By Matt Hoffman
Analyzing the data produced by collections is no easy task, as collections is charged with managing multiple goals across multiple channels. Determining the best e-mail, phone, and website strategies to increase the net money collected without unnecessarily harming customer satisfaction involves complicated trade-offs that are hard to communicate.
Simplification is the typical solution for this kind of problem in other parts of the organization. Consider a service center trying to increase customer satisfaction. Data can be used to simplify this directional goal (“Increase CSAT”) into simple facts (“Customers that are given an irrelevant cross-sell are 15% less satisfied, while customer that are given a relevant cross-sell are 10% more satisfied”). These types of data are highly actionable; in the hypothetical example, leaders now know that eliminating irrelevant cross-selling will significantly increase customer satisfaction.
Unfortunately, this level of simplification is often misleading in the collections environment. Collections simply has so many interrelated variables at play—consider staffing levels, staff tenure, occupancy, 90+ aging trends, and technology costs–that simple statistics rarely offer a good depiction of the entire picture. Explaining the multiple impacts of a change in staffing levels, for example, is difficult to do with simple data points.
Interactive simulations are a great solution for this type of problem. Rather than having internal analysts or vendors analyze your customer data for you, have them create a model that uses previous collections performance data to forecast future collections performance under an infinite number of scenarios.
Senior leadership and managers can then use this interactive model to analyze the data for themselves. Data-heavy presentations may put managers to sleep, but an interactive tool where managers can see the effect on performance of increasing the frequency of outbound calls is more intriguing. One of our members in South Africa has had success with this approach to analyzing collections data.
While investing in the creation of an interactive simulation is initially costly, the long-term benefits typically make the investment worthwhile. With an interactive simulation of collections performance in hand, organizations can make better budgets and organizational plans that are based on an appropriately-detailed understanding of the variables at play. Additionally, the simulation can equip managers with the tools they need to propose their own budgets and staffing proposals.
Stay tuned to CCC Buzz for the final two installments of our series on debt collections, and be sure to review our research brief to learn more.