Key Differentiators in Debt Collection Firms, and How Your RFP Can Uncover Them

I’ve been a proposal writer for a number of years, but I wasn’t always writing about debt collection services. Over the course of my career, I’ve responded to RFPs for industrial printers, surveillance cameras, open-road tolling technology, and even ankle monitors. So when I first started writing proposals for debt collection RFPs, I received a lot of questions from my fellow proposal writers in other industries (I still keep in touch with many of them, and believe it or not, proposal writers even have our own trade shows, monthly happy-hour get-togethers, and internet discussion forums). With raised eyebrows, my colleagues would ask, “an RFP for a collection agency? What kinds of things do prospects ask for? How do you sell collections?”

Like I did before joining the collection industry, my curious colleagues were making some wrong assumptions. They envisioned vast, impersonal call centers full of collectors that just dial all day, then joylessly read from a script if anyone answers the phone. They probably wondered, “Where are the nuances? All collection agencies are pretty much the same, aren’t they?”

Nothing could be further from the truth. When I explain the collections industry to the uninitiated, and specifically when I tell them what prospects are looking for, I typically boil it down to three key areas of differentiation: performance, consumer goodwill, and compliance. Although there are many more factors for a buyer to consider, the majority of RFP requirements I read fall under one of those three spheres. But if you’re a purchasing agent for a large organization that’s seeking collection services through an RFP, how do you craft your requirement language to get exactly what you want in each of those key areas? In the following sections, I’ll talk about each area of differentiation, and I’ll present some tips for writing requirements that root out the best possible vendor.

Performance

Perhaps the most obvious differentiator is a collection agency’s ability to collect. After all, you wouldn’t be publishing an RFP in the first place unless you wanted to liquidate your organization’s aging debt. 

There are a lot of factors that contribute to collection performance. For instance, when we first receive an account from a client, we analyze that account to determine the most likely path toward resolving it. Using demographic information that we’ve amassed over our decades of experience, we determine exactly the right frequency and pacing for letters and phone calls based on the type, age, and balance of the debt we’re collecting. 

But it isn’t just a numbers game; the human element is perhaps even more important to collection performance than strong analytics. That’s why IC System is a supporter of a variety of programs that improve performance, encourage teamwork, enhance morale, and reward our collectors. We hold a number of hourly, daily, weekly, and monthly incentives, including prizes for the best call quality (a measure of a collector’s tone of voice, respect for the consumer, and similar factors). We even have fun events like snow cone days and hot dog cookouts. Maintaining a light, fun-focused environment keeps morale high, and high collector morale definitely results in increased performance!

So when you’re writing your next RFP, consider including some requirements that dig deeper than “include your performance rate on similar projects.” Instead, ask specifically how the agency uses analytics to achieve constant improvement. And if you think that a happy, energetic staff will best represent your organization, think about including some specific questions about how an agency uses incentives and manages morale to energize its staff.

Consumer Goodwill

Speaking of the collection staff that will represent your organization, many buyers have public relations foremost in their minds when contracting a collection agency. Yes, you want your bad debt recovered. But you also need certain assurances that your customers will be treated with respect and dignity. Ideally, they’ll find a way to settle their past due accounts without leaving a bad taste in their mouths about your organization or ours. 

So when it comes to gauging a collection vendor’s approach to maintaining your relationships, ask specific questions about training, monitoring, supervision, and collector accountability. Some examples I’ve seen include:

• Describe how your collector training processes will ensure a positive experience for our consumers.
• Are all calls recorded? How often are calls audited? 
• What is the escalation process when a consumer has a complaint?
• Is your firm a member of ACA International? Are your collector’s expected to uphold ACA’s code of conduct?

Asking probing questions about the methods used to consistently provide respectful collections will hopefully help you determine whether a collection vendor really has tried-and-true processes in place, or whether they’re just whipping something up for the benefit of your RFP. 

Compliance

Closely related to consumer goodwill is compliance. Primarily, a collection agency should treat consumers with respect and dignity simply because it is the right thing to do. But secondarily, doing the right thing helps protect you and your collection vendor from liability. There are many consumer protection laws at both the federal and state level, and hiring a firm that knows how to navigate those laws is vital. On each and every call we make, for example, there are dozens of legal and regulatory factors to consider. Just a few of the questions we ask ourselves include:

• Were the mini-Miranda and call monitoring disclosures stated?
• Did the rep ID themselves and the client?
• Were all mobile phone policies and procedures followed?
• Were all federal, state, and municipal regulations followed, as well as legal department system update requirements?
• Did the rep avoid stating any false, misleading, or deceptive comments?
• Did the rep follow the policy regarding talking about Credit Bureau Reports?
• Was required scripting provided?
• Was the account documented accurately?
• Were HIPAA and GLBA guidelines followed?

And that’s just phone calls. When you add letters and online interactions into the mix, the legal landscape becomes even more treacherous. So when you write your RFP, make sure to ask vendors about the steps they take to ensure legal and regulatory compliance. Also, make sure they’re experts in collections throughout all 50 states. After all, fifteen percent of consumers move away from the area in which their debt was initially incurred. But since collecting in Massachusetts requires knowledge that collecting in Illinois may not require (and vice versa), you’ll need to hire a collection agency with expertise across the country. If not, you risk that fifteen percent going ignored and uncollected, or worse, collected in a way that exposes you to liability.

In Closing

So, when my proposal-writing colleagues ask me, “what do you really sell when you’re selling collection services?” I break it down to three main spheres: collect effectively, collect ethically, and avoid lawsuits. Those three concepts (plus a section on past performance/references) would make a great outline for anyone sitting down to write an RFP. 

Ready to get started? Email IC System for assistance at Proposals@ICSystem.com.

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