” and quickly ending the call will not work. You’ll end up with broken promises and the customers will be stuck in your “revolving door.” This leaves you spending budget on staffing to have the same unproductive call with the same customers month after month.
Let’s face it, at some point when their money runs out, your customers will stop answering the phone, email and/or SMS. Even though you have digital capabilities enabled, the most challenging cases will come through the phone.
So how do you start off with a customer interaction that results in aligning a solution to their financial hardship? Answer: agents need to ask questions and have a conversation. They will need to find out why the customer is delinquent and what type of consistent income they may have.
4 Ways to Have a Conversation and Make a Connection
The best way to prepare collections operations to successfully handle an influx of delinquencies is to make a connection with each customer.
Use four elements to make connections and build loyalty with your customers:
- Simple Call Model to structure the conversation
- Payment Programs to offer the customer
- Training that includes soft skills to execute the call model successfully
- Listening and Coaching Programs to monitor and sustain performance
Steps to Make Connections
1. Use a Simple Call Model to structure the conversation
Have you ever listened to an agent who sounded scattered? This agent repeats the same message and offers fee waivers without understanding how much a customer can pay or why they are past due. We have all heard these calls. A collection call needs to be simple with an easy-to-follow structure. The structure allows for a conversational “give and take” while the agent gathers critical information. Once armed with information, the agent can provide response for all hardship types. Our proven framework works, with results of up to a 40% lift.
2. Design Payment Programs to offer customers
Do your agents ever say, “I just don’t know how to help them?” You can develop offers and solutions using break-even points by delinquency stage. These offers then help customers get back on their feet while you minimize losses. Most importantly, you must align payment solutions to the financial hardship stage in order to apply the solution correctly. We have identified two types of hardships that an agent can ask enough questions about to align a realistic program that won’t break:
– Short-term Programs: Hardship will last <60 days
– Long-term Programs: Hardship will last >60 days
3. Develop Training that includes soft skills to execute the call model successfully
Listening to cringe-worthy calls challenges leaders. You know, the calls where a customer is pouring out their heart and the agent responds with, “Okay so can you make a payment today?” You sink in your chair.
Avoid that kind of call with a balanced training curriculum. Your curriculum should teach a simple call model to navigate calls to make a connection. Remember that not all agents have the life experience to sympathize with customers. So, using scenario-based role playing will help paint the picture and put the agent in the customer’s shoes.
A successful program balances instruction on collections call components with activities focused on soft skills and reinforcing the right behaviors. The goal: learn how to have a conversation that resolves delinquency.
Successful Training Program Components:
– Call Model
– Call Scripts and Phrases
– Role Play Scenarios
– Individual Activities
– Call Listening Exercises
– Job Aids and Handouts
4. Establish Listening and Coaching Programs to monitor and sustain performance
Training is not a quick fix. Agents won’t walk out of a class and instantly be successful. Success takes practice. You should build listening and coaching programs to reinforce the concepts taught in training.
Help agents use the call model framework to develop good call habits. Building good habits requires consistent feedback. But first you must set expectations by using a call coaching form based on your call model. This way, agents will understand what is expected and will get the training/tools to succeed. You will soon see several benefits of this program including but not limited to ones below.
Listening and Coaching Program Elements
Listening
– Actionable feedback delivered from real call samples
– Customer experience improvements addressed
Scored Feedback with Call Coaching Form
– Agent expectations are clear and consistent
– Call quality expectations measured regularly
– Data is available to track performance
1:1 Coaching Sessions
– Tailored agent feedback increases speed to competency
– Motivation and reward success provided
Performance Dashboard
– Overall clarity of team performance
– Ability to rank talent and make decisions
– Prioritized continuing education by performance categories
Monthly Training
– Closure of individual performance gaps
– Increase in team performance
You can start now. Use the simple call model. Teach what is expected in each section. Practice with customer responses and agent acknowledgment statements. Then, provide solutions to offer customers – you will set the foundation.
By having a robust listening and coaching program to fine-tune communication skills to make that connection, YOU WILL BE READY!
Start Preparing with Our Help
The elements outlined above must be done in concert so that there’s a lift in dollars collected. We’ve done the preparation, the training and the ongoing coaching. This process will work for you to improve collections rates and customer satisfaction scores. Contact us today.
[Editor’s note: this article was written by Kristin Stolp, former Bridgeforce Senior Program Manager]