The Psychology of Making Clients Want to Pay
"Help me out here, mate. That rottweiler back at the office is giving me grief about my customers' overdue accounts. Do me a favour and write me a cheque would you?" This version of good cop-bad cop is, more or less, the standard salesperson's approach to debt collection. If someone said this to you what would your reaction be? Chances are it would depend on how much you liked the person who said it. If it was someone you'd shared a good relationship with in the past, you'd probably pay up just to keep them out of trouble. But what if it was the surly office clerk who doesn't recognise you, continually gets your name wrong, and won't even make polite conversation?
A good proportion of successful credit management comes down to how the client feels about you. It's not a new idea - but understanding the psychology of why it works may offer new incentives for establishing good relationships with clients. It may mean the difference between receiving a cheque promptly and not receiving it at all.
Successful salespeople use psychological techniques of persuasion to get potential buyers to feel good about making a deal. The psychology of persuasion sells everything from cars to mascara, washing powder to insurance, all by appealing to the very basic concepts of human nature. Credit managers can use the same techniques to persuade potential payers to pay. All you have to do is find the weak point. Everyone has weak points, and, even better, everyone has the same weak points.
People have the same psychological needs - they want to be liked, they want to be right, and they want to be consistent. By offering the opportunity for debtors to achieve these psychological needs, you can increase their desire to pay you.
In this article, I'll give you an overview of one of the basic psychological needs - the need to be liked - and how it relates to collecting an overdue account. Every person wants to be liked by as many other people as possible. Being liked improves our perception of ourselves, and we all want to think favourably of ourselves. Being liked by the right people or the right group is also important to us, because others judge us on who we associate with.
Liking is a two-way feeling. It may start because someone is friendly to us. We equate friendliness with being liked, even when we know that person may just be doing their job. They are friendly to us; we immediately like them. So we return the feeling by being friendly back. In doing so, we become more likeable, so the other party reciprocates and a friendly exchange is under way. Remember how difficult it is not to smile at someone who is smiling at you? It's the same principle.
The more relevant aspect of this basic psychological need is that people more often comply with the wishes of people they like, and this extends to debtors paying the businesses they like. For example, a credit manager we know remembers when he was in business for himself. When financially stretched, he used to make a point of not paying those credit managers whose approaches were unpleasant but would pay those he liked.
What's the theory behind the behaviour? When people like us we feel good, and to go on feeling good we must ensure that people continue to like us. Doing things for people/friends ensures the good relationship continues, while refusing a request may jeopardise it.
I'm not suggesting you invite clients for Sunday brunch to cement your friendship - relationships that are too familiar may lead your client to take advantage of your goodwill. This is a common problem for professionals: they fear talking about money, and the good relationship with the client works only to the client's advantage. The professional doesn't want to damage the relationship by chasing the debt. This is an issue which I'll cover in another article.
Here are some basic techniques for establishing and maintaining a good business relationship with your client.
Know them personally.
No-one wants to be confused with someone else or feel like a number. You can't be expected to remember all the details of their business but keeping a note of their personal details, and asking how they are finding their new car, house or baby goes a long way. Imagine you are low on cash and receive two invoices - one from a business to whom you are relatively anonymous, and one from a business where the staff greet you by name, and remember to ask how your six-week-old son is doing. Who would you pay first?
Be attractive.
Fickle as it may seem, we like attractive people, and we tend to perceive them as more intelligent, powerful and nicer than less attractive people. We want to be liked by attractive people because it makes us seem more desirable. Cheerful, well-groomed, efficient people always seem attractive.
Be similar. We like people who have the same interests, lifestyles and viewpoints as we do, because they reinforce our choices. Finding a common interest in fishing, sports cars or having children of the same age can enhance a relationship.
Be cooperative. Most of the time you will be working with your clients to provide a service. When it comes to collecting payment, continue to use the ‘team' framework. Get the client ‘on side' by working together on the goal of payment (let's see if we can come up with some arrangement), or use a third party to be opposition to you both (help me out, mate. The rottweiler...)
Use compliments and praise. While it may seem a little strange to be offering praise to someone who owes you money, consider that a) we tend to believe compliments even if they are untrue or insincere, and b) we try to live up to people's views of us. You're usually such a prompt payer Mr Smith, that I knew it would just be a simple mistake...
Act before you need to. Accountants can't repossess. What they can do is implement some psychological persuasion techniques before the client becomes a debtor. A credit manager who gives Christmas presents to the accounts payable staff of larger customers has told us that his accounts are processed a lot quicker as a result.
And of course, not only are customers who appreciate you more likely to pay promptly, they are also more likely to bring their business to you again.
Chartered Accountants Journal of New Zealand