The phone rings, it's the moment of truth. On one end, a debt collector; on the other, a debtor. This isn't just a casual chat—it's a collection call, a delicate dance of negotiation and persuasion. In most cases, these collection calls are the lifeblood of debt recovery, the bridge that connects outstanding debts to resolved accounts.
In this article, you'll dive into the art and science of making your collection calls not just good, but great. You'll learn how to prepare effectively, master your tone, overcome objections, aim for commitment, and harness technology to drive success. By the end, you'll be equipped with the knowledge to make your collection calls effective and efficient, turning every ring into a resolution.
What is a collection call?
Debt collection calls are strategic communications initiated by creditors to recover overdue payments. These calls, when executed effectively, can transform unpaid invoices into settled accounts, turning financial uncertainty into assured revenue.
But how can you achieve that? Let’s uncover the secrets that will catapult your collection strategies to new heights, steering the wheel of success in your favor.
How to make debt collection calls that convert
Making effective collection calls is an art form, a blend of preparation, communication skills, and technology. It's about more than just asking for payment—it's about understanding the debtor, navigating objections, and guiding the conversation toward a resolution. In the following sections, we'll explore the key components of effective collection calls and provide actionable strategies to enhance your collection efforts.
1. Get prepared: answer these 14 questions before you call
Before you dial that number, pause. Preparation is key to making effective collection calls. By answering these 14 questions presented by Highacko, you'll arm yourself with the knowledge you need to navigate the call successfully:
- What's the goal of this call? Define your goal. Is it to secure a payment, negotiate a payment plan, or simply update account details?
- What's the smallest payment you're willing to accept? Know your bottom line. This will guide your negotiation strategy.
- What objections might the debtor raise, and how will you respond? Anticipate resistance and plan your responses.
- How long has this person been a customer? Long-term customers may warrant a more delicate approach.
- Have they failed to meet payment commitments in the past? This could indicate a pattern that needs addressing.
- Is there a pending order for this customer? This could influence your approach and negotiation leverage.
- How valuable is this customer to your business? High-value customers may require a more tactful approach.
- How overdue is the payment? The urgency of your approach may depend on this.
- Has the customer exceeded their credit limit? This could indicate a more serious financial issue.
- How would you categorize the risk associated with this customer: low, moderate, or high? Risk level can guide your strategy and tone.
- Is this customer a personal acquaintance of a senior member of your organization? These accounts may require a more diplomatic approach.
- Should you inform the customer that their account is on hold? This could impact the customer's perception of your business.
- Should you warn the customer about potential consequences for non-payment, such as loss of open account terms? This could be a powerful motivator for payment.
- Are there any topics you should avoid during the call? Knowing what to avoid can be just as important as knowing what to say.
By answering these questions, you'll be well-prepared to handle whatever the call throws your way. Now, let's move on to mastering your tone.
2. Master your tone: the perfect balance between compassion and authority
Mastering your tone during collection calls is like walking a tightrope. On one end, you have compassion, understanding the debtor's situation, and empathizing with their struggles. On the other end, you have authority, asserting your position and guiding the conversation toward a resolution.
The key to effective collection calls lies in finding the balance between these two extremes.
But it's not just about how you say things—it's also about what you say. As PDCflow mentions, the language you use can greatly influence the outcome of the call. Negative or shaming language often makes debtors defensive or uncooperative. Instead, use positive, intentional language that shows compassion and builds a connection with the debtor.
For example, replace phrases that might make the debtor feel alone or singled out, like "you need to", with more inclusive language, like "let's figure out a solution together." This subtle shift in language can make a significant difference in the debtor's willingness to cooperate and resolve their debts.
Remember, you choose every word, and, subsequently, every tone you use with your debtors. With all conversations, you either build a bridge or burn it. By mastering your tone and using positive, intentional language, you can turn every collection call into an opportunity for resolution.
3. Overcome objections: handling excuses and improving negotiation skills
Overcoming objections during collection calls requires a blend of tact, empathy, and negotiation skills. Here are some strategies to handle excuses and improve your negotiation skills:
- Use the customer's name: A personal touch commands attention and shows respect. Just remember not to overdo it.
- Validate the customer's feelings: Especially if you disagree, make sure you acknowledge their perspective. At the end of the day, you want open communication and reduced defensiveness.
- Ask open-ended questions: Encourage the customer to share information. Instead of asking directly for sensitive details, frame your questions in a way that naturally leads to the answers.
- Listen and take notes: This helps you gather clues about the customer's payment intentions and prepares you for future calls.
- Use silence strategically: Pauses in the conversation can compel the debtor to fill the silence and talk, providing you with more information.
- Stay focused: If the customer tries to divert the conversation, politely steer it back to the purpose of the call.
- Don't be manipulated: If a customer becomes angry, stay calm and remind them that you're there to help. If necessary, suggest a call back at a more convenient time.
By employing these techniques, you can navigate objections, improve your negotiation skills, and increase the effectiveness of your collection calls.
4. Aim for commitment: the importance of debtor commitment
A collection call without a commitment from the debtor is like a ship without a compass— directionless. The goal of every call should be to secure a commitment, whether it's a full payment, a partial payment, or a promise to call back with a payment date.
- Control the timing: Instead of asking when they can get back to you, suggest a specific date. For example, "I’m looking forward to our follow-up call on Wednesday."
- Summarize the call: Before ending the call, review the debtor's commitment, your expectations, and the consequences of not meeting those expectations. This reinforces the urgency of the matter.
- Encourage a follow-up call: Ask the debtor to call you back on the payment date to confirm that the payment has been sent. If they don't call, it's likely the payment wasn't made.
- Follow through on consequences: If the debtor doesn't fulfill their commitment, ensure you follow through on the stated consequences. This reinforces your seriousness about the matter.
By aiming for commitment and following these strategies, you can increase the effectiveness of your collection calls and improve debt recovery.
5. Harness technology: use data to drive collection calls success
Dashboard displaying key data metrics for collection call success
Now that debt collection has turned digital, leveraging data-driven solutions can significantly enhance your collection efforts. That’s why we at Arrears exist, to bridge the gap between collections and technology in this digital-driven world.
Behind the scenes, the Arrears team has been training an algorithm with the ability to pinpoint debtors with the highest return on investment (ROI) in real-time, significantly improving collection calls efficiency. This advanced technology sifts through your data to identify the debtors most likely to respond positively to collection calls. It takes into account various factors, such as payment history, communication patterns, and more, to predict debtor behavior.
The benefits of this approach are manifold:
- Efficiency: By focusing on high-ROI debtors, you can optimize your time and resources, making every call count.
- Increased conversions: The algorithm's predictions can help you tailor your approach to each debtor, increasing the chances of successful collections.
- Continuous learning: The algorithm learns from each interaction, refining its predictions over time for even better results.
By harnessing the power of technology, you can drive collection call success and transform your debt recovery process.
Every call is an opportunity to build a relationship with the debtor, understand their situation, and work towards a mutually beneficial resolution. And with the aid of technology, you can make every call count.
Are you ready to make your collection calls more effective? Try Arrears today and experience the difference.