Getting people to keep their promises to pay
A version of this article appeared in the Chartered Accountants Journal of New Zealand, June 2001
"I don't really know - I just always have..." Many of us have said this type of thing when we've been asked why we do business with a particular firm, why we always prefer a Japanese car (or a Holden, or a wagon), and why we keep going back to the same hairdresser or bank even when we grumble about the service. The reason we do this is that humans like to be consistent - it has some great benefits for us, as well as the odd disadvantage. We can use this desire to be consistent to help us to get people to do what they have promised, including their promises to pay.
The word consistency means good things to us and we value it. We tend to associate consistency with personal and intellectual strength, rationality, and stability. Inconsistent people are fickle, uncertain, unstable and not to be depended upon. To change our minds indicates that we were wrong.
A consistent person is likely to be seen as someone who can be trusted, who does what they have said they will do, and is reliable. Most of us want to be seen as that kind of person because we want to be liked - we certainly don't want people to describe us as inconsistent, not to be trusted, or always making promises we can't keep.
When people promise they will pay, most of the time they will want to be seen to be doing the behaviour that is consistent with that promise. Of course, there will always be exceptions to this - some people make promises just to get you off the phone, some will forget, and others won't care what you or anyone else thinks of their integrity, but for most debtors it will apply.
Another advantage of consistency is that it is a shortcut - it allows us to weigh up the pros and cons of a particular behaviour and make our decision once. The next time that situation arises, we don't waste time weighing up the options again. We take the shortcut and do what we did the last time.
Imagine you are dealing with debtors who claim to be unable to pay in full but will promise to pay the debt off by instalments. There are two useful things you can do to improve the chance of debtors in this type of situation sticking to their word. The first is getting them to write the commitment down, and the second is to let them feel they’ve won.
If you can get them to make their commitment in writing or at least sign their name to what they are promising to do, you add some extra reasons for them to keep their word.
1. If it's written down, they can't deny that they agreed to the arrangement. This is particularly important when debtors want to make some very minor change to their arrangement to pay - often we think it is not worth bothering to get a signature, but when a debtor forgets of denies the arrangement, a document can be very useful. It also means that when a debtor suddenly "remembers" that the reason they are not paying is that they were dissatisfied with the product or service, you have a signed document that they agreed to pay the whole debt off in instalments. You have good evidence to take along to the Disputes Tribunal or the District Court that the "dissatisfaction" is a spurious excuse.
2. It allows you to make use of the power of publicity. People don't want you to see them as weak, fickle, inconsistent debtors who don't keep their promises. If you have written and signed agreements then, not only do YOU know, but you can potentially show many other people the weaknesses in their character - in effect you can air their dirty laundry in public!
I know a woman who used the power of publicity as a motivator for an overseas trip. She had wanted to go to the United Kingdom for years and had never managed to get there - she was not terribly confident about flying and something always cropped up to prevent her going. In the end she told everyone she knew in great detail where she was going and when - she used the power of publicity. She told me later there was no way she could have changed her plans after that without having to face a lot of awkward questions and having people think that she was unreliable.
In credit, the better your customers feel you know them, the more likely they are to want to be consistent, and to keep to their agreements. If you allow them to feel anonymous, treating them like a number, or an unimportant customer, you reduce the effect of the power of publicity quite substantially. If customers feel anonymous, they feel that the chance of you using the power of publicity is not very large - they may even feel that you won't notice if they don't stick to the agreement.
3. The more effort debtors make to get the agreement, the more importance they give to it, and the more likely they are to be consistent with their promise. By writing it down themselves, debtors have to think about what it is they are agreeing to. If you change your BNZ PIN number at the bank, you will have to write "I undertake to keep my PIN secure." This is using the same psychology.
If you are dealing with customers over the phone, and you think they are unlikely to return a signed document (let alone write out a statement of intention), at the very least, get them to say to you what they have agreed to. They'll remember it much better than if they let you explain the agreement while they just say "yep, yep, yep" without thinking about it. (If you are dealing with a business customer, think about getting the written promise by fax.)
Our second recommendation is that you try to let the debtor feel he or she has "won".
The happier a debtor is with a deal, the more likely he or she is to keep to the commitment to pay. One way to do this is to let the debtor feel that they have got a good deal. "You drive a hard bargain." "My boss will probably have my hide for agreeing to this." "I’m not supposed to do this... but okay." Even if you’re quite happy with the arrangement, let them feel that they’ve pushed you further than you wanted to go (though not that they have walked all over you.)
This allows the debtor to feel responsible for setting the terms of the deal, and it lets them feel satisfied with the outcome (they have pushed you down to a lower price - they must be pretty damn fine at negotiating!) When they feel responsible and satisfied with the deal, they are much more likely to be consistent with what they have promised to do.
Sarah Fifield Ph.D is a psychologist.