Helping people to keep to their payment arrangements
This article first appeared in MG Business in June 2003
Bill, the editor of the Mercantile Gazette, has just reminded me that my article is overdue, so it's appropriate that I write something on getting people to do what they've promised to do. This is really important for creditors. When you call someone about an overdue account, more often than not, you get a promise to pay. However, in some collection operations, fewer than 50% of those promises are kept. This article is about some of the things we can do on the phone to get people to keep those promises.
There are two basic issues. One is that many people are incompetent and forget things, so we need to help them remember. The second is that many people are unreliable. Their commitment to the arrangement was never strong and so they don't worry about breaking it.
Here are five ways (many of them very simple) to help customers remember what they've promised to do.
1. Repeat repeat repeat
Repeating the key message a number of times is a good thing. Some of the most effective collectors will often repeat the agreement to the debtor ("pay $50 next Friday then $70 a week for the next three weeks") half a dozen times in different ways.
2. Get the customer to write it down
When you write something down, it goes through a different pathway in your brain and you are more likely to remember it. You will also be reminded if you see the note again. It helps if it's put somewhere where it will be seen again.
Where should consumer customers write these things? Perhaps on the bill, on a calendar or in a diary if they have one, or on a note they can stick to to the fridge. Think about your own systems for bill-payment. Where would work best for you?
3. Get the customer to recap for you
" John, so that we're both clear on the arrangement, could you just summarise what's going to be done here?" When a customer repeats something back to you, he or she is more likely to remember than if he or she just agrees with their suggestion. It makes the customer think more deeply about the arrangement and it is more likely to stick in his or her mind.
4. Spell out the payment method
Ask, "how will you be paying that?" Make the customer think through the practical details.
In many cases, credit card is the ideal way (from your perspective) for them to pay. Here's a tip. To get people to pay by credit card, get them to promise to pay, then casually ask them if they have a credit card. Once they've said they have one, it's hard for them not to use it.
5. Confirmation letters
In some cases, you'll get benefit from sending a confirmation letter. Most sophisticated credit operations do this. You wouldn't do it for an agreement to pay the day after tomorrow but you would for an agreement to pay $50 next Friday then $70 a week for the next three weeks.
So that's fine for the customers who simply aren't organised enough to remember what they've promised. What about those who are simply not very committed? One relatively sophisticated way of influencing them is by using "attributions" to change their behaviour.
You may not know it but your beliefs about people influence their payment behaviour. For example, a creditor expects a debtor to react angrily to a request for money. To gather the courage to make the call, the creditor puts on a tougher attitude that they usually would. To the debtor, this attitude appears to be bullying, so the debtor responds with anger, thus confirming the creditor's view that debtor X is aggressive.
In credit, if you can give the impression of expecting that the customer intends to pay, you make it more likely that they will pay. We always want to know how other people see us. If someone tells you something about how you are viewed, especially if it's something good, you take notice. Say someone says to you, "you're a really honest person." Perhaps you discount it. You hadn't thought of yourself as being particularly kind, compared to the norm. Then someone else tells you the same thing. You think, "I am an honest person, aren't I." You start to think of yourself as "that sort of person." As a result, you become more likely to be honest. What people say about the sort of person you are, influences your own view of yourself, which influences your actions. It can also influence you negatively. Parents who tell a child repeatedly that he is a bad boy, may help make the boy worse.
You're more likely to change someone's view of themselves if you add something that explains why you think that. "You're such a honest person. You always do the decent thing."
If the reason they are that way is some outside force, they won't be influenced. The following statement, for example, won't positively affect anyone's view of themselves. "You're such a honest person. You must be really scared of being caught doing something dishonest."
You can change behaviours but not necessarily attitude through punishment. Attribution is a way of changing what they think. Here are some of the sorts of phrases that may be useful when dealing with debtors.
- I can tell from your record that you're the sort of person who pays their bills.
- I'm not really supposed to do this but I can tell that you're the sort of person who won't let me down.
- I know you're a good payer - you've never missed one before.
Nothing in collection is guaranteed to work every time. This is a relatively subtle approach and won't always work, but its use makes it more likely that people will keep their promises to pay.
Of course there are some people who are so bad at paying that they will not believe you if you use any of the phrases above. However, you might be surprised. People want to believe good things about themselves and we all tend to have a good opinion of ourselves, sometimes despite stacks of evidence to the contrary. Bill, the editor, for example, might be startled to discover that I consider myself good at meeting deadlines.