Sitel Receivables Management (SRM)

Sitel Receivables
Management (SRM)
www.sitel.com
A new, more effective
collections strategy.
By: Steve Copeland
Director of Product Management, Collections
Sitel Operating Corporation
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Executive Summary
Most businesses still handle collections the way they did 20 years ago -they keep their customer care and past-due collections functions
separate. As such, they employ a “reactive” collections strategy -- one
that involves waiting until the customer is well past due before turning
the account over to a first/third-party collections agent.
Sitel delivers a new “preventive” collections approach that combines
advanced technology and sophisticated billing analytics to identify and
prioritize revenue recovery opportunities early in the payment cycle.
This proven strategy often secures payment before the customer ever
reaches the collections stage.
The Sitel program employs “Universal” agents skilled in both customer
care and collections. These specially trained agents are better able to
engage late-paying customers and gradually move them away from the
collections process, in some cases permanently.
Identifying and resolving past-due issues before the customer reaches
the collections stage is a proven way to increase revenues, reduce
collection costs, enhance the customer relationship and improve the
company‟s bottom line.
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Introduction
With more than 13 years of customer „cure‟ and early stage collections
experience, the Sitel Receivables Management (SRM) program is a
proven way to reduce roll-rates, mitigate net credit losses and increase
customer retention and revenues.
While most companies employ a “reactive” collections strategy –
essentially waiting until the customer is well past due before turning
the account over to collections -- Sitel partners with the client to
deliver an alternative, “preventive” solution that leverages technology,
customer data analyses and specially trained “universal” agents to keep
many customers from ever reaching the collections cycle in the first
place.
How SRM works
Nobody likes or wants to receive a collections call.
Preventing a
customer from having to endure the stigma of entering collections –
even early stage collections – by helping them work out a payment
schedule in advance increases customer satisfaction and preserves the
relationship.
Working in partnership with the client, Sitel employs proprietary SRM
analytics to 1) identify and categorize those customers who regularly
pay late or constantly move into and out of collections and 2) uncover
and prioritize revenue opportunities earlier in the payment cycle.
A variety of debt collection technologies -- from interactive voice
response (IVR), call blending, predictive dialing, and electronic claims
submission, to a guaranteed contacts system that screens no-answer,
busy signals, answering machines and disconnected numbers – are then
employed to increase customer contact.
Finally, once the contact is made, dedicated, “universal” agents
capable of handling virtually any issue – from standard customer care
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problems to past-due collections – work with the customer to ensure
they either pay on-time or pay sooner than they would have.
By leveraging technology to enable customer contact earlier in the
payment cycle and directing targeted calls to dedicated universal
agents capable of addressing virtually any customer issue, a greater
number of the client‟s past due debt issues are resolved.
As a result, the SRM program reduces:

