Collections is a tricky business. On one hand, your primary goal is to bring in as much outstanding debt as you can from people who are late in paying. On the other hand, these people are still your customers and you don’t want to damage your relationship with them to the point where they refuse to pay or decide to stop doing business with your company altogether.

The trick to striking the right balance is to approach past due payments as a customer service issue, rather than a collections issue. This is especially important early in the collections process where your initial interaction with the customer will set the tone for those to follow. We have found that it is possible to reclaim the money you are owed while at the same time fostering customer loyalty and business growth by starting early – sometimes only a few days after the bill is delinquent – and applying the following three customer service tactics:

1.     Utilize Multiple Communication Channels
The goal of the initial interaction is to break the ice without offending the customer.  In order to avoid the embarrassment associated with typical collections calls, a more service-oriented approach would be to initiate communication with the customer via a less direct channel such as text or email. If a customer merely forgot to pay a bill, a gentle reminder message that reads, “Please call us at your convenience to discuss payment options for your recent bill,” may be all it takes to get them to pay, or prompt them to call. There is no accusatory tone in the message that could make them defensive and no request that they deal with this matter immediately, which might be inconvenient for them. If they choose to ignore the notification, it would signal the company to send a follow-up message or escalate the issue to a phone call.

2.     Take Advantage of Analytics
Knowing your customers is the key to providing quality experiences. Analytics programs can help you gain this knowledge and help your collections agents decide which customers are most advantageous to pursue. These programs can sift through a company’s data records to prioritize customers based on hundreds of attributes such as their credit history, likelihood to pay, amount they’re likely to pay, outstanding balance, and payment history. Analytics programs can also increase your collections conversion rates by identifying the channels and times customers prefer to be contacted. 

3.     Identify Opportunities to Upsell
Depending on the customer’s profile and history with the company, collections calls can be excellent sources of new business. For example, if a customer is typically an on-time payer but has fallen on temporarily hard times, or just forgot to pay his bill, there is an opportunity to offer additional services that help make paying his bills easier. These services, such as automatic bill-pay or proactive notifications, can increase customers’ satisfaction, raise their lifetime value and reduce their likelihood to churn.

Like the old saying, “you catch more flies with honey than with vinegar,” suggests, the best approach to any customer interaction is to treat them with courtesy and respect. It is important to remember, customers with past due payments are still your customers and continue to be valuable assets to your company. By combining a pleasant rapport with the customer service tactics described above, it is possible to create a positive customer experience during an unfortunate time, which increases the likelihood that your customers will be more willing to work with you to establish a manageable payment plan.