Did the birth of the “consumer” and the death of the “debtor” kill the debt collection industry?

As the debt collection industry has tried to be more consumer friendly we changed our vocabulary from “debtor” to “consumer”. How has that also changed the industries mindset? Is it a good thing?

I think not.

It was hard for me to change my vocabulary a couple years ago but it was willingly I did so. As the market started using the word consumer over the word debtor it seemed appropriate. But the longer this has been in effect the more and more I see it affecting the mindset of collectors, managers and owners in a negative way. Consumer lawyers (maybe we should call them debtor lawyers) are why we changed our tune but I think we should have kept the word debtor, its not a bad word.

Somehow the word debtor became a bad word and I am not sure why?

Wikipedia defines a debtor as “If X borrowed money from his/her bank, X is the debtor and the bank is the creditor. If X puts money in the bank, X is the creditor and the bank is the debtor.” and defines a consumer as “The consumer is the one who pays to consume goods and services produced.”

If this is the definition to both words they are debtors not consumers, consumers “pay to consume”,

So why did a whole industry change its vocabulary?  

The truth is we did it from pressure we created on ourselves as an industry. We thought its would make us look more consumer friendly in the eyes of regulators, clients and potential clients. But was this a good thing? I think it has gotten too many collectors and even managers in a mid set that the debtor is right and the collection strategy is the bad factor.

The truth is that debt collection has been getting more and more consumer friendly since I began collecting in 1979. But it has gotten to a high point in 2016 in my opinion. Debt collection has changed to accommodate the consumers’ habits by moving to self-cure websites and IVR systems.

The birth of self-cure 

The birth of debtors curing their debt online with no human interaction is a positive result of the consumer mentality of debt collection. It has allowed agencies and law firms to reduce its compliance exposure and collection expenses by letting the debtor pay online. Most debtors do not really desire to talk to a debt collector when it comes time to pay they just want to make the transaction online. So the use of a payment site is the obvious answer and a best thing to come from the consumer friendly era created by consumer attorneys.

Now what? 

I think as an industry we need to remember that that are both debtors and consumers. Actually our job as an industry is to turn them from debtors into consumers. We have to treat them like consumers but remember that they are debtors till they pay the debt and they need to be handled like debtors.

The fact that our industry has made the effort to allow the debtors to self-cure by creating elaborate payment sites shows our ability to adapt to the consumer model but we still have to remember that most debtors need help to pay their obligations. They need financial counseling, just the push a call makes or they need a payment arrangement that the website cannot approve for them.

Lets remember they are debtors and need our help to pay their bills and become consumers.

Re; My collection staff sucks!

Since 2007 I have seen the decline of the skill set of debt collectors in the US and it is at an all time low today. As a consultant to the ARM industry I see this daily and I have several ways to deal with the problem.

When the economy was really pumping in 2005-2007 or so the debt collection industry was at a high point and debt collection was easy. Debtors, now called consumers had the availability to get loans so money was flowing in debt collection, it was just financial counseling. After 2007 and the economy fell the ability of the debtor to get a loan was gone and so was the ability to collect money from debtors.

Along with that change in economy came a stoppage of training and development in the ARM industry which has continued until recently. Back when the money was easy to collect, training was not a big deal, just get someone on the phone and you had collection results. Now collections is much harder due to not only changes in the financial landscape in the US but in compliance costs as well.

With the birth of the “consumer” and the death of the “debtor” we have also changed the way we do business. As the ARM industry started using the term consumer over debtor a change in mentality also was created. The truth is “They are consumers.” So as that mentality changed so did the mentality of the average collection agent. But we did not provide new tools to collect from the new consumers. Training and development was and is still a last resort not a daily task. Managers would rather fire and hire than train and develop. Why? Because they don’t know how to train, that skill set is gone in todays C level managers.

So how do you solve this problem? You already know the answer its training and development but how do you do that is the real question. Most managers do not have a good training program. Most agencies I see just sit the new staff member next to their best collector to be trained. This is wrong in so many ways.

I have developed an extensive training  program that I can facilitate or help my client facilitate that starts with what is a debt? and ends with negotiation skills. It is very extensive on everything from credit reporting to an explanation of each bankruptcy type. This is how I solve the problem.

