Customer service shouldn’t stop when a customer falls behind on payments.
Debt has become a way of life in the United States. According to a recent study by Pew Charitable Trust, 8 out of 10 Americans are in debt. This can create significant challenges for businesses when their customers fall behind on their payments. No matter the industry, no matter the business, we all want loyal customers.
However, keeping those customers loyal, and happy, becomes difficult once the collections process starts. But it is still possible to keep customers during and after collections. It’s at this time that delivering good customer service becomes the difference between a loyal customer and a leaving customer. Treating customers the right way and preserving your business’ customer service reputation has a ripple effect on your brand and service image. And, it can also have a lasting effect on your product manufacturer’s or supplier’s reputation.
Times are changing. The accounts receivable management (ARM) industry used to emphasize one goal—recovery. That was the key metric for both delinquent and default accounts. While recovery remains an important aspect to any business, you cannot dismiss customer service. Whether delinquency involves medical, utility, credit card or any other kind of debt, the collections industry faces a core dilemma when interacting with customers: We must provide a satisfactory customer experience while collecting and recovering lost assets.
If you’re in charge of debt collection, you already know that your job is challenging—and it’s not getting any easier. You have to manage the collection process and drive increased receivables to remain competitive and support growth. At the same time, you don’t want to focus entirely on recovery rates. You have to do things the right way and remain compliant. You cannot overlook the potential problems created by unscrupulous collection practices. These can quickly lead to customer complaints and compliance issues—not to mention damage to your company’s reputation and brand.
This is where providing good customer service can help. Customer service is as important with delinquent or default accounts as it is with accounts in good standing. Customer service doesn’t—and shouldn’t—stop when companies are dealing with outstanding accounts. When it comes to collecting a debt, companies delivering the most exceptional service remain focused on honest and compliant communication and treating every customer with respect and dignity—regardless of account status.
So how do you make sure that your company is providing great customer service? The following are four tactics for delivering quality customer service during repayment interactions.
1. Make Customer Satisfaction a No. 1 Priority
Whether working with a third-party provider or managing accounts receivables in-house, emphasize customer service and customer satisfaction. Your ability to compassionately work with your customers to help them through a difficult financial period, while also recovering monies, can set the tone for a lasting relationship. You’re not a bill collector so much as a repayment consultant. You provide guidance, insights, advice and valuable information that can help your customer achieve greater financial independence.
A great way to put customer service at the forefront is to make good use of customer surveys. Survey your customers throughout the repayment process. Ask questions that improve your processes. No matter the specific phrasing of the questions, you’ll want to walk away with some key information: How satisfied are your customers? What are the main customer complaints? Are your agents providing enough counsel to help your customers avoid future delinquencies? Customer satisfaction surveys can often yield surprising results. For both in-house and third-party providers, customer satisfaction surveys should be conducted for every agent and every account on a regular basis.
Feedback from these surveys will pinpoint issues and help you to head off future problems. They can also be helpful in determining why certain accounts have slipped into late payment or delinquency.
Another way to emphasize customer satisfaction is to tailor communications according to your targets and demographics. There’s a wealth of media and communication tools at your disposal. Make sure that you’re reaching the right customers the right way. Millennials might want to communicate through texting and smart phones, while older customers might be more comfortable with ground mail and physically speaking with someone on the phone. Some customers prefer automated messages, but every recipient should be able to opt out of automated newsletters or updates.
2. Instill Trust
Another significant component to enhancing customer service in ARM is to establish trust. This is a highly regulated industry for a reason. Your company and your agents (in-house or third-party) handle highly sensitive information. Put yourself in the shoes of your customers. Some random person has contacted them and is privy to their financial information and repayment history. This is likely information that they don’t even share with their friends or family. Trust builds loyalty. Trust instills faith and confidence. When trust is established, it is more likely that a consumer will have a positive experience with your company. As you know, trust is the basis of any good relationship in or outside of the ARM industry.
