It is Easy to Capitalize on Missed Opportunities Within Your Collections Process

This is the first article of a two-part series discussing how to develop effective data and scoring models in the collections process and how to execute an optimal contact strategy.
 
While the economy is technically out of recession, unemployment remains quite high. Perhaps that’s why we constantly hear the cost of debt collections is rising. The “smile and dial” approach that once produced results no long yields the collections return it once did, and worse yet, it’s become even more expensive.  As a result, collections professionals must develop new strategies that increase collections without increasing their costs.
 
Collections is a process.  Like any process, there are often many flaws that result in missed opportunities.  An optimized collections process isn’t rocket science, but everyone needs help.  Some of the most effective process improvement solutions are not complicated and are readily available today.  The key lies in finding solutions that are sophisticated, yet easy and cost-effective to implement.  How does any process become easier and more cost-effective? Innovation is the root answer to this question.  Now more than ever, collections professionals need to innovate within their process to work smarter and tailor strategies to optimize results.
 
Collections can learn a lot from politics. In politics there’s a concept called micro-targeting. It’s the process of identifying specific groups for whom key campaign messages will be most effective. The 2004 Bush campaign used this technique to identify the so-called “security moms,” suburban women voters who were concerned about national security. Likewise, the Obama campaign successfully targeted younger voters by tapping into social networking and text messaging as communications channels. This technique is one that can and should be applied in developing collections strategies. The underlying premise of micro-targeting is that different groups respond differently to different messages and channels. But political campaigns hire high-priced consultants to develop these strategies over months, so how can you develop a micro-targeting strategy without breaking the bank (and thus increasing the cost of collections even more)? The answer is by automating the process using tools and technologies available on the market today.  These tools and technologies drive results in three main ways:  creating and leveraging data in more meaningful ways, synchronizing dialogues with customers/debtors and creating targeted contact strategies. The foundation is effective data and scoring.
 

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