Collections Without Conflict

There are two assumptions often made by debt collectors:

1. The debtor is trying to avoid paying where possible.
2. The more pressure applied to a customer, the faster the debt will be repaid.

These two principles are at odds with everything else customer-centric companies are trying to do today to inspire loyalty from their customer base. As customers, it can almost feel like we are under attack – bombarded with letters and calls at a time when it’s likely we are already under immense pressure.

Some companies choose to outsource this dirty work, as if they can remove themselves from the impact on customers, but this means the debt collection is taking place outside the existing customer relationship. This can drive contact that is at best cold, at worst callous and combative – and it can break trust irretrievably.

Of course, companies don’t want to end up in this situation any more than the customer does, but all too often this is the default approach to handling collections.

Companies fear that going gently risks the customer not prioritising the debt. So they use shock tactics to try to ensure that they are front of the queue.

If we instead assume that most customers borrow money in good faith and intend to pay it back, then a much more helpful way of looking at things is: how companies can strengthen that commitment to pay and give the customer enough control over the agreed plan. Keeping an honest dialogue going with a customer is essential.

It’s worth bearing in mind that a customer who is unable to meet their regular monthly financial commitments is already likely to be in a high tension position and not feeling able to take control and navigate themselves back on course.

The triggers that can drive a customer from being a ‘good’ debtor to a ‘bad’ one are some of the most traumatic curveballs life can throw at us: bereavement, redundancy, illness, caring responsibilities, or even just the slow spiralling of debts becoming unmanageable. These are all times in people’s lives when people learn who their real friends are – as well as which companies really value them as an individual customer.

Debt situations can be complex as well as uncomfortable, so there is a risk of oversimplifying, but the guiding principle should be that the debtor is a human being with a normal set of priorities and feelings. They do their housework and take their kids to school, but also face the unexpected situations and costs that life can sometimes throw at us. Treating them as a human being will go a very long way to keeping the mutual respect intact.

Using this approach, you can convert a pressured debtor to a contented, loyal customer who knows you will stick with them, even when the going gets tough.