As an example, an article published in the Harvard Business Review explained that “transparency about the use and protection of consumers’ data reinforces trust” and that such trust can be more easily broken in situations where sensitive customer data is being shared involuntarily (“Customer Data: Designing for Transparency and Trust,” HBR, May 2015).
For the consumer, it’s unsettling enough to be contacted by organizations that market to them based on researched purchasing and lifestyle trends. Now imagine when that organization is a collections agency in possession of their financial information and seeking to collect on a debt. There’s no single way to navigate this dilemma. But, successful strategies tend to involve what is called a “philosophy of collection” based on transparency as well as collaborative problem-solving with consumers to preserve what could otherwise be a troubled relationship.
3. Understand That There’s Life After Collection
The customer relationship does not end after the debt is recovered; that’s a common misconception. Customer service should be a priority when initially contacting customers who are delinquent, during the process of collecting, and after the debt is paid. We all know the notion that “bad things happen to good people,” and it’s imperative to understand this as we work with customers.
Life happens. Sometimes there are extenuating circumstances that negatively impact customers and create financial burdens. For example, a customer may lose his or her job or have a medical emergency. Financial downturns can also have a severe and lingering impact, even on customers who have faithfully made their payments for years. Another issue can be how your customer prioritizes their bills. They might be paying much larger bills every month, pushing yours further down the stack. These and other considerations can influence your role. Customer relationship management (CRM) is a big part of the ARM process.
ARM and CRM go hand-in-hand. Again, customer service does not and should not stop when a customer falls behind on payments. In fact, customers with late payments may need even more help. Remember, think of yourself as a problem-solver who is there to help the customer. They could be facing issues well beyond their control. Businesses would do better to see the situation for what it typically is—a hiccup in an otherwise good customer’s financial life that requires education, support, flexibility and patience to help them get back on track.
4. Pay Attention to Social Chatter
Social media fallout is a critical consideration. People communicate every day on platforms like Facebook, Twitter, Glassdoor and Instagram. These channels give consumers a loud voice and create an opportunity for them to communicate directly with companies of every size. Social media has brought businesses closer than ever to their target market and customer base.
Social media provides an ideal megaphone for consumer complaints. If a business treats customers poorly or becomes known for its aggressive and noncompliant collections practices, its reputation will suffer. This can have long-lasting effects. Make sure to pay close attention to what’s being said online. And, consider responding to customers so you can better understand their concerns. This may help you to improve your processes and potentially avoid repeated situations with future customers. Actually, acknowledging the issue on a social forum can do wonders for restoring a customer’s loyalty to your business. And, it can also positively impact potential customers, as well. They’ll know that your business cares about its customers.
Again, think of collections as a kind of problem-solving that is based on dialogue, negotiation and mutual agreement. Make sure that you’re responding in a manner that both demonstrates and emphasizes some flexibility; this is key in problem-solving. It helps both parties to adjust their expectations and still reach their goals.
These are just a few examples of how attention to detail can help to preserve customer relationships for the long term and can enhance the customer’s view of your company and brand.
Balance Revenue and Customer Loyalty Objectives
The entire tone of the debt collection and ARM industry is evolving. Yes, revenue still needs to be at the forefront of the recovery process, but both creditors and third-party providers are now looking at revenue goals within the larger context of customer relationships. Today’s customers have varied expectations. Many are changing the way they think about debt payments and how they interact with businesses. You have to keep pace with those changes or risk losing valuable customers.
But, ARM doesn’t have to be a trade-off between revenue and customer loyalty—these are not mutually exclusive. In fact, the right approach involves treating customers in a caring and respectful way that protects the customer relationship while still driving increased receivables.
The bottom line is that there is no substitute for a customer base that remains loyal even when you’re trying to collect outstanding debt. Just because we’re operating in a highly regulated industry does not mean we should abandon traditional CRM practices. Rather, we should set a higher standard and expect more of ourselves. Providing the best possible customer experience takes a commitment. Delivering great customer service, educating and advocating for your borrowers, and treating all accounts equally will pay rich dividends well after your customers’ financial troubles subside.