My second recommendation is to move some staff to Jamaica. The results of collectors in Jamaica is 90-110% of those in the US. The staff is much more eager to come to work and be taught and work for 1/3 the wages. I have helped several agencies set up in Montego Bay and in every instance the staff there is out performing the US collectors.

Either way you go you have to embrace the fact your staff must be trained and then they must be slowly developed into better staff. Its a big commitment and if you need a road map or some help just give me a call.

Knowledge is like manure. It’s no good unless it’s spread around.

As a consultant and thought leader in the debt collection industry, I spread lots of manure I mean knowledge around the industry. But just like manure helps many plants to grow and flourish, so does knowledge in the collection industry. Does your company need some fertilizer?

As a consultant to the ARM industry, it amazes me just how few companies are looking for more knowledge. Most are just in survival mode; whether the industry is strong or weak, but there has always been enough companies looking to get better that I have remained busy for the last 17 years. Still, it amazes me that there are not a dozen other companies like Lighthouse Consulting offering the same services that I do. Do you want to know why?

It’s because of the type person who is drawn to debt collections is not a person who takes advice well. In most cases I am called when the owner or operator has reached the limits of their management capabilities. They call me to get past an issue or set of problems, but really do not want to be told what to do. So over the years I have learned that the hard part of consulting is not the solutions I present, it’s the way in which I present those solutions to the owner/operator that that determines how they will accept or reject my recommendations.

So I have learned how to get the buy-in from management and staff to get the changes not only implemented but embraced by the entire team. Changes that are not embraced, never become effectively implemented, and therefore have no positive  or lasting impact on the organization. I am hired to make an impact, and changes in operations, strategies, policies and procedures are at the heart of all the consulting I do. So I have learned to educate the client instead of tell them what to do.

Educating my clients is the core of what consulting is to me. I do not always just tell the client what they should do I lead them to the water and hope they get thirsty. If you want to help your company to grow, then invest the time to educate your team and then foster an environment to spread the knowledge within the organization and to each individual. If you need more knowledge to spread around, call Lighthouse Consulting.

4 Things I Find In My Consulting Practice In Almost Every Engagement.

As a consultant I find the same 4 things are lacking or missing at almost every engagement.

  1. 1. Training and development programs and scorecards
  2. 2. Automation of processes
  3. 3. Clear communication from management to staff of goals
  4. 4.The right people in the right jobs

These things seem to be lacking or non existent in most organizations, so how do I suggest they do business, read on.

POST: As a consultant I find the same 5 things are lacking or missing at almost every engagement. It has been a blessing for me as a consultant as it has given me infinite opportunity to build programs that overcome theses deficiencies.

TRAINING AND DEVELOPMENT

When I entered the debt collection industry in 1979 training was the most important thing emphasized by management. In fact the job I applied for was not title debt collector it was entitled “management trainee”. The company made every effort to make sure every employee was able to move up the ladder with promotions. As you moved into management the biggest emphasis was in training a replacement for yourself so you can move up.

Training and development plans seem to have lost the war with the annual budget. you do not have a trainer much less a superior training program. Between 2000 and 2007 the industry quit training and instead created a bunch order takers. Times were good, collections were high and the need for a highly trained staff just didn’t seem to make sense. In 2007 the very best US trainers left the country headed to India where they have a desire to learn. Many of those traders are still there.

Most US call centers have not gotten back to a training mentality to date. The use of a scorecard for every staff member helps to identify deficiencies and training opportunities. The only way to develop a team is to understand their deficiencies and create training programs to combat them.

AUTOMATION OF PROCESS

I find that most collection agencies and especially law firms prefer to do many tasks manually. In many cases they know that the task could be performed in an automated fashion but they just resist the change as they are afraid of their software. Yes afraid of the cost, the hassle the time and money.

By showing them how to embrace their systems and in some cases adding systems to get the job done they are able to get tasks performed in a error free environment.

CLEAR COMMUNICATION

Most owners and CEO’s think that everyone is on the same page as they are but seldom is that the case. Type A people tend to think the word is either following along or already on board with their ideas. Therefore they do not make an effort to share their goals, direction and thoughts.

