Should credit staff treat all customers alike?
This article first appeared in the NBR in June 2009
Why "how are you today?" shouldn't be just a cliché
I occasionally work with an Australian credit manager, Elke, who is a very talented horse trainer. People bring badly behaved horses to her and she fixes their problems, like an Australian horse whisperer. However, the Queensland sun doesn't suit pale-skinned blondes so she can't do that as a fulltime job. Instead, she's ended up working as a credit manager and she's exceptionally good at it.
Her skill at reading animals, understanding their problems and solving them, transfers to humans. She is a brilliant reader of people. She has very good insights into human behaviour and how to influence it, and that makes her very good at collecting overdue accounts. She attended one of my seminars some years ago, and afterwards I called her and asked if she'd like to co-present some of our seminars.
Here's one of the most important things I learned from her. At the start of a collection call, she almost always asks the person on the other end of the phone how their day is going. Until she explained her rationale for this, I was ambivalent about this sort of question. When telemarketers interrupt your meal this evening, inevitably they will ask, "how are you today?" Most of us eventually work out that sales people who ask this question have an ulterior motive. "How are you today?" is a cliché, and when an unsolicited caller asks that question, we can assume they don't really want to know how you are today. They are taught to say this in order to show interest in their prospects so that they can start to build rapport.
Elke, however, genuinely wants to know how they are today. What they say in response will give her the first clues about how to deal with this customer. To take a simple example, some people will respond best when they are called by their title - Mr Smith or Mrs Smith or Dr Smith, and will resent being called by their first name, let alone being called "mate". For others, a first name approach is essential. The trick is to pick which is which.
The reason I'm telling this story is that someone told me the other day that their collection staff should be treating all customers the same. I was surprised. Did he really want his staff treating a financial controller of a company which spent $5 million in the same way they treated a small business owner who spent $500 a year? The downside of upsetting the former was much less than the downside of offending the latter, so surely a little more preparation and care is justified.
One of my minor bugbears is the fact that many people who have never collected overdue accounts, notably senior managers, assume that there's nothing to it. I wonder whether the belief that you can treat all customers the same is a factor in this. I can see how people who haven't collected debts might feel that collecting money is just a matter of picking up the phone and asking for it. I can also see how the push for consistency in businesses can encourage a drive for standard approaches and even standardised scripts. And certainly, I see many credit staff who do have only one standard approach and are unable to vary it.
At the front-line level, the whole point of Elke's opening gambit is to start to work out how each individual should be dealt with, and to have the flexibility - the range of people skills - to deal with each one appropriately. In my view, the ability to do that is one of the most important skills a credit manager or debt collector (or of course a sales person) can have.
At a business process level, the ability of businesses to identify types of overdue customers and the different processes that should apply to them is vital to the effectiveness of a credit management operation. There are usually significant differences between consumer debts and business debts, and between brand new customers (who need to be trained) and existing customers (who, hopefully, have already been trained). In fact, there's a whole science of behavioural scoring which tries to identify the factors which should determine a difference in approach. The point is, one size does not fit all.
Peter Hattaway - www.hattawaysconsulting.com - is generally considered Australasia's leading expert in credit management. He can be contacted at peter@hattaways.com