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.

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

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.

I Wish I Knew How To ———

Do you ever say this to yourself? Being the leader of a ARM company these days is a challenge and most great leaders look to others for advice. How are you getting your advice?

Presidents have cabinet members, pilots have co-pilots and air traffic controllers, doctors consult other doctors and in fact most hi stress positions have assistants or advisors. As a leader of a ARM company where are you getting your advice from?

First lets answer a more important question; what kind of advise do we need and who would be best positioned to have that knowledge and lend that advise? Well in the debt collection business the main questions seem to relate to either compliance, profits, technology, business development or staff development. So that means you need a very rounded and connected person to advise you on these topics. This is the power of Lighthouse Consulting and Phillip W. Duff it’s CEO, he knows the answers!

Lighthouse Consulting works with debt collection agencies, creditors, law firms, first party, early out, third party, debt buyers and debt settlement companies daily. The knowledge obtained by this diverse business is what we are selling and what our clients need most, solid advice. We have seen hundreds of ways to do the same task and we have learned what works and what does not. Often the answers are easy to describe but achieving the tasks seem unobtainable until someone says have you tried this?

Lighthouse has been providing its clients advice since 2001 and we can provide lots of references but here is a sample.

Phil has impressed me with his ability to listen to concerns and find a solution. His unique approach gets the desired result accomplished with effectiveness. Phil Stenger, Esq. 

We no longer waste time and money wondering what we are missing. There is a greater comfort level, increased excitement amongst our staff and a genuine sense of greater things to come. James B. Atkins, Esq.

Phil has the ability to understand a collection process, see its value and suggest an improved version of the process that can be more productive. Stuart Wolpoff

At Lighthouse Consulting we have seen and fixed every problem known to the ARM industry so why not take advantage of that history and knowledge. For more info on our services and costs call Phillip W. Duff at 904-687-1687 X 101

The one thing you can’t afford to do in todays environment .

Here is a quote from Steve McQueen in the Magnificent Seven

“You remind me of a guy who fell from the 10th story of a building, he was heard saying as he went by each floor.  “All good so far.“

Well maybe I gave that away to easy but yes the answer is be complacent or to do nothing. You cannot sit around waiting on anything anymore. Business cycles move at much higher rates due to the movement of information via the internet. If you sit still for a just one minute you have lost your space in line.

But I guess the real question is what should you be doing? Well thats a three part answer.

If you are an creditor, agency or law firm in the business of debt collection you need to first find cost reductions that do not reduce the service you provide to your client. Better labor at reduced costs, better technology, automation and improved processes.

Secondly you must find to create stickiness to your current client base. Give them more or give them something no-one else can or does. It is that level of service that will determine the stickiness you have with that client.

And that does not mean just meet or exceed their KPI’s, sometimes it means telling them their KPI”s are misaligned or too high to too low. Far to many companies are afraid to tell their clients how they think the money can best be recovered instead they work towards KPI’s that will NOT provide the best results.

Lastly you will need to find or create new business lines and new lines of revenue. You will have to step outside you box and look at things differently to get that perfect client base. You must look at business acquisition differently. Social Media and the internet are now how you will introduce yourself to the next prospect.

Lighthouse Consulting can help you do all of these. Yes even the marketing, actually we do lot’s of marketing and sales assistance in the ARM space.

The 3 Most Ask Questions About Agents in Jamaica

While I have been speaking to people regarding opportunities in Jamaica I have been getting the same three questions over and over so I thought I’d like explained them here.

The first question that is pondered is can you understand the agents? My answer is clearly yes. The first time I went to the island as an auditor for Bombardier Capital the language skills were very good along the call center workers yet there was a clear accent among other Islanders including resort workers.

Here is a link to a redacted call from a recent (August 2016) collection call from a Jamaican call center in Montego Bay. 

Over the last decade even those accents have diminished tremendously. I’ll tribute a large majority of this to the fact that the island started receiving Cable channels from the US and Canada about eight years ago. So they are watching the same channels you are in Fort Lauderdale, Chicago, Montréal, Los Angeles and Miami. This exposure to used car commercials and endless reruns of Seinfeld has changed their language skills and understanding of the US economy.

The second most ask question is do they have the infrastructure to handle my Technology needs. The answer to that has been yes for many years. Initially most of the infrastructure for call centers doing business on the island was created by the government in an area called the free zone. Nowadays the same infrastructure exist throughout the island but especially in Montego Bay and Kingston.

The final question everyone ask is is it safe? My answer is you’re just as say in Montego Bay as you are in Miami, Chicago, Los Angeles or most larger cities in the United States or the world. Jamaicans really want to be Americans therefore their attitudes towards foreigners are very positive. The Jamaican government makes sure there are only a limited amount of visas issued to the United States as it fears there might be mass exodus if borders were oped wide. I have traveled many places in the world and most places they do not like Americans, one of the reasons I have been traveling back to Jamaica over the last decade is the Jamaicans positive attitude towards Americans.

The ONE reason you can’t lose with a Jamaican BPO

Most people first think about near shore or off shore BPO when they are looking for better labor rates but they may be missing the biggest reason to use a BPO in Jamaica.

When you begin to look for better labor rates you are first lead to off shore options like the Philippines or India and when you get further into your due diligence you discover the labor rates are not as good as you were looking for, even though much better that what your paying in the USA.

As your research leads you to near shore operations you see more value for your dollar with the Caribbean workers. You find many English speaking countries with nice Universities and a labor force that desire to have a job not a labor force that feels entitled to work and benefits.

St Lucia, the Dominican Republic, Aruba, Puerto Rico all have BPO operations and the BPO call center crown jewel is Jamaica. Why Jamaica? The biggest reason is the exchange rate, yes the exchange rate. Yes the workers are priced appropriately, they are effective and experienced, they have excellent verbal skills and work ethic but the largest reason is the US$ to JD$ exchange rate.

“The value of the Jamaican dollar has depreciated by 4.8 per cent for the financial year to date compared with a depreciation of 3.2 per cent for the same period last year.” See reference 

There was also a notable increase in the employed labour force by about 40,100 people. Overall, GDP at best is projected to grow at anywhere between 0.5 and 1.5 per cent on average for the entire year”. See reference

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