Earlier this year Kai Ryssdal of Marketplace, a radio program produced by American Public Media, talked to economist Stephen Dubner (famous for the best selling book, Freakonomics) about the retail customer service experience. The main takeaway from their conversation was that providing better customer service was good for business.
This short interview got me thinking: how might better customer service help debt collection agencies recover more money for their clients? And how might the ARM industry learn from some of the research Stephen Dubner had conducted in the retail space and apply it to collection industry business practices?
Here are a few of Dubner’s findings:
- “Stories of bad customer service–and of customers behaving badly–are abundant.” (If this doesn’t ring true for your experience as a debt collector, you’re probably leading an incredibly charmed business life.)
- “The most successful low-cost retailers (like Costco) spend more money on wages and training than their competitors—and companies like Costco are more profitable than their competitors.” (DING DING DING—hiring good people, training them properly, and spending money on how they do their jobs–through training and technology, for example–can make your collection agency more profitable.)
- “When a retailer doesn’t invest in its people, then execution at the stores suffer.” (Collecton agencies are services businesses, and people are collection agencies’ most valuable assets.)
- In a survey of more than 75k consumers, researchers found that a lot traditional niceties are irrelevant–or even annoying–to consumers. Instead: “Making things simply easy for customers–getting a question answered, returning an item, making the burden as low as we can on the customer–results in the greatest initial economic benefit for the company.” (This concept was the tipping point for me: how can collection agencies make life easier for consumers–not to be nice–but in order to get paid? Are collection agencies accurately responding to consumer behavior in the service of their own business objectives? If not, what can the ARM industry do to change that?)