Simple things like a mission statement printed and framed can help this. Company newsletters and town meetings also help drive engagement from the top down. I have help to set up these types of communication in many engagements and the results are tremendous. The staff are glad to understand the direction of the company and the CEO now knows that the company is all headed the same direction, together!

STAFFING

One the main reasons I have to do an onsite evaluation of new consulting clients is to evaluate the staff and management. If I just ask questions online and sent solutions it would not work as the people getting the blueprint may not have the skills to enact the plan. The plan has to be customized to fit their skill sets.

Often I find that staff that is considered as under performing is just in the wrong job or has not been properly trained. Often I find management that is underperforming and being over paid. All of these are opportunities to help the company to make improvements and increase profits.

If you think that one or all of these things exist in your operation the next step is to pick up the phone and talk with me free of charge to see if I might be able to help you increase profits and improve strategies. Phillip w. Duff CEO Lighthouse Consulting 904-687-1687

Listen long enough and you will hear a solution

Owners and managers of Collection agencies are just like the collectors that work for them and in most cases they got it honestly. They just don’t listen. When I do collector training 50% of the training is listening skills I teach the collector to listen long enough to get some offer of payment. Owners and managers who probably started as debt collectors have similar issues regarding improvements to the collection process.

As a consultant I am constantly sending emails like this or writing blogs that provide Solutions or at least hint at the solutions to today’s problems in the ARM industry. But just like the collector that doesn’t listen long enough to get a commitment of payment which will start the negotiation process the owners think they already have all the answers and turn their minds off two other solutions. When I started consulting 15 years ago I worried that finding better solutions would be difficult I quickly learned that what is difficult is getting the persons by-in to a new process. Most people do not like change and therefore just ignore improvements.

The face of the debt collection industry it Is changing and becoming much more electronic. As this change occurs everyone in the industry must embrace those changes and be willing to make the proper improvements. As we move to a self cure collection strategy how we use our live agents becomes even more important. More and more consumers will choose to self cure as the electronic options become more consumer friendly and available. Self cure liquidation rates will only be driven by the strategies used to drive consumers to that website or IVR. Once the consumer is logged in to your payment portal only the strength of your portal Will collect the bill.

The biggest gains in liquidation rates Will be driven by the inbound and outbound call strategies. As the self cure options reduce the number of inbound and outbound calls the quality of those calls becomes more important exponentially. Owners need to listen to experts like myself who are able to provide solutions that can blend self cure with call strategies that maximize both the timing of the contact, the type of contact and the strategy behind that contact method.

Emails, Texting, IVR’s, Manual calls, Letters, Payment sites and inbound calls all need to be blended not only for a effectiveness but also for compliance. As we move to a multichannel collection process including all of the methods listed above we will need to track Communications not only for compliance, Best practices and the results we will also need to understand what drove the consumer to pay. Was it the letter that drove them to the payment site, or was it the message they heard while on hold at your call center? We need to be able to track all of those consumer interactions to be able to create best practices.

If you ever heard what I am saying and you are ready to hear more I would love to talk to you. Please call me at 904-687-1687 to discuss.

Phillip W. Duff

CEO Lighthouse Consulting

My thoughts and observations from the recent DBA conference

Well it was the 20th conference for the debt buyers and it was well attended and was upbeat for a change. As I usually do here is my thoughts and observations firm the conference.

People

Well the players are changing along with the name of the association. As new debt buyers emerge the look of the DBA will also evolve into something that can survive in today debt purchase marketplace. The attitude of the people attending was much more upbeat that the last few years and this I will attribute to Trump.

Many of the people I have talked to during the conference have confirmed that they are much more optimistic than past years just due to the change in Presidents. People who I know had gotten out of the business and not attended the conference recently were back with smiles.

New

There was lots of talking about changes in the industry like Discover requiring partners to take payments away form the call recording devices to reduce the possibility of that call recording system being hacked and credit card info being available in the recordings. Patient financing for the healthcare agencies and buyers in the new thing as well. I meet a guy who is buying medical debt and forgiving it. The company is a charity and takes donations.

There was lots of talk about self cure processes and near shore shops. Both vendors, agencies and debt buyers are now moving processes and agents to near shore call centers with Jamaica being the prime location.

