Behavioral economics applied to ARM and collections
The effects of tailoring processes to consumer preferences and behavior
Behavioral economics studies the way consumers make economic decisions and what drives them to make those decisions. In marketing, research is done on consumer groups to analyze many aspects of the consumer experience. Then, the information is applied to the way companies form their marketing.
Behavioral economics has high potential for influencing the way companies perform collections.
Why you should tailor your ARM and collections to the consumer experience
In the collections process, it pays to understand consumer behavior. Consumers typically see collections as cold and unfriendly. Although companies may not like that, it's important to know how the consumer perceives the activity, in order to tailor the activity to the consumer experience.
By conducting consumer research about collections activity, companies can gain a better understanding of why consumers do not pay on time, what drives their behavior, and how they perceive collection attempts. Researchers should ask questions that get to the heart of why consumers do or do not respond well to collections methods. The insight gained from studying consumer behavior is incredibly valuable.
After gaining insight into the driving factors of consumer behavior, apply the knowledge. Pinpoint key insights that drive how a consumer interacts with your collections process. Then, adjust your collections process based on those insights. There is no one-size-fits-all approach to doing so, because each company has variations in their customer base.
It pays off to create an ARM and collections system tailored to consumer wants and needs. Make sure that your system is friendly to work with for consumers, easy to navigate, and that it is simple to pay off debt. With these and other aspects implemented into your system, your company will receive higher returns because it is working with, and not against, consumers.
Conduct research into the behavior of your customers, and apply the findings. It will make a positive impact on the success of your ARM and collections system.