Late payments

The number of customers going into collections

The number of customers having their service terminated

Future churn

Annual collections costs
Improving the bottom line
The SRM program is a proven way to move a greater percentage of
customers out of the collections cycle – in some cases permanently. To
date SRM clients have realized the following benefits:
Increased Revenue
The SRM strategy keeps a greater percentage of the client‟s customer
base out of collections, thereby increasing overall cash flow and
revenues.
With fewer customers in collections, collections costs also decrease.
Costs associated with soft or hard service disconnects and reconnects
are also reduced.
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Preserving the customer relationship
In every case the SRM program‟s specially trained agents treat the
caller with respect and, if necessary, empathy, demonstrating that the
company clearly wants to retain them as a customer.
Further, Sitel has found that past-due customers are often experiencing
a problem with a product or service and want to resolve that issue first.
Working with an agent who can resolve both the product/service
problem and then revise/settle the billing issue in a single call greatly
enhances the customer experience.
If necessary, helping the customer work out a payment schedule in
advance also increases customer satisfaction and preserves the
relationship. Many either pay on time or sooner than they would have.
And because they did not have to endure collections calls, customer
satisfaction increases.
Decreased Sales Outstanding, Delinquency and Charge-off
Rates
A preventive collections strategy directly and positively impacts the
client‟s days sales outstanding, or DSO. Preventing the customer from
entering collections, or having them pay earlier in the billing cycle,
decreases the number of days the client must wait for the debt to be
paid. That, in turn, decreases the client‟s DSO, delinquency and charge
off rates, while significantly increasing reoccurring cash flow.
Decreased Collections Expense
While most vendors focus strictly on collections, Sitel‟s “universal” SRM
agents can handle both customer care and collections. Leveraging
technology to route targeted inbound care calls from customers that
typically pay late or have a payment due allows the Sitel agent to cure
both the customer care and collections issues at the same time.
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By turning what traditionally have been two calls – customer care and
collections -- into a single call, Sitel substantially reduces the client‟s
customer service/collections spend.
Addressing the “gray area”
Every company knows how difficult it is to get a decision maker on the
phone. A key benefit to the preventive collections program, therefore,
is the Sitel agent‟s ability to address “gray area” calls that require the
agent to handle both collections and customer-care related issues at
the same time.
Say, for example, a targeted SRM customer calls with a billing
complaint. The call is automatically directed to a Sitel agent and the
customer‟s status -- they are overdue and will soon enter collections -comes up on the agent‟s screen.
The customer points out that the bill does not reflect a two-day outage
that occurred that month and requests an adjustment. In this case the
“universal” SRM agent can resolve the customer care issue, which
involves adjusting the billing amount, and then negotiate/secure the
payment while the customer is still on the line.
Under a traditional collections strategy the client would pay twice –
first for the customer care agent to take the call and adjust the bill,
and then for the collections call, which would have occurred afterward.
If a customer calls for service and is also due to go into collections, why
pay the vendor twice? With the SRM solution, the client pays once and
the chance of getting the payment, either on time or earlier than usual,
increases. Further, service disconnects are reduced, collection costs go
down, customer satisfaction is enhanced, and reoccurring revenues
increase.
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How the SRM program is managed
Choosing the right people
As a leading provider of outsourced call center services, Sitel has a
proven methodology for testing and screening prospective call center
agents. Collections, customer care and technical support skill sets are
identified and evaluated up-front. The top performers in each area are
then matched to specific clients.
SRM universal agents are unique because they have the skills to handle
customer service and the thick skin required for past-due collections.
Simply put, you can teach a collections agent how to handle customer
care, but customer care agents rarely have the skills needed to manage
collections calls.
Up-front and ongoing training
Once identified, universal agents receive special training. They must
have the empathy, bridging and negotiation skills needed to open and
close a customer care issue and negotiate and resolve a past-due billing
issue – often during the same call.
Depending on the client, a certain amount of on-going training is
required. For example, agents must be kept abreast of the latest client
offers. They must know how to change a customer‟s payment due date,
offer a 10 percent credit if the customer pays that day, or waive a
service fee if they pay on phone.
If the customer recently lost their job, the universal agent must be able
to show empathy and offer payment alternatives. If the customer owes
$200, for example, might they be able pay $40 today and set up a
payment plan for the balance?
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Controlling customer service quality and performance
With customer data and payment habits on their screen the moment the
call comes in, SRM agents can deliver a quality customer experience by
offering empathy and sympathy – while remaining firm enough to meet
the client‟s collection targets.
Statistics prove that empathy and the ability to offer alternative
arrangements – as opposed to the traditional, bottom-line collections
call -- enhances customer satisfaction/loyalty and increases the
likelihood of receiving payment.
Leveraging customer data to build prevention strategies
When a customer gets his or her next paycheck, every company wants
to be paid first.
By having the individual‟s payment history on-screen at the outset, the
universal agent is better able to negotiate. They may offer suggestions
like: “Can we change the bank‟s rate plan to better fit your needs?”
After incorporating a more conversational, sympathetic approach, Sitel
saw an eight percent lift in payments. Though a friendly, caring
approach increased the handle time, it also delivered superior financial
results.
Providing access to all customer contact channels
Employing a multi-channel approach, the SRM preventive collections
program can leverage or combine voice communications with other
direct contact channels, including direct mail, chat and email.
Global consistency through GOS
The SRM program is based on Sitel‟s Global Operating System (GOS) -- a
set of highly defined, world-class standards, processes and procedures
based on global call center experience developed over the past 20-plus
years. The GOS nine-step recruiting process delivers universal agents
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with identical skill sets, regardless of whether they‟re located in the
U.S. or abroad.
Motivating and incenting
Every client has different needs. As a result, when it comes to
motivating and incenting SRM agents there are a variety of clientspecific compensation models. In some cases, the agent earns a set
amount for every customer “cure.” Under a contingency model, the
client only pays if the agent collects the overdue balance. Regardless of
the model, Sitel works in partnership with the client to create a
balanced program that provides SRM agents with the incentives they
need to help the client reach its financial goals.
Experience and Success
For the past 13 years, Sitel has provided the following industries precharge off collection services ranging from customer service to risk
based approaches:

