Have you ever considered a collection approach to be a marketing campaign? If you are a first party creditor (school official) your goal is delinquency prevention. The goal once they are delinquent is to motivate the customer (student) to respond to your message and to take action (pay the bill). The marketing messages and the marketing approach that we use should be designed to increase response rates.
I am not saying that students should not be accountable. I am saying that we should sell them on all the positive aspects of paying their loans and tuition bills — having a solid credit report is as valuable as any degree at the end of the day –as a part of the collection process. Let’s treat them like customers and not like debtors. Our mindset has to change.
The current approach is not working
If you are responsible for collections at a college or university, your current message is probably based on government regulation: The threat of turning your student over to a collection agency if they don’t pay, litigation, etc. If you work for an agency, the implied threat might be some type of “further action” if they don’t respond to efforts and the non-dischargeable aspects of their loan. The collection process is adversarial from start to finish. “If you don’t do this, we will do that.” That business model doesn’t work anymore. On the other hand, students are bombarded every day with positive messages on TV, radio, and the Web to not pay their bills and stop the collection calls. Many of these firms running those ads are offering bad advice that can actually harm students’ credit. Today, there is no stigma in America for not paying your bills. It’s easy to blame the schools, the government, the bank or the economy. Students don’t really understand the long term effects of bad credit.
Develop a Marketing Strategy for Collections
If you were trying to market a product to a student (the debtor), you would need a multi-channel marketing strategy in order to create numerous favorable impressions. This could include advertisements, direct mail, social media and more. In today’s collection model, we need to have a marketing strategy for selling the delinquent customer on the value of paying the bill. In fact, we are trying to sell them something. We are trying to sell them on the value of paying their obligation. We need to create a win-win. It can’t be faked. You really have to care about your customer (the debtor) and develop solutions that work for them and your client or institution. The key here is to be less aggressive up front and truly want to help your customer (the debtor) to resolve the balance. First the collector needs to take ownership of the account and project a position of “let’s see what we can do to resolve this issue.” This position replaces an adversarial position of collector vs. debtor with a partnership that has a shared interest. Of course, that also requires listening, counseling, longer talk times and courtesy regardless of their initial attitude.
It Starts With Education
Before you can collect a bill, your customer must be listening. At our company we decided that education was the best way to get them listening. You see, a “win-win” requires giving something in exchange for something. Your gift is to educate your customer, increase awareness and develop solid reasons why it’s better to make the effort than to give up. It starts with compassion, a friendly approach and a smile. At Access, we created an unbranded website, www.whycreditmatters.net to encourage our delinquent customers (debtors) to learn about their credit, credit scores, bankruptcy, credit repair, debt settlement and more. We are in the process of adding a section specifically for student debt and student loans.
If You Build It, Will They Come?
The second step in our approach is to develop a multi-channel approach to increase response and entice the customer to go to our site, explore their options, create a desire and motivate them to action.
As a debt collector, I am restricted at every turn by government regulation as it relates to how I attempt contact with a customer (debtor). There are no restrictions however on how the customer contacts me.
As a result, we want to have multiple communication channels open to them in order to increase inbound response. These channels also need to include the ways most people communicate today, text and web. Our goal in student collections is to create an environment that is helpful, friendly, interesting and even fun. The efforts however can be many and varied. Here are just a few examples of how inbound response can be increased thereby improving your contacts and recoveries. Here are some examples of marketing techniques I have used successfully in collections to increase inbound response and recovery rates: