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Everything You Need to Prepare Collections Operations for the Delinquency Tsunami

The industry has batted around timing of a looming economic downturn. The downturn has held off, until now. This blog shares how to prepare your operations for the hardships and delinquencies coming your way.

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.

 

Indicators Point to a Troubled Economy and Rising Delinquency Rates

Rumblings of a looming recession are getting louder. Additionally, inflation, the great resignation and pandemic fallout have left customers with little disposable income to pay down debt.

The result: delinquency is rising. The Federal Reserve has reported an increase in the 30-day delinquency rate in Q1 of 2022 from 1.63% to 1.73%, which is the third straight quarter of increases. While nowhere near the 7% rates from the Great Recession, it is a trend to watch.

 

Most Collection Agents are Not Equipped to Engage Beyond Promise 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.

“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.

RELATED CONTENTAgent training webinar provides details of the Simple Call Model along with other critical communication skills

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:

  1. Simple Call Model to structure the conversation
  2. Payment Programs to offer the customer
  3. Training that includes soft skills to execute the call model successfully
  4. 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.

4 steps to a call model for an empathetic approach

 

 

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

CLIENT SUCCESSA client comes to the rescue for customers during significant financial hardship

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.

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