How to Prepare Debt Collection Operations for Rising Delinquency Rates
- February 06, 2025
- TOPICS:
- Collections & Loss Mitigation
- Performance Management
- Strategy
Recent research shows that 65% of U.S. consumers live paycheck to paycheck. Plus, a quarter of consumers are struggling to pay bills. This blog shares how to prepare collections 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? We can help you get to “yes.”
For 25 years, our experts have been fine-tuning the collections playbook, giving collectors like you the tools to make a real impact. From coaching and training programs that build trust to accelerating digital programs that meet customers where they are, explore our collections services that will position you to create real change for the people who need it most.
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 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.
Four elements help make connections and build loyalty with your customers:
- A simple framework to structure the conversation
- Helpful payment programs for resolving the delinquency
- Training that includes soft skills to understand the customer’s circumstances and offer a realistic program they can keep
- Listening and coaching programs to monitor and sustain agent performance
Steps to Make Connections
1. Use a Simple Call Model Framework to Structure the Conversation
Have you ever listened to an agent who sounded scattered? The agent repeats the same message and offers fee waivers without understanding how much the 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 enables a conversational “give and take” while the agent gathers critical information. Upon gathering the necessary information, the agent can provide options all types of delinquencies and hardships. Our proven framework works, with results of up to a 40% lift.
2. Design Helpful Payment Programs to Offer Customers
Do your agents ever say, I just don’t know how to help them? You’ll want to ensure you offer payment programs using break-even points by delinquency type. These programs will help customers get back on their feet while you minimize losses. Most importantly, agents can gather information from the customer to align a sustainable payment solution based on the customer’s circumstances, whether it be short term or a longer-term hardship.
- Short-term Programs: Hardship will last <90 days
- Long-term Programs: Hardship will last >90 days
3. Provide Training that Includes Soft Skills for Successfully Understanding the Customer’s Situation
Listening to cringe-worthy calls challenges leaders. These are calls with a customer 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, which teaches a simple framework to navigate calls and make a connection with the customer. 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 empathize with customers. So, using scenario-based role playing helps paint the picture and put the agent in the customer’s shoes. Also, augmented financial literacy education has been known to help agents build their skills as empathetic listeners.
A successful training program balances instruction on collections call components with activities focused on soft skills, reinforcing the right behaviors. The goal: learn how to have a conversation that resolves delinquency.
Successful Training Program Components:
- Call Model Framework
- 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 develop good call habits. Building good habits requires understanding expectations and receiving consistent feedback. Coaching programs based on both the collections call model and the soft-skills training will reinforce these habits. But first you must set expectations by using a call coaching form based on your call model. Your coaching program will provide you with the following benefits.
Benefits of a Listening and Coaching Program
Structured Expectations
- Elements of the call model and soft skills are clearly defined and rated
- Call quality is defined and rated
- Performance tracking
Listening
- Identify actionable feedback from real call samples
- Observe the customer’s experience
1:1 Coaching Sessions
- Tailored agent feedback increases speed to competency
- Regular reinforcement builds the right habits
Performance Dashboard
- Overall clarity of 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 this simple framework to help prepare collections operations for increased delinquencies. 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 an ongoing coaching program to fine-tune soft skills necessary 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 to prepare collections operations for increased delinquencies from your customers.
