Delinquency Management Part 2: Empathy in Collections
By Heather Papows, Sr. Consultant, Loan Servicing & Secondary Market
In the first of this two-part series, we introduced to you the idea behind relationship banking, and using that as a competitive advantage as you prepare for the possible looming changes in landscape when it comes to delinquency rates. With relationship banking, you build the trust of your customer, and the foundation for open communication, with the hopes of having an earlier vantage point for impending delinquency issues.
To build on that approach, let’s next talk about our second strategy in managing delinquencies, which is bringing empathy to the conversation. Demonstrating empathy when discussing delicate topics such as hardships and financial challenges can completely transform the tone and translate to more success in your interactions.
Empathy Explained
Empathy involves using emotional intelligence to understand another person’s thoughts and feelings. When you are empathetic, you recognize the personal nature of a conversation, and you make a conscious effort to hear the emotion (sadness, grief, stress, anxiety, worry) of the individual. The tone of your response is an indicator of your awareness and understanding of the individual’s emotions.
How to Integrate Empathy
Employing empathy in collections applies not only to verbal conversations, but to emails, letters, and even the voice messages you leave. Your choice of words and the overall tone contribute to the individuals’ expectation of the interaction. Instead of focusing on the problem, your first objective should be on identifying the root cause of that problem.
Which of the following would you consider to be an empathetic conversation starter? Which is closer to how your conversations typically start?
1. I am calling about your past due payment and when you expect to bring that current.
2. I am calling to check in, and see if anything has changed about your financial situation that resulted in your payment being late.
The first statement is a fire-starter to the individual’s emotion, and to whatever the trigger was for their payment challenge. The second allows for an opportunity to learn more about the situation, understand their emotion, and allows you to cater workout options to their specific scenario.
To not empathize can make you sound impersonal, hard, and as if their situation is not important. Ignoring emotions in the conversation can be costly- the relationship you worked so hard to build can be broken in a second with the wrong attitude in any form of exchange.
The results of employing these two strategies in your delinquency management process will speak for themselves. To set up a time to discuss a review of your current delinquency management process including scripts, letters, and procedure docs, or to inquire about coaching and training session availability, contact SCA’s Director, Bill Dolan, at WDolan@scapartnering.com or by phone at (617) 694-2617.
