Have you ever watched a comedian bomb? It’s painful to watch, right? You squirm around in your seat counting the seconds (which seem like minutes) until their routine and the misery ends. But here’s the thing, sometimes the reason they aren’t getting any laughs isn’t because their jokes aren’t funny. It’s because they are delivering them to the wrong audience. The right group of people could find the same comedian hilarious.
Same goes with debt collection. If you have a one-size-fits-all collection strategy you might find yourself bombing more often than not. If you want to be more successful, try to tailor your tactics and techniques to your debtor audience. Many factors need to be taken into consideration before deciding which collection practices should be used. For example, considering the age of a consumer can really make a difference. A particular collection tactic that works well for one age group may not for another.
I recently read an article by David R Glezerman in the Collector magazine that did a nice job describing why varying your approach works so well. The article’s opening line grabbed me immediately. “Understanding the unique characteristics of each consumer group can help you make stronger and more productive connections.”
Who doesn’t want that, right?
As mentioned earlier, the age (think generation) of the consumer owing the debt is a key characteristic you should consider when deciding which communication strategy will be most successful. Over the years, we’ve written several blogs you might find useful that discuss the strengths (or weaknesses) of a particular age group such as The Lost Art of Conversation. Help is on the Way!
Glezerman’s article presented in the ACA International publication did a nice job of compiling a lot of data in order to list the strengths and weaknesses of each generation. It explained that when you understand the characteristics of each generation you gain insight into the how and why the debt exists. And that can make a big difference on how you go about getting it paid.
Here are the highlights of the article:
Baby Boomer generation: Their strengths include a good work ethic and strong communication skills. Their challenges? Poor financial literacy skills (they aren’t alone. Read why here.) and many, 59 percent of those who have kids, are still financially supporting adult children. This group still responds well to traditional communication methods like telephone calls and letters although many also use current technologies when buying and more importantly paying bills.
Average nonmortgage debt for this generation: $27,500
Generation X: Even though this is the first generation not expected to do as well financially as their parents they are highly educated and tech savvy. But they are also cynical when it comes to creditors and exhibit a strong sense of entitlement. Preferred communication for this generation? Cell phones.
Average nonmortgage debt: $30,300
Millennials: Are considered the most educated generation. They are extremely tech-savvy and well-versed in digital tools. Unfortunately, they don’t respond well to authority and want what they want now. Consequently, they spend their money as fast as they make it. Even though riddled with compliance issues their preferred communications tools are texts, emails and voicemails.
Average nonmortgage debt: $22,800
As you can see, utilizing traditional collection strategies on Gen-Xers or millennials oftentimes will not be as successful as when used on baby boomers. These tech-savvy consumers want to communicate through more up-to-date technologies.
Armed with insight into these generational differences, we, here at A. Alliance, recommend you modify your “consent to call” agreement and upgrade it to a “consent to contact” agreement. This can help mitigate compliance issues while improving your collection efforts by giving the younger generations what they want. Win-win!
Here is sample language for your “Consent to Contact” agreement
You agree, in order for us to service our account or to collect any amounts you may owe, we may contact you by telephone at any telephone number associated with your account, including wireless telephone numbers, which could result in charges to you. We may also contact you by sending text messages or e-mails, using any e-mail address you provide to us. Methods of contact may include using pre-recorded/artificial voice messages and/or use of an automatic dialing device, as applicable.
I/We have read this disclosure and agree that the Lender/Creditor may contact me/us as described above.
Borrower/Customer: Signature date:
A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners. Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 13 years.