Have you ever received a call from a company asking you to collect prime at 18%? And you know they’re leveraging 5 other agencies, pitting everyone against each other, waiting to see who’s hungry enough to take the debt. If you are savvy on the buyerzone.com model, these situations are probably handed to you on a daily bases. How does one company steal the deal over the other 5 and put the rate back where it should be? That’s exactly what I want to talk about today, points of differentiation in your agency that allow you to maintain your rate and seal the deal. It’s time to put the ball back in your court by predefining attributes of your marketing message that will make your agency’s services more valuable.
It’s important to consider that your prospects don’t want to hire a collection agency; they just want to recover their lost revenue. Their decision to go with one agency over another is based on how effectively you communicate your agency’s ability to: collect the highest amount of revenue, in the shortest period of time, while eliminating the amount of risk and converting your prospect’s thinking from contingency collections to actual receivables in 12 months.
Specialize, then Customize
I find that specialization is the biggest support mechanism when bidding on a new portfolio of debt. I’ve read this phrase on multiple collection agency websites: "We build a custom solution for you." This is re-inventing the wheel in my opinion. I think it’s about collecting debt you already have experience collecting. That’s effective recovery. Once you know how to collect the debt, you can do it more profitably. Another reason I like specialization is you can address your prospect’s unique situation/debtor in your sales, and that builds client confidence. The degree of relevance you have towards their problem determines how comfortable your prospect will be in engaging with your service. Your prospects have a few things on their minds and want answers to questions that are relevant to their situation. This requires you to specialize, organize and prepare for the opportunity before it presents itself.
In order to help adequately express my point about specialization and how it affects the overall value of your agency, I would like to use an example industry, Machine Tools. To give you an idea of how big the global machine tool market is, consider this: if you have a cell phone, a machine tool created the dye. I was unable to locate a collection agency that super-services the machine tool industry. I found many repo & remarketing companies but no full service collection agency. There are many profitable industries you can specialize in that are not being serviced by anyone.
Have you ever had a prospect ask this question?
Have you collected this type of debt for anyone else in my situation? What was their rate of recovery? I find the best way to answer these questions and prove it, is with a Case Study. In one document you can explain your process and show your prospect a tangible end result when using your service. It is your responsibility to illustrate end results in your sales presentation. Back to our working example: managing the receivables of Capital Machine Tool Equipment. In this hypothetical Case Study, you might present the following circumstance to a prospect like Mori Seiki’s bank in your sales pitch:
"Takisawa (a competitive machine tool company) placed 300 default machine tool loans in 2003. Machine Tool Recovery, Inc. (Demo Company) collected $7 million (roughly 50%) in receivables and remarketed/sold an additional $3 million over the last 12 months. This was 75% recovery of total debt and 25% more than their previous solution. Takisawa, prior to using Machine Tool Recovery, Inc. was using a traditional collection agency pre-selected by their bank. How we were able to accomplish these additional receivables was through our proprietary Machine Tool Collection Program. Machine Tool Recovery Inc. has been specializing in recovering debt for machine tools for over 10 years. Learn more about our process by visiting MachineToolRecovery.com.”
If you were bidding on a machine tool contract, it would be very difficult for a prospect to use a traditional agency after reading that case study. In fact, they may feel they are doing a disservice to their company by going with anyone else. Machinetoolrecovery.com could easily be a sub-brand of your agency. Specialized markets take very little time to build and are profitable once established.
Defining your collection process and how it relates to your prospect’s debtor.
What process are you going to use to collect this debt and how is it better? Your new prospects will want proof. In order to do this you will need to illustrate your collection process well beyond skip-tracing, call cycles and technology. The process comes from understanding the debtor’s situation. Every debtor is going to have a unique situation in every market.
For instance, in the machine tool industry most loans go into default because the Machine Shop does not land a new contract that keeps the machine running and generating revenue. Banks come in and pick up the machine to be resold and leave the prospect with no machine to generate revenue to pay off the debt. Seems frivolous, don’t you think.
Take any industry and look at how a more refined collection process could affect the end result to the bank and debtor. I see this done a lot with medical collections. However there are multiple sub-markets within and outside of medical collections that need attention. Once you establish how your collection process will effect your prospect’s unique situation, make it part of your sales pitch. Express the nuances of your process and how it affects your prospect’s overall receivables. This will add a great degree of credibility to your agency and build customer confidence.
Affecting your Prospect’s Decision by Displaying More Credibility
I’ve personally been to over 1500 collection agency websites. I may have seen about 20 with testimonials or some type of third party recognition. This is the collection industry and I think credibility is a major part of your prospect’s decision-making process. AmSher, nominated for a Best in Business Award, by Birmingham Business Journal, wrote a book on collections and is growing rapidly. AmSher took their collection process out of the agency and put it in a hard copy for everyone to relate to. My point is, try to organize some content that solidifies your credibility and illustrates your level of skill to your prospects. If you make it relevant to their business they will like you even more. You don’t need to write a book; this can be as simple as a testimonial from a client or a monthly newsletter educating your prospects about how you have improved the collection process.
A Creative Point of Differentiation
There are many other factors beyond those mentioned in this article. One very important issue is customer service. How do you define your customer service platform? This is actually a more creative process and I suggest doing it anyway. Avis Rent a Car’s unique customer service message is "We’re #2, So We Have to Work Harder to Earn Your Business." I love this example because it makes me think that everyone is running around on 8 cups of coffee getting things done at nitro speed. I just had a DHL guy deliver a package to my office and he jumped out of the van, ran up to the door huffing and puffing, "uHuhhh…uHuhhhh, can you sign this for me?" He then ran back to the van and sped away. I don’t think he’s late with his deliveries either, I’m thinking it has something to do with DHL’s Unique Selling Proposition. LendingTree.com’s Unique Selling Proposition is "Lending Tree, When Banks Compete, You Win."
If you survey your customers and ask them why they do business with you, and make them part of your Unique Selling Proposition, you will probably get a lot of great ideas. The next step is to incorporate them further into your business. This can be as simple as the way your staff answers your phone. Once you define and quantify your Unique Selling Proposition and its effects on your debtors and clients, you will achieve measurable results.
Levon Goudima began his career in marketing and communications in 1994 with the "Federal Express to FedEx" brand transition. Since then, he has worked with more than twenty Fortune 500 companies. Over the last ten years, Levon has had experience in all aspects of business development; from creating identities to writing strategies for campaign initiatives. About four years ago, he decided to focus strictly on the collections industry because he identified a need for better communications. Currently, Levon is the CEO of Vinton Moss (www.vintonmoss.com) which services more than 15 collection agencies within different market segments. Vinton Moss’ main objective is to help collection agencies grow by efficiently communicating the value of their service to their target market.