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 Having made my home in Minnesota, I follow the Minnesota Twins. Coming into Spring Training this year, the Twins are in desperate need of good pitching. It occurred to me that my industry could also use some training around its "pitching". Did you realize the "pitching" that agencies do has a direct impact on your productivity as a credit professional?
Do you track how many collection agencies call you in a year? I had one client tell me they had logged 152 calls in just one year! Agencies are persisent and the market is saturated with companies that all "sound the same". They all want your business, but how do you sort through the noise and figure out which agency to choose?
Trying to figure out who is worthy of collecting your company's debt can be a daunting task, but it doesn't have to be that way.
Here are some of my favorite industry "pitches" and a little bit about what each really means:
We send private investigators to visit every debtor!
Ever hear this one? This is a powerful concept. No doubt, sending a human being to collect money has its benefits. But do you really think someone is going to visit a debtor any place in the country, for any size of balance? One of my clients received a pitch like this and threw it right back to the agency by saying, "I have 500 accounts all less than $200, are you going to visit all of them?" The salesman went away with his tail between his legs. This pitch is meant to play to your emotions. Know that every reputable agency in the country can get a private investigator to someone's doorstep. Sending someone to visit a debtor is part of a strategy that you use when the time and conditions are right. It's really a tool for a collection professional and shouldn't be the primary selling point of an agency.
We don't fool around, we sue everybody!
If a sales person is telling you their agency sues everybody, its probably a sign their internal efforts are weak! One of the biggest misconceptions about suit is that it causes people to pay quickly because the debtors are afraid of litigation. Most debtors have been around the block and realize that a lawsuit actually gives them more time to delay payment. If you want your money faster, you want a professional collection effort at the time of placement and you want a collector who has incentive to collect your money today, outside of court! Suits require that you spend money out of pocket and you pay a higher contingency rate, so use an agency that collects as much money pre-suit as possible.
We are the "biggest" and we have the most experience in your company's industry!
In the collection industry, the biggest players tend to have massive operations that feed into a bureaucracy. Accounts may be "serviced" from multiple call centers across the country and they might be called from overseas. Work is completed to a "minimum standard". That means providing the minimum effort required on each account as opposed to doing everything possible on each account to get your money collected! Being the biggest sometimes means being the slowest and least efficient. Collections is a people business; collectors make connections with people. No amount of technology can replace the benefit of one on one personal contact with debtors. You don't need "big", you want a collection partner who is nimble and does whatever it takes to get each account collected.
We collect 75% of placements!
Beware of any sales person who pitches that they collect X% of your placements. The number they like to quote is normally north of 50%. This sounds great, but what does it mean? We have clients across many industries. Some clients work their paper thoroughly prior to collections and some don't work it at all. Some sell products that are highly valued to a group of credit worthy customers and others deal with subprime credit risks. Some of our clients' recoveries even vary by regions of the country. What I know is that if agencies recovered more than 50% of all their clients' paper, agencies wouldn't exist because clients would collect all that money in house! An agency that claims they can collect a high percentage of your paper without knowing anything about your paper is playing to your emotions. They are more likely to be slinging manure than selling effective collection services!
Sales is about appealing to people's emotions and creating urgency to take action. A sales pitch may get you on the edge of your seat; however, instead of making hasty decisions, you need to slow down and examine what it is you really want. Agencies with great products don't need to play on people's emotions. Here's what a good product feels like to me:
Experience: It's nice that my agency has 43 years in the market place, but what's nicer for my clients is the fact that I can rattle off a list of senior collection staff that all has 20 plus years of experience. Those are the people that collect your money! People who know what they are doing and have made a career in the industry. I'll put my money on people that are committed and passionate any day of the week!
Systems: With experience comes time-tested systems and attention to detail. We have developed systems that give our staff the ability to contact accounts as frequently as necessary to collect your money quickly! We manage our workloads carefully and that enables us to deliver consistent results and high recoveries to our clients. Collectors can't plow through thousands of accounts. A professional collector needs some time to employ a strategy with their efforts. It takes time to review back up, research backgrounds and to make effective calls.
Measurements: We measure our people based on what they do for all of our clients. This enables us to level the playing field and do an apples to apples comparison of all our collection professionals. People who do the best on a mix of all clients' paper are rewarded and promoted. Those who need to improve receive more training and once in a while, for people who can't perform, we redirect them to a new career. The bottom line is, we have to measure people's performance, it is the most important component to creating your recoveries!
Rewards: Collectors work best with incentives. Our staff is compensated based on every dollar they collect for you. This ties their compensation to generating successful results for you!
I hope my stories have given you a smile and some insights on the collection industry. Some people will say anything just to try and get a client to switch partners. I would love to hear any entertaining stories you have about "pitches", drop me a note at jfritz@rccmn.com. I enjoy hearing the latest about what my sales brethren are up to! Remember the commercial collection industry is the same as any other industry, you get what you pay for! Go Twins!
Jim Fritz is the Vice President of Sales for Receivables Control. Jim can be reached at 763 315 9631 and his email is jfritz@rccmn.com.
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I hope you find this newsletter informative and I invite you to share it with your peers. 
Know the character of the collection partner you choose and ensure you hold them accountable for results and reporting. That is the best way to mitigate your risk.