Vendors

The overall vendor attendance was low but the main players were all there. Stratics had the oversized booth that stuck out like a red headed step child. This proves there is a war for clients coming in the ringless voice mail segment currently owed by Vo Apps. This contact method for cell phones is defiantly the cheapest method to reach cell phones.

The vendors all seemed to be busy during the cocktail hours and lunches but not much traffic otherwise.

Conclusions

The debt purchase industry is reinventing itself and the people involved are positive it will work. The old school debt buyers are retiring and moving on to their next career or golf game. The vendors are all suffering as the overall volume of business is down 20%. The industry will continue to embrace technology and reduced labor costs to collect money and the industry will evolve to meet the challenges.

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Lighthouse Reputation Beacon will generate and download ROI reports showing growth in reviews, ratings, traffic and ROI to support business decisions.

This service is very affordable, to learn more call Phillip W. Duff at 904-687-1687 X 101.

Is Your Payment Website going To Penalized By Google?

Google wants the web to be traveling over a secure channel. That’s why in the future your Chrome browser will flag unencrypted websites as insecure, displaying a red “x” over a padlock in the URL bar. If your payment site is not secure your site can be labeled as non-secure by Google and this could stop your revenue stream.

Lighthouse Consulting provides marketing services to many companies in the ARM industry and we have many programs to make sure your technology is advanced and able to handle todays consumer actions with ease and securely. This is why we felt it important to notify the rest of the industry as we now most of you have no idea of these types of changes till they have been impacted by the changes.

With this upcoming change in Chrome, Google makes it clear that the web of the future should all be encrypted, and all sites should be served over HTTPS, which is essentially a secure layer on top of the usual HTTP web protocol.

Starting in January with Chrome 56, password or credit card form fields on non-encrypted sites will be labeled “not secure.”

In following releases, those warnings will be extended by labeling HTTP pages as “not secure” in Incognito mode, where users may have higher expectations of privacy.

Eventually, all HTTP pages will be labeled non-secure, and the HTTP security indicator will change to the red triangle/exclamation mark that Google uses for broken HTTPS.

If your current website host or marketing team needs a professional edition then call Lighthouse Consulting today and ask for Phillip W.Duff at 904-687-1687 X 101.

Hey Phillip, How do I become successful in the collections field? This was a recent question posed to me recently.

Years ago that was easy for me  to answer and hard to do, now its hard to answer and even harder to do. But there is a clear path to success in 2017 in the debt collection industry its just a big wide, steep road with lots of pot holes that can swallow your whole company so pick the correct lane and do not just follow the car in front of you.

So as a consultant to the ARM industry people ask me often why I do not open my own collection practice and the simple answer is people. Managing people is the biggest problem of every client I have ever had with more than 2 people. But I do believe I have the blueprint to  be successful in 2017 in the ARM industry as a collection agent.

The first thing imperative to success is the people, second is the technology and lastly is the consumer experience. Yes, the debtors experience dealing with your agency or law firm is very important these days.

The People

The staff in a collection operation are very important even though in most cases they are not highly paid. The staff that are actually talking to the consumers are task with producing all the revenue in the old collection strategy. A company of 20 had 12 collectors who had to generate all the revenue to pay the 20 staff, overhead, vendors and the owners profits.

In a newer strategy the collection staff are still burdened with producing most of the revenue but now there is a silent collector who ask for no wages, the payment website. (More about this in Technology)

The collection staff are also task with compliance which is a big task these days one that technology can help immensely. But the support staff are very important in the new and old strategies as every dollar spent by the support staff must be recovered 5 fold by the collection staff and technology.

The biggest problem I see with companies is a lack of training and development programs by the company. The second biggest problem is a person with a golden umbrella within the organization. This can fall into two categories 1) the person is a relative, friend or some connection that the owner refuses see all the faults in and even when confronted with the damage they create still refuses to even discipline the person, much less fire them. 2) Or is a person who is making much too much money due to the length of service to the company. This is stopping the company from hiring 3 new hires, or buying new technology, or just making money.

All the above equal people problems.

The Technology

This is now the new compliance officer and the silent non commissioned collector. If you have a modern software package you should be using it to create compliance by only showing accounts to staff when it is proper to call them, to count contacts, limit letters, to create automation of many tasks and much more. Technology from collection software to your IVR all all now very important to the multichannel collection strategy required in todays electronic world.

