Deeper Penetration: The Way To Get More Out Of Your Accounts Is Penetration
In times like these when debt collections become more difficult and you see a growing increase in delinquency in the industry you need to have the best practices. Portfolio Penetration has always been a way to get more money out of any portfolio of accounts. The problems with penetration is the cost to penetrate. How can you reduce that cost and still get the results?
Penetration
The secrets to portfolio penetration lie in the costs to work the previously ignored or underworked accounts. These costs include scoring, letters and phone calls. Most companies these days score the files before they develop a work strategy for each segment. They score and then insert accounts into different buckets or subsets and then create a strategy for each bucket. The strategies are all based on the presumed collectibility of each bucket and then the cost to collect is figured in and the strategy created. Bucket 5 will get 2 letters and 3 phone calls in month one and so on….
So the actual penetration is based on the costs expended. The truth is you could collect much more money from that bucket if you spent more money on it. If you made more calls, sent more letters and generally worked each account harder you would collect more money. But do the costs overway the results? Thats the balancing act done by portfolio managers which accounts do we spend our limited resources on?
Penetration Costs
So if we want deeper penetration and more money from each bucket we have to find a cheaper way to do it. A cheaper way to work each bucket. Letter costs are hard to reduce but the type, color and wording are pathways to increase response form this letter costs. The placement and font of your self pay site on those letters will increase adoption of self pay by debtors and therefore reduced costs.
Outbound and inbound calls would be the biggest costs for the penetration in most cases. The inbound calls usually are the easiest accounts to collect but also contain the most disputes. An easy way to reduce these costs are to drive the payers to your self cure site with hold notifications and via live agents. Also the agents that are just taking inbound calls can be less skilled that the outbound agents and therefore paid less. Since these agents are primarily just taking payments or logging complaints the skill level required is less and often these employees will NOT be paid a commission for those collections as they came from debtors wanting to pay not debtors who had to be persuaded to do so. Often these staff can be nearshore staff at highly reduced costs. Usually nearshore labor is 1/3 to 1/2 less in hourly cost.
Inbound calls can also be outsourced to nearshore countries to reduce costs. Many countries like Jamaica have been doing the same jobs as US call centers for decades and can do the job at the same efficiency level in most cases at 1/3 the costs. So this also provides a way to reduce costs allowing for deeper penetration into the portfolio.
So the answers to deeper penetration lie in the costs to do the work. I have remote Experienced debt collection or customer care agents in Jamaica for $8.50 USD an hour. No minimum number of agents, no long term contracts. Let me know if you want to reduce your costs.
