An Integrated Approach to Debt Collection – What Accounts Receivable Can Learn From Marketing

shutterstock_109826651In many ways marketing and debt collection collection are quite similar. Both entail trying to reach a customer and convince him or her to act. In the case of marketing, it is to purchase a product or service. In the case of debt collection, it is to pay what is rightfully owed.

One of the most effective forms of marketing is known as integrated marketing. This is marketing that transcends any single advertising campaign and goes to the very core of a company’s identity. It is marketing that integrates every aspect of a business, from the way it treats its customers at each touch point, to the internal culture of the company itself, which is reflected in the way its employees dress, speak, think and act.

McDonalds is an example of a company that has successfully employed integrated marketing for many years. Everything about the McDonalds brand is reflected in every aspect of the business and the message is consistently the same: good tasting food in a fun, family atmosphere.

So how does integrated marketing speak to debt collection?

While the goal of debt collection differs from that of marketing, there are a number of similarities between the two processes. For instance, debt collection involves attempting to communicate a consistent message to a certain group or groups of people. Also as in marketing, it uses a variety of mediums to communicate with those groups, and often needs to employ creative methods to get their attention and to get the message across.

Above all, successful debt collection involves a consistent, integrated  approach,  with the goal of forming customer relationships, building brand loyalty and ultimately recovering what is owed.

Know your customer

Successful integrated marketing is entirely customer-focused. Everything is about the customer; knowing and understanding who they are, how they think and act, and what their dreams and aspirations are. When you know who your customer is, you can then employ various strategies to reach them where they live, offer them what they want or need and push the buttons that will motivate them to act.

Successful debt collection is also about the customer (the debtor). For instance, by understanding what kind of debtor they are, you can then work out how best to communicate your message to them. If you can identify them as falling into the category of those who want to pay but can’t afford to due to their current financial circumstances, you would then be able to tailor your message to one of conciliation and negotiation, perhaps arranging a payment plan that they can afford.

On the other hand, if they fall into the category of those who constantly procrastinate and juggle debts, then you would tailor your message to make them realise that your debt has priority over others and must be paid. Or if they fall into the category of those who simply have no intention of paying their debts, then your message would become one of legal consequences, which should then be followed through with strictly.

Be consistent

Successful integrated marketing is also about consistency; ie. sending the same message over and over in a variety of different ways. A brand that is known and trusted will bring customers to its door again and again, for as long as that reputation is maintained.

In debt collection, consistency is also the key. Your debtors are your customers, so how you treat them will not only affect whether you get paid for overdue debts but also whether people will remain loyal to your brand. As such, successful debt collection is about broadcasting a consistent message in everything you do. In general, you want to be seen as firm but fair. In order to do this, you need to spell out your trading terms up front on all documentation. You also need to follow up overdue debts with consistent communications, whether they be telephone calls, emails, or letters of demand that graduate in urgency.

If your debt collection methods are not consistent with your company’s brand (i.e. if you are rude or threatening to debtors), then the brand will suffer, because despite the fact that you are the one owed money, negative word of mouth can still do a great deal of damage.

Hire the right personnel

As in integrated marketing, where your company is represented by your employees, so the people in your accounts receivable department are the key to successful debt collection. Just as every employee of McDonalds is trained to dress, act and talk in a certain manner, so your debt collection staff should reflect the way you want your company to be perceived.

Debt collection can’t be successful when it is adversarial. If a debtor believes that you understand their situation because you are similar to them, they are less likely to dig their heels in and more likely to work with you to try and resolve the problem.

And it is always essential that successful debt collection involves achieving the primary goal of recovering the debt without damaging your brand in the process. Those with good people skills and the ability to think outside the box are therefore ideal employees for this kind of work.

The reality is that there will always be people who can’t or won’t pay you for what they have received. The key is to have an integrated approach and be consistent in the way that you deal with them.

Jarrod Kagan
Having practised at a major law firm before moving across to Probe Group (one of Australia’s most prominent credit management organisations), Jarrod has over 8 years’ experience in credit management and debt recovery. He now holds the position of Head of Business and Compliance and as a qualified Lawyer, his skill level and experience covers the technical aspects of credit management and debt recovery, including: best practice, compliance, legislation, strategic analysis and industry specific detail.