You wouldn’t set out to bake a cake or cook a gourmet meal without having the proper ingredients.
Likewise, the strategy you use with your team to collect is a recipe that requires certain ingredients to be successful.
Let’s take a look at the five main ingredients for achieving high-converting collections:
Key Ingredient #1: Level up your collectors’ emotional intelligence by understanding consumers’ fears and frustrations associated with having a debt.
An in-depth survey from the Consumer Financial Protection Bureau reveals four main struggles that put consumers in a near constant state of stress:
Many consumers are unable to absorb a financial shock, meaning when something unexpected happens, they have no plan B or a way to meet their basic needs.
Many consumers feel out of control with their day-to-day and month-to-month finances, almost like they’re trapped in a hamster wheel that isn’t going anywhere. Despite working and earning income, some consumers feel like they’re making zero progress in saving money because once they pay off one debt, another is waiting right behind it. This makes it difficult to plan for the future.
Feeling a lack of control over your finances can mean not meeting your financial goals and, in many cases, not even having financial goals. This is when fear turns to utter helplessness.
Ultimately, consumers struggling with their finances can feel like they’re unable to make choices that allow them to enjoy life – like taking a vacation or pursuing work they actually enjoy rather than taking a job just because it makes ends meet.
What’s important to understand is that all of this can lead consumers to enter collection calls on edge and affect their ability to stay calm on the call, trust collectors, and be open to solutions from them.
Now, when collectors can understand how to disarm those negative emotions and speak in a way that lifts consumers up, builds trust, and motivates them to pay off their debts, they are going to be more successful.
Which leads me to ingredient #2…
Key Ingredient #2: Know what creates conflict and what creates connection.
To become a master collector, you need to not only understand what happens in the consumer’s brain and body when confronted with debt, you also need to know how the words you use on collection calls make consumers feel.
Are your words creating connection and moving the call forward toward payment or are they driving disconnection and moving the call backward?
Stepping back for a minute: Many collection strategies are built on a baby boomer mindset, which attempts to appeal to a sense of consumers’ pride and responsibility to get them to pay their debts.
In the millennial era, the outcome of a collection call is really determined by how you as a collector made the consumer feel. Did they have a positive experience talking with you? Or a negative experience?
Put a consumer in conflict mode and the risk of a lawsuit or complaint goes up.
On the flip side, knowing how to connect with consumers makes them 6 times more likely to reach a deal with you.
With that in mind, let’s first talk about some of the language that causes conflict.
Negative words create conflict by making consumers feel hopeless and stressed. They instantly cause stress chemicals like adrenaline and cortisol to flood consumers’ bodies, which means the call ultimately goes nowhere.
For example, reciting policy and using language such as “by law” is going to create conflict by making consumers feel like they’re in the wrong and put them on the defensive.
How can a consumer defend himself and move forward at the same time?
Putting the consumer in defense mode only serves to move the conversation backward, wasting time and costing you revenue because the call will not end with a payment.
On the other hand, using positive language, like “I’ve got great news for you” and talking in terms of solutions puts the consumer at ease, creates rapport, and establishes a level of trust.
When you can lift consumers up and motivate them to pay off their debts instead of tearing them down, you are going to be more successful.
Key Ingredient #3: Have a consistent, well-developed collection strategy that is step-by-step and scalable.
Just like anything you want to win at in life, it is important to invest in a strategy that will give you a competitive edge.
Here are three essential elements that I believe are needed to create a successful and scalable collection strategy:
Create a payment guidelines grid for allowed payment arrangements, meaning collectors have a range of what the monthly payment should be according to the balance.
Develop a negotiation strategy so that every collector is performing the same way in every communication with consumers. I cannot stress enough how much this will change your game and your results in collections.
Put your communication on autopilot by having required phraseology that is used on every call. In the Collection Advantage online training program, we train collectors to use a simple-to-integrate 3-step Communication Code that when followed, creates connection and avoids all the typical conflict in a collection call. This communication strategy truly puts your collector in the position of an ally instead of an enemy.
Key Ingredient #4: Know how to ask powerful questions.
Certain professions like journalists are taught the art of asking questions. The rest of us rarely think about perfecting our questioning techniques or understand how asking better questions leads to more productive calls.
As a collector, learning how to ask questions is a powerful tool that will help you gather important information to move calls forward toward payment, build rapport and likability, mitigate risk, avoid miscommunication, and become a stronger negotiator.
There are four types of questions I believe every collector should have in their toolbox:
Closed-ended questions – These questions prompt “yes” or “no” responses. The best time to use these are when you’re asking directly for payment.
Open-ended questions – These questions cannot be answered with a “yes” or “no” response. Open-ended questions require more thought and invite a longer, more detailed response. It’s helpful to use open-ended questions when you’re managing demographic information.
Reflective questions – These questions encourage critical thinking and are helpful when you’re trying to determine a problem and the solution.
Calibrated questions – These are “how” and “what” questions that prompt the longest responses and help promote goodwill and connection.
Key ingredient #5: Know what to say when…
Helping your collectors know what to say, when to say, it and how to say it is going to make a huge difference for your agency.
How often do you hear this question from collectors: “What do I say when…?”
For instance…
What do I say when the consumer claims insurance was supposed to pay?
What do I say when the consumer claims they filed bankruptcy?
What do I say when the consumer feels their ex-spouse is the responsible party?
One of the best ways I know to scale and level up your collection floor is to pre-script responses to the most common consumer stalls and objections your collectors hear daily.
Pre-scripting also benefits your bottom line because once you have a well thought-out, pre-written response to each of your most common pain points, you will cut down on 80% of the conflicts, headaches, and escalated calls to supervisors.
What I have noticed is that when collectors – and even team leads – are in the middle of a really challenging call, they will just say whatever comes to mind.
Or when a consumer asks a tough question, some collectors will easily lose their cool, pushing the call into conflict mode.
Maybe it’s because when collectors are in the heat of the moment with a consumer, they don’t have time to brainstorm the perfect response. It rattles their confidence, and ultimately, the call goes nowhere.
I’ve also noticed how inconsistent collectors’ responses can become. The last thing you want is half of your team referring the consumer back to the client and the other half following the correct policy.
I suggest your agency start by taking a look at the 10 most common consumer stalls or objections – I call them pain points – your collectors hear and documenting exactly what you want your collectors to say.
This is a crucial scale ingredient, which will also help your agency collect more with less stress, boost your collectors’ confidence, create massive consistency on your collection floor, and reduce risk.
From Theory to Practice
When I set out to create the Collection Advantage online training program, I made sure it was formed around these five ingredients, which I consider to be critical to collectors’ success.
In fact, one of my training clients saw a 5x increase in new hire performance because rather than have the new hire shadow a veteran collector, the new hire was trained exclusively using the Collection Advantage program and my signature negotiation strategy, “Payment Plans that Work.”
The powerful strategy features a step-by-step negotiation method that will double, triple, or even quadruple the average monthly payment arrangement each collector collects on.
For more information on how the Collection Advantage can help you build a team of high-converting collectors, book a call with me today.