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Disclaimer: The
content of these articles is to be used as a general guide only.
Professional advice should be sought before taking any action relating to
the points discussed in these articles.
PERSUADING
PEOPLE TO PAY
By Peter Renton
Webster's Dictionary contains two definitions of the word
"persuade": 1. to induce to believe something,
to convince. 2. to cause to do something, especially by
reasoning, urging or inducement. How persuasive are
you? Do you think that a big stick is all you need to be
persuasive? If that weapon is the only tool of persuasion that
you're using, your customers may not last long. And then where
will you be? There are many tools a credit manager can use to
be more persuasive and at the same time build customer
relationships. These tools will ensure you get paid first and
that your customers remain loyal and happy.
Account
Collection is Like Sales
The skill used in persuading customers to pay for their goods
or services is just like the skill that the sales force uses in
persuading the customers to buy in the first place. In fact,
our job is very much like that of the sales people. If we
think of our job as a sales job, the rest of our work fits in quite
easily. Pursue your customers as if you were in sales.
Be friendly and persuasive never pushy. We are selling the
customer on the idea of paying their account. We are selling
the peace of mind, the self respect, the clear conscience and
friendship received in return for payment of their account.
There is one big difference, however, between collection and
sales, a difference that gives you a big advantage. In sales,
a good case can often be made for not buying the product or service
at all. Not so in collection. Here, you are always
right. The customer has purchased something, and now they
should pay for it. There is no question about it (leaving
aside the case when there has been a problem or mistake). Most
often, your customer intends to pay. It is up to you to
persuade that person to pay earlier than they were intending to, and
before they pay anyone else.
You Are in
the Mail Order Business
We send statements through the mail. Most people
spend little time or effort in thinking through this process.
"The customers owe money. Let's just remind
them". A plain, computer generated page with just the
invoice numbers and amounts owed is the norm. Now, let's
imagine you are selling a product by mail. You will give a
great deal of thought to the design of your mail piece. Maybe
you will print a glossy brochure that showcases your product and
explains the great benefits the customer will receive when they
purchase your wonderful product.
Do you think mail order giants like L.L. Bean or Lands' End
would ever send out an impersonal computer generated letter or a
plain sheet of paper with just a statement of facts about their
products? Of course not. This is not to suggest that for
your next statement run you do an elaborate four-colour glossy page
with photos of the items purchased. However, whatever you do,
it should be well-designed, easy to read and concisely communicate
your message.
There are a number of inexpensive ways to improve the
effectiveness of your invoices and statements. A popular way
is to use brightly coloured paper or envelopes. A better way is
to use a bright thank you or collection sticker on your
statement. This gets your message across in a clear and
concise way and attracts the attention of the person opening the
envelope. If you are writing a letter, you could format it
sideways so that the page is 11 inches wide. There are any
number of imaginative ways you can use to get your message across in
a unique way.
You Are Not
Competing With the Debtor for Money
Imagine the person in charge of accounts payable for one of
your customers. If it is a typical small business, every day
the person will receive several (sometimes as many as 20 or more)
invoices and statements, which usually will be kept in an
"accounts to be paid" file.
Your customer may be a little short of money that
month. This person now has to decide who is going to be paid
first. There may be 50 or 100 bills due to be paid this week,
but only enough money to pay 10 or so. How do you make sure
that your invoice or statement will be among the 10 that are going
to be paid this week? Somehow, your bill needs to be
noticed. So, you see, you are not competing with the debtor
for money, you are competing with all the other companies to whom
your customer owes money.
Building
Customer Relationships Through Collection
This is probably the most overlooked part of collection. Many firms view
collection as just an added cost
of doing business, not as an opportunity to build stronger customer
relationships. In today's competitive business environment,
every relationship with the customer is fragile. We need a
good product and excellent service, but we also need more.
Every contact with the customer should be viewed as important,
whether it is a sales or collection phone call
or simply sending
a statement. Every contact will either add to or detract from
the current relationship.
It is when we do the unexpected that we are remembered
most. It is considered normal for the sales staff to send a
"Thank You" card when they land a big order. Why not
send a "Thank You for Your Payment" card to your
customers. The accounts payable people will be blown
away. You can also put a little "Thank You" sticker
on an invoice or statement, or write a hand-written note. Be
innovative. The whole idea is to build a relationship between
people you as a collection person and the accounts payable person
at your customer's company. It can and will make a huge
difference to your business.
Even if a customer is past due, you can still build on the
customer relationship. If they are only recently past due,
remind them of this in a funny way. Make them laugh.
While other people are probably being mean and nasty, you are being positive and friendly.
You see, the art of collection is to collect money in such a way
that the customer will be happy to come back and do business with
you again.
The Magic
Ingredient
There is a magic ingredient in account collection. In
the short space here it is not possible to deal adequately with this
concept. Very briefly, the basic idea is the perception that
people, especially your customers, are basically good people.
If you hold this perception in mind, it translates into reality and
is communicated to others. It sounds simple, but it is a
powerful concept. It is best illustrated by a real-life
example.
You have a small-business customer who is late paying her
account one month. Now put yourself in her shoes. She is
having a really hard time in business; things have not gone as
expected lately and she is fearful of losing her business, her
livelihood. If she can get away with it, she will promise
payment next week or next month. The best idea here is to sit
down and have a frank and open discussion. Take her to lunch if
you can. Ask her how everything is, not just the outstanding
account. Treat her as a good person and be understanding
you
may easily have a friend for life, instead of a resentful and,
perhaps, delinquent debtor. Just imagine the difference that
would make to your business.
If you didn't know it before, you should definitely know it
now collection is about people. Be more than just a plain
old invoice, a generic collection telephone call. Be a
friend to your customers. You will enjoy your work more; you
will be more successful; and the business world will be a more
pleasant place.
This article is reprinted from
Rentons' Business Tips No. 1
© Copyright February 1998 ACS
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