9 lessons on asking hard questions of overdue customers
Some credit staff are very resistant to the idea of asking customers for "private" financial information. In a recent seminar we were talking about asking customers about their financial situation in the course of collecting debts - asking for financial statements or asking questions such as "how much do you earn?" and "what other debts do you have?" and "what payments are you expecting from your customers?" Someone said, as someone often does, "I couldn't ask my customers that!" Here are 9 points to consider on this issue.
The first point, and I think it's an obvious one, is that we're not talking about asking these sorts of questions in every collection situation. You would only consider asking them if you think it will help for you to know more about the situation. For example, if the customer has already broken a promise to pay and acknowledges financial problems, why wouldn't you want to ask some questions about their situation? The further along the collection process you are and the more money they owe, the more you can justify. But if you know your customer is a huge, wealthy multinational which can afford to pay your $500 account, you don't need to ask about their financial situation. If your customer is two days past due and has promised a bank transfer of the full $20 this afternoon, you don't bother. If the unpaid account appears to be just an oversight, you don't bother.
A second point to note is that these questions are not impossible to ask. Some people do ask their customers this sort of thing. They find that it's useful information and they find ways that work for them to ask these questions or variations of them. If they didn't work regularly enough, they wouldn't ask them.
Thirdly, you are bound to offend someone, sometime, when asking hard questions, so there is always the risk of losing customers. No-one ever said credit management was always going to be easy. The easy option, certainly, is just not to ask them at all, but in credit management you need the ability to say all sorts of difficult things in situations which are often stressful and delicate. You need the courage to face up to doing so.
These "difficult things" are not necessarily just questions. I know of people who have been successful at persuading debtors to borrow from a finance company, cut down on their cigarette expenditure, or borrow from family. The trick is to be able to say these hard things without having all your customers swear at you and slam the phone down. If you can't say those hard things well, you either don't make the calls, or you take a soft line on your customers, or you offend everyone.
Fourthly, you will be able to judge most of the customers from whom you have no chance of getting an answer to one of these hard questions. If your customer is someone who is in a prickly state because of embarrassment or guilt, you don't bother. If you can tell that the customer hates you for calling them about their account and is on the verge of exploding, you don't bother.
Fifth, you don't necessarily just jump straight in with your toughest question. A lot of the "secret" of successful telephone collection lies in your ability to build rapport. You have a customer who has a problem so you ask a series of questions that are clearly designed to help you understand the problem so you can help to find a solution. The first questions are easy and non-threatening. (What day do you get paid? Do you have other accounts that you have to pay ahead of ours?) Remember that many consumer and small business debtors are in a very difficult position. They want to pay their debts but they can't, and they have lots of creditors ringing them and saying simply, "you have to pay me or else." If you appear to be trying to help them find a plausible way out of their problems, many of them will play ball.
(Another approach is to be an authority figure, something like a stern headmaster. Some people can pull this off; most can't. It's not an approach that works with all debtors.)
Sixth, even when customers do object to answering questions, these objections may be able to be overcome. After all, when someone has breached their contract and failed to pay the money they owe - and especially if they then break further payment arrangements or acknowledge that they are in trouble - why shouldn't the creditor have some more information about the situation? That's not an unreasonable argument and will overcome some objections. The other obvious argument is that you're trying to help and in order to help you need some information.
Seventh, your tone is vital. Find a tone and an approach that works for you. As a broad rule, sincere and non-threatening are adjectives to keep in mind.
Eighth, it's unlikely that your customers are a special breed who simply can't be asked hard questions. Let's take the example of a credit manager who's dealing with senior managers, say financial controllers, in big corporations, over very large accounts? I've had people in seminars tell me that you couldn't ask hard questions of these sorts of people because you don't want to lose their business. I disagree. See my first point: if they owe you enough money and the debt's old enough, you (or someone in your business) must ask the hard questions that need to be asked. Their bankers will be.
The last point, of course, is that you may be right. Let's say you're 18 and your customers are all experienced businesspeople, most of them 20 to 40 years older than you. Or perhaps you just don't have the personality or people skills to build rapport with people over the phone. In such a case, perhaps you're right - you shouldn't try to say these things to your customers. But perhaps you should consider that you might be in the wrong job.
Peter Hattaway - peter@hattaways.com - is a director of Hattaways, specialists in credit management training and consulting - www.hattaways.com