The definition of insanity when trying to collect money
25 May 2016
When speaking about collections, the phrase the squeaky wheel gets the oil comes up a lot and for good reason, it’s quite true! If you don’t chase, don’t expect your invoice to be paid before the guy whose squeaking away. The part that many business owners (and collection companies for that matter) forget is the law of diminishing returns. Or look at it another way, as our buddy Einstein puts it, doing the same thing over and over again and expecting different results.
I was going to put a link to the Wikipedia entry on diminishing returns, but it’s as dry as the Sahara so let me give you a real world example.
If your client has ignored your first three emails, the chance your fourth email is going to spur them into action is frankly ridiculous.
Don’t get me wrong, email is a great communication channel, but it needs to form part of a multi-channel communication strategy, not the whole strategy! According to Cellit, SMS produces engagement rates 6-8 times higher than email and are read on average within 5 seconds of receipt. The best bit, it stops that mundane excuse of ‘oh your email must be in my spam folder’ that debtors love to use.
When the emails remain unopened and the SMS ignored, you need to turn to the channel that gives you a higher engagement rate than email, SMS and letters put together… the humble telephone call. The downside for Small Business is the propensity of creating fiction or embarrassment with your valuable relationships as it’s a miserable call for all parties involved.
The good news is like email and SMS, you can automate the voice call and it’s actually preferred! As reported by FICO, one collection organisation found that 61% of surveyed customers said they preferred an automated contact (voice, email or SMS) over being called by a collections agent. I’d go as far to say that 100% of business owners would prefer NOT to pick up the phone at all if its to talk about an overdue bill!
Mix it up, keep it fresh and escalate through the comms channels. It’s time to undo overdue.