In these days of increased debt loads, tight financial restrictions on lending and a generally static to stressed economy, a payment can often be crossing with an early stage payment reminder or a customer can be reaching the early stage of delinquency and needs some guidance.
These customers, while having greater potential to increase in risk over time, can still be rescued from what can become a bad habit through late or missed payments, and gain some useful education that helps them and helps a company secure their business into the future and potentially happier times.
How are collections leaders building their strategies for early stage collections to retain and educate the customer?
Consider the customer profile first of all. Does every missed payment customer become a multi-payment missed customer? No, but the repetitive nature of a missed payment can indicate risk factors may be rising. What tools do collections leaders have at their disposal to make sure that at the outset of a behaviour change in their customer, they help correct it and maintain, if possible, the customer in good standing?
What about the debt level? Lending is predicated on customer credit factors and customer profiling is of increasing importance in the decision process.
What I am seeing more frequently is the idea of separating out the customer management from the risk assessment and collections processes into three distinct activities.
Under the customer management sphere would come items such as early stage actions or education decisions.
Risk assessment would determine the strategies for collections.
At the collections operations level the strategies would be followed and modified based on success factors.
In all cases, companies want to keep a customer unless the risk is too weighted against it. Early stage collections therefore becomes an interesting challenge.
How are you managing your customer management and early collections strategies – do you want to keep yoru customer and potential uplift in revenue in better times or remove the risk?
I think the question is one that should be among the foremost in the minds of collections organizations and customer management strategy.