Jul 7, 20200 comments

A Compassionate approach to debt collection by taking into account Emotional Intelligence and a Neuroscience perspective

Covid-19 struck most businesses and caught them off-guard as a “black swan event”.

Most leaders of companies face deep economic challenges as they strive to keep the bus afloat. CEO’s have created war rooms to take decisive action to safeguard liquidity to navigate them through the corona virus crisis.

The National Small Business Chamber Survey shows the devastating effect as a result of the Covid-19 pandemic on our economy and one of the most significant challenges now is insufficient cash-flow due to a poor flow of customers and significant drop in sales, especially in the key sectors such as Tourism, Hospitality and Retail.

Historically businesses used a series of letters and phone calls to encourage customers to pay. It usually started our friendly and progressively became more serious/insistent. The golden rule was that you should not let your debtors age beyond 90 days and already start the process after 30 days.

According to the Experian South Africa’s Consumer Default Index (CD1) the continued impact of a worsening recession going into a full-blown depression is becoming quite clear. The Covid-19 pandemic has resulted in the South African Consumer Default Index reaching its highest level over the past five years at a composite level. Add to that the domino-effect of increasing unemployment (from 30% to 50%) and the retraction of the economy of at least 10%, it will take enormous skill and planning from businesses to steer their boats through the icebergs of debt collection. The statistics show that there is now R1,5 trillion in outstanding consumer debt across the whole spectrum of home loans to credit cards, personal loans, and clothing accounts in the South African market.

But what if we tell you that basic human behavior has been driven by the laws of neuroscience since the beginning of time? Although current times are tough on business, threatening the customer and dragging them to court would not be the best approach and will have a ripple effect on your brand and service image.

It will be crucial going forward to understand that there is life after COVID-19 and especially with regards to collection. The universal truth is that “Bad things happen to good people” and good clients lose their jobs too. And life happens to all of us. Financial downturns also happened to your most faithful customers and you need to understand human behavior if you want to weather this perfect storm. You ultimately want your customers to feel involved in the decision-making process in order that they don’t feel threatened and only act upon the primal instincts of survival. When functioning in this thinking mode, access is blocked to the prefrontal cortex where informed and logical decisions are being made, and in order to survive challenging times you want innovative brain solutions. The opposite of these decisions is when one is acting purely from a fight- or flight position because of feeling the desperation of minimizing a huge threat. Even during the collection process, a good customer experience becomes the difference between a good loyal customer and a leaving customer. The job becomes challenging: manage collection versus retaining the future sales.

Join our Zoom online webinars about the new compassionate approach to debt collection and customer experience where we will share insights that might be the distinguishing factor between a business that will not only survive, but also thrive through this pandemic, and one that will most likely file for insolvency. Understanding how the brain’s threat and reward networks lead us to move toward some things and away from others is the key to keeping your customers and ultimately the sales or relationship in future. With the skills you will gain through this webinar, you will be in a better position to improve your collection rates, lower bad debts and legal costs and ultimately improve customer loyalty. Don’t miss this opportunity! Look out for these in our Upcoming Webinars.


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