You hold your ARM providers to high performance standards for the outsourced portion of your portfolio. Are you holding your in-house AR to the same standards?
Take a fresh look at the performance of your AR team and consider their results against the rest of your portfolio. Which segments are paying off? Where’s the tipping point that takes your outsourcing mix from acceptable profits to an excellent ROI?
Evaluate your outsourcing mix every year in light of changes in the regulatory and economic landscape and your own company’s evolution.
One way to hold your collection teams to a higher standard is through a “champion/challenger” approach. Measure your top performer against someone new, pushing both teams to earn your business, and keep earning it. Consider these ideas across the various consumer debt collection stages.
EARLY STAGE. Many early stage debtors are eager to return their accounts to good standing and are receptive to this first contact. Performing early stage recovery in-house keeps costs down and doesn’t require the skills of a seasoned collector who understands consumers in default. But the gentle reminders to consumers who forgot to make a payment are just the beginning. Your first call to the customer sets the tone for your relationship. Proactive customer service ensures you maintain goodwill while reclaiming outstanding debt. Many companies perform early stage collections in-house for that very reason; they want to keep control over the client relationship and their reputation.
However, you don’t have to give up control when you outsource. Many agencies excel in nurturing the customer relationship by training contact center staff to listen to customers, empathize with their problems, and work with them to find mutually beneficial solutions. Challenge your champion, whether in-house or outsourced, to prove their worth as you evaluate resolution rates and customer surveys. Rigorous and regular attention to analytics testing ensures your highest return as your champions and challengers vie to earn more of your business.
LATE STAGE. Communication at this stage can be a pivot point in the customer relationship and with your cash flow. Taking a consultative approach helps your customer avoid default and maintain loyalty to your brand. Successful recovery requires an in-depth understanding of delinquency cycles and the psychology of the consumer. Recovery specialists must be more than just collectors. Maintaining cash flow requires problem solvers with a compliance-centered mindset who generate revenue and customer satisfaction. Does your staff maintain that level of expertise?
If you’ve used the same vendors for years, use competition to keep them performing for you. Put a new vendor to the test with a champion and challenger pilot test. Whether you measure the amount collected, days to collect, or their liquidity rate, the performance-based metrics can help you decide whether to expand or reduce your number of vendors.
VERY LATE STAGE. This debt can be the toughest to collect, requiring your most skilled players. Pitting your in-house champion against a third-party challenger may quickly reveal whether seriously delinquent debt exceeds your capacity to collect. If you opt to use the resources offered by a third-party ARM services provider, look for a company that can generate a full suite of analytics. Top producers know how to capture, read, and interpret the data — and develop a plan to bring customers back to good standing. Skip trace capabilities help find missing debtors. Omnichannel capabilities let agents use not only phone calls but text, email, and web chat to reach consumers in ways that may make them more receptive to your message. As you view your company’s annual technology investment, include the infrastructure that fuels your consumer debt recovery as well.
At any collections stage, an ARM partner should give you a 360-degree view into what’s being done on your behalf. Accomplished outsourcing partners know transparency is vital to maintaining relationships with their clients and their clients’ customers, as well as satisfying regulatory requirements.
An ARM partner should give you a 360-degree view into what’s being done on your behalf.
Evaluate your outsourcing mix every year in light of changes in the regulatory and economic landscape–and your own company’s evolution. Keeping your collections in-house may work better for you one year, but not the next. Or perhaps you already have personal relationships with your customers that a third-party provider would have to rebuild from scratch.
If you opt for additional outsourcing, put your current ARM provider, and others, to the test. Even if your existing partner is performing as promised, it may be leaving money on the table. Does it offer transparent insight into its operations and performance? Find a company with a demonstrated history of results and culture of compliance.
At every stage of collection, make sure your AR team (both in-house and outsourced) has the time, tools, and expertise to establish work strategies to surpass your past performance.
— Gary Dorman, Director of Operations (@wrg_gdorman)