You must be sending emails, texts, voice mail drops, calling, letters, IVR and pushing the consumer to self cure at your payment site with every channel. So technology becomes the 24/7 collector as the pay site gathers revenue at Midnight and beyond.

The Consumer Experience

This is a part of the business that is overlooked or over focused in recent years. This includes both the clients experience and the debtors experience dealing with you. As you see from the technology section we are trying to drive that consumer to self cure at our payment site so that consumer experience is very important. You must build a comprehensive pay site that is easy to authenticate for the consumer and then easy to navigate to payment, usually a <6 click navigation.

Also the tone and look of the letters, pay site, voice mails, callers, company website and emails have to create a positive consumer experience.

If you can get the right people, working the right technology and creating the right consumer experience you will succeed in the ARM industry, if you need a guide please call me.

Which star from “Gold Rush” best describes your management style, Parker Schnabel, Tony Beets or Todd Hoffman?

beets

Is it like a Hurricane?

Tony Beets was described as a hurricane manager by his son in the show Gold Rush on the Discovery channel in a recent episode. So what is a hurricane manager? Its a manager that likes to arrive unannounced and immediately begin to question everything that has happened that was not his or her decision. They tend to be loud, look or dress in a manner that is unconventional.

Tony’s son stated that all you can do to weather a hurricane is duck and wait till the high winds subside or it moves on to reap havoc on another location. You try not to get blown away by the storm.

So how do you deal with a hurricane manager? Well from experience I can tell you what happens is the team become a team against the manager not a team with them. The team feels they all have one thing in common, the hurricane as it hits everyone without prejudice so they tend to band together. This is probably how unions got formed.

The staff work well together when the hurricane manager is not present as they have formed a strong alliance and work as a team well. In the long run the hurricane has created the team so the system works but it is all filled with stress.

The largest issue with the hurricane is that all the good things the hurricane blows over and sees improvements in are overshadowed by the team as they huddle together in the corner while the water rises and the wind increases. In many cases the hurricane is very smart and sees the solutions easily but the delivery is so bad the point never gets properly delivered.

If you are a hurricane manager try to reduce the damage by becoming a tropical storm instead, the damage is much less and the staff are much less scared. The best way to do this is to just stop and listen to the staff.

todd_hoffman_gold_rush

Is it based on faith in the leader?

Todd Hoffman’s crew is called 316 Mining because they share a faith in God. Todd’s management style would also be best described as faith based. The 316 crew seem to have many issues just like all the other crews featured on Gold Rush but they do have one clear direction and that is to get gold and they have faith that they will find the gold. They have faith that God is really leading them to the gold not Todd Hoffman, not that they believe he is hearing words directly from God, just that God is in charge of everything and it will all work out if they keep the faith and be good followers.

So when the team disagrees with Todd they tend to be less likely to revolt as they have faith. They have faith that Todd is the leader for a reason not known to them but their faith leads them to follow the leader.

Faith is about followers and a team that follows the leader is great until the leader gets in over his or her head or leads the group off the path. This makes for a great team as long as the leader is truly a leader and can lead without the help of his crew. But most leaders are truly great because they have a great team of advisors.Like a President that has a group of advisors the best leaders also use this method to lead.

A leader like this will be very successful because he or she has a great team that will follow them anywhere.

parker

Is it a bit risky?

Parker Schnabel is very well liked by his crew and the watchers of the TV show Gold Rush. He has a likable personality that is laced with a high level of risk taking, something inherent to the idea of gold mining and with his young age. His management style follows that same flow as he is constantly trying a new machine or a new piece of ground believing that each will be better than the last.

Parker leads by example he will do any job on the gold mine and in fact prefers to do it himself it possible. He has almost driven equipment off a cliff and had many close encounters as he pushes the limits of the ground, his crew and his equipment. But his crew want to follow him because he is so hands on as a manger. The crew just follow his lead to push the equipment, ground and themselves to the breaking point all to make Parker proud of them.

This is a great management strategy as long as you don’t actually fall off a cliff. The team is one that needs little direction to get motivated they just need to follow the leader. The issue is when the leader is absent the team is lacking that level of motivation to make the leader happy.