Banking

Consumer finance

Commercial finance

Telecom

Utility

Automotive
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Between January 2010 and June 2011, the SRM program achieved the
following
successes
as
measured
against
client-supplied
key
performance indicators (KPIs):
•
Exceeded client-established goals for dollars collected by 12%;
•
Surpassed client-established goals for accounts rolled by 8.5%;
•
Beat client goals for call quality and compliance by achieving a
99% quality and compliance score;
•
Improved the collection prevention metric by 9 %, saving clients
$1.7 million in collections costs and contributing $3 million in
improved cash flow.
Client Success
Satellite TV Services
A major satellite service provider partnered with Sitel to cure and
collect balances from zero to 200 days past due. With the objective to
liquidate dollars past due Sitel met the client‟s first party liquidation
rate eight of the past 10 months and exceeded the third party
liquidation rate 10 of the past 10 months. Sitel also improved the
client‟s days sales outstanding rate, reduced delinquency and chargeoff rates, increased cash flow and delivered a greater return on
investment.
Retail
A major retailer partnered with Sitel to cure and collect balances from
zero to 220 days past due. The objectives were to improve the
liquidation rate and the contact rate for prevention, collections and
notifications. Sitel met the contract rate for notifications and first party
collection for 18 consecutive months and surpassed the liquidation rate
for 18 consecutive months. Days sales outstanding was improved, cash
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flow increased, additional product review potential was realized, and
delinquency and charge-off rates were reduced.
Automotive
A major automotive industry lender partnered with Sitel to cure and
collect balances from zero to 90 days past due. The objectives were to
reduce net losses, improve dollars spent per hour and achieve client
specified penetration and RPC rates. Sitel agents exceeded the net
losses target eight of the nine months reported, surpassed dollars RPC
ten of the past 11 months, and met the dollars per hour target nine of
the last 11 months. Sitel agents improved the net loss rates, reduced
delinquency and charge-off rates, and decreased compliance while
maintaining high quality call rates.
Financial Services
A major financial services company partnered with Sitel to cure and
collect balances from zero to 120 days past due. The objectives were to
liquidate dollars past due, roll back delinquent customers and achieve
penetration and RPC rate targets. Sitel agents exceeded the liquidation
rate 26 of the past 30 months, including the last 19 consecutive months;
surpassed the roll rate 25 of the past 30 months, including the last 19
consecutive months; and met the penetration and RPC rates for the
past 29 consecutive months. The program improved the company‟s days
sales outstanding rate, reduced the client‟s delinquency and charge-off
rates, with improved customer satisfaction.
Financial Institution
A major financial institution partnered with Sitel to cure and collect
balances that were 180 to 240 days past due. With the objective to
liquidate dollars past due, Sitel exceeded the liquidate program rate 12
of the past 13 months; met operational business strategy and audit
goals for the past 24 consecutive months; and did so with zero regulator
complaints over the last four years. Delinquency and charge off rates
were reduced and the amount of cash collected increased.
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Technical Model
From a technology standpoint, there are two ways of executing the SRM
program:

A client-based solution

A Sitel-based solution
In a client-based solution, the client controls the customer payment
data, provides the customer contact strategy and debt collection
technology and directs the SRM agent‟s activity.
With the Sitel-based solution, a partnership is formed with the client to
review and analyze the customer database, uncover and prioritize
collections opportunities, and develop the contact strategy.
Sitel‟s debt collection system is based on a modular architecture that
can be custom-configured and expanded on an as-needed basis. Fullyintegrated modules include, for example, predictive dialing, inbound
call processing, electronic claims submission, and electronic check
writing.
This seamless, integrated platform lends itself to more productive agent
performance
and,
ultimately,
increased
client
profits.
Account
prioritization, for example, is automated to increase the timeliness of
collection activity on each account. A guaranteed contacts module
screens no-answers, busy signals, answering machines and disconnected
numbers so only answered calls are directed to an account
representative.
Most importantly, the system allows SRM managers to automatically
filter and process accounts based on user-defined criteria, and monitor
every account to ensure each is worked according to user-defined work
standards. Managers also have increased control with user-defined
reports, queuing options and real-time graphical displays.
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As a result, customer contact levels increase and specially-trained
agents are able to work accounts properly and on time. Further, overall
productivity is increased and client goals are met, or in many instances,
exceeded.
Though Sitel has a record of successfully working with client based
solutions, the company generally views its SRM-based solution as more
proactive and effective.
Summary
Outsourcing a collections program to Sitel makes it possible to drive
down the overall cost of customer service, delinquency and charge off
rates, while increasing revenue and cash flow. This, in turn, allows you
to:
Increase the return per customer by increasing revenue and
reducing expenses
Additional per-customer revenues can be reinvested to support growth
initiatives designed to increase market share – which further improves
cash flow and revenue growth.
Focus on the customer experience
Leveraging customer profile analytics and taking a less demanding,
more conversational approach to collections generates trust and good
will with the customer and often delivers a positive outcome.
Faced with a choice, the decision maker is much more likely to pay a
company that treats them with empathy and respect -- one that‟s
clearly trying to retain them as a customer – first. A company that
simply turns the account over to collections usually has to wait in line,
if it gets paid at all.
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Choose a strategic partner versus a vendor relationship
The SRM prevention collections solution is
a true, strategic
partnership. Unlike a traditional vendor relationship, Sitel works with
you to analyze and prioritize your collections database, identify and
prioritize collections opportunities, and develop a program that offers
incentives and deliverables beneficial to both parties.
The SRM‟s preventive collections model is a proven way to reduce
delinquent accounts; reduce the number of customers in collections;
reduce the costs associated with collections, including shut-offs and
reconnects; and greatly enhance customer satisfaction.
All of which allows you, the client, to focus on what is most important –
improving the bottom line.
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