Arum’s Director of Strategy, Operations & Training focuses on one of the key issues affecting the credit industry – Treating Customers Fairly.
Delivering a collections and recoveries strategy that balances the needs of the customer with the needs of your business is essential in today’s highly competitive environment.
The increased number of customers involved in debt scenarios presents new challenges in terms of analysing and segmenting debt, and deciding on the most appropriate strategy to pursue.
Treating Customers Fairly (TCF) is the solid foundation that all strategies should be built on. However, a common misconception that we at Arum have witnessed on our consultancy travels is that many companies see ‘Treating Customers Fairly’ as treating every customer the same. Nothing could be further from the truth; many customers need many different treatments, however, they must all be treated fairly. This is vital for organisations to realise and understand.
Within Collections & Recoveries, operational efficiency is supported by good customer satisfaction. You can’t have one without the other. However, to collect the right amount that is affordable to the customer, you can’t adopt a one size fits all approach.
The key is having the necessary analytical capability in place to segment both customers and accounts to enable the right communications and treatments to be carried out in a targeted and prioritised manner.
Mass communications to all and sundry is both expensive (cost of collections) and may indeed lead to not treating customer fairly based on the generic message mass communications brings. “Less is more” could be an appropriate tag-line in a targeted communications strategy where different sets of customers/accounts receive different types of communications and, perhaps more importantly, the message within the communication is relevant and specific to their situation.
Arum likes to differentiate companies within the broad bandings; traditional, aspirational and exceptional.
Traditional companies will use general mass communication when contacting customers, with no segmentation and/or prioritisation strategies and potential TCF flaws.
Aspirational companies tend to be on the segmentation and prioritisation journey. However, often segment customers rather than actual collections account segmentation.
Exceptional companies will use segmentation and prioritisation at account level and identify different communication styles – targeted and different for each customer, based on a mix of risk and situation whilst cutting out a whole raft of accounts that do not actually require any communication (self-cures).
As the evolution from Traditional to Aspirational to Exceptional transpires so too does the correlation between Treating Customers Fairly (but not necessarily the same). Traditional companies are at risk of not treating customers fairly whereas Aspirational companies are more likely to.
Ultimately in the TCF quest, it is the interactions of your collections teams with your customers that will drive your success. EQ (Emotional Quotient) training can create a competitive advantage in this area, ensuring that mutually beneficial outcomes are achieved and a positive EQuilibrium is reached between business and customer.
Peter Maguire is Director, Collections Strategy, Operations & Training with Arum