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What Can We Do About Customers Who Cancel After Debts Are Settled?

I currently work in a negotiations department for a mid sized debt settlement company. We have roughly 2,500 clients who are active. We have been on a massive push recently to get all of our clients settlements once they have made 3 payments. We have reached the point where more than 80% of our total client base is involved in paying a settlement or has paid a settlement in the last 30 days. I have been in the business since 2005 and this is the best work I have ever seen.

My question is this. How do you keep a client engaged enough to keep them in the program?

We understand that life shows up and emergencies happen but it seems like more and more clients are just throwing in the towel. For January 2012 I can attest to more than 10 customers who cancelled for no reason. All of them in the middle of a settlement. 3 out of the 10 were paying on settlements that were for less that 20% of the balance.

We try to re-engage them. Remind them that the goal is to get out of debt. Show them the honest work we have done. We have even started a program whereas we voluntarily ask our past graduates to talk with other clients in the program if they feel they need re-assurance. It has had great results but has not fully bridged the gap as we would like.

My initial thought process was more “TOUCHES” with the clients. Shorter response times. More settlement offers. Add in a little technology and the clients would be more engaged and be more interested in settling that last account or the rest of their accounts. I am flat wrong.

Last year I saw a YouTube video of “The Honey Badger” by Randall, last week I seen a Pistachio commercial with the Honey Badger(reference video to understand), high level view it appears that some Consumers just “DON’T CARE”. I care. My negotiators care. We all care. Why are some clients like Honey Badgers? Not trying to be funny but a little comedy seems to go a long way in these instances.

Steve, Any reply, thoughts, ideas, community discussion or even a “Yes your right, some people don’t care.” is appreciated.

Best,
I Do Care

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The Answer

Dear I Do Care,

Thank you so much for your observations and questions. Let me offer my advice and hopefully we can get a conversation going in the comments with others as well. I had to go hunt down that video you mentioned. How funny.

Let me preface my statements by saying there is just a segment of the population that will drop for no clear or apparent reason, no matter ho good of a job you do. That needs to be factored into your business model.

Without knowing what specific reason your particular clients dropped I can only offer some general advice.

Times are tough and the longer a full resolution of the debt takes, the more the stress and pressure of the situation builds on the client. After a certain period of time many will reach an emotional tipping point where it just feels like it does not matter any more. They want the pain to go away, NOW!

Quite frankly, settlement is best for people that otherwise would have been a Chapter 13 bankruptcy. For the rest that would have qualified for a Chapter 7 bankruptcy, which 70%+ of filers do, the bankruptcy result is swift and relatively inexpensive.

In just one day a consumer can file a Chapter 7 bankruptcy, stop lawsuits and stop debt collectors quickly. Their debt will be discharged in a few months and the entire process will be in the $2,000 range. The credit can be easily rebuilt.

While many people will walk out of the bankruptcy office feeling low, there is also a tremendous benefit knowing the mess is over.

I would guess that the primary reason people seek your services is because they want intervention to quickly deal with the problem with a desire to avoid bankruptcy. And I would also safely guess that people that come to you with cash on hand to settle quickly, don’t drop.

If someone has been sitting in a settlement program for more than a few months and is getting collection calls, letters, threats of lawsuits and their stress level is not abated much or it’s increasing, then the drops are not all that unexpected at all.

The amount of touches as you’ve observed is not the answer. I know people that have limited touch setups and those that are in front of the client on almost a daily basis.

If anything was a deciding factor I’d have to say it would be speed of response, quality of response, and professionalism of your staff. Those are important factors you can control and should.

What Can We Do About Customers Who Cancel After Debts Are Settled?
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Charles Lep

    On a side, but somewhat related topic: What do you think about a customer who drops after a settled account is completely paid, but still owes fees? For this example, let’s assume the customer didn’t respond, just failed to pay into the program or communicate.

    • http://GetOutOfDebt.org Steve Rhode

      I think it’s a shame that some people will cheat you out of fees you have earned. But no matter what you may do, there are just some of those people in the world.

      My observation and advice is that if you treat your clients as friends rather than a bother or a nuisance they will develop more of a relationship with you and want to pay you what they owe if they can. Not all will pay but certainly more will.

      The flip side is that if you do manage to create that kind of friendly, extreme customer service bond with the client some will bend over backwards to make every effort to pay.

      It’s a major irritant with me that companies often treat their customers like something that interrupted their day and made them do work.

      This was always the repeated focus of my staff back in the day. It was always a constant battle to remind them that no matter what the client asked for, it was making sure the client was happy and well taken care of that paid their salary.

      An employee that felt any task requested by the client was a nuisance never made it long in my debt relief company.

      Getting paid for work performed begins at day one.

      Just my two cents.

  • http://northeast-properties.com Andy Faria

    It may help for intake (sales) to seek a better understanding of a consumers desire  to “avoid bankruptcy”.  Avoiding bankruptcy is not always the best solution and many times the clients that enroll in a DS program are only really “postponing bankruptcy”. They may not be ready to come to grips with the fact that bankruptcy is their best option, and they enroll in DS as a stall tactic… postponing the inevitable.

    In my opinion, there is no logical reason why any consumer should ever enroll in a DS program, without first speaking with a bankruptcy attorney (or two or three). I bet your DS company could increase retention by ten-fold, if they required that every potential client meet with a BK attorney, before even being allowed to enroll. Unfortunately, sales would be cut to a fraction of what they normally are, resulting in lost revenue and increased marketing expenses that would eventually sink the company….  it’s a double-edged sword

    Now chances are, if you went to the owners of your company, and made the suggestion that all leads be screened for bankruptcy prior to enrollment… you might be laughed out of the room, or even fired. Why would they sign their own corporate death warrant? The wouldn’t, and I get it.

    But.. I believe there is a solution. And that solution involves reaching out to as many bankruptcy attorneys in your market areas as possible. Build relationships with them… learn what they do… but more importantly, educate them on what it is that you do. Think about it for a second… you have what they want, and they have what you want. You want their people that only qualify for a Chapter 13 and they want your people that qualify for a Chapter 7. Yes, I can see how it would be hard for your DS sales staff to take a lead that they paid top dollar for and hand them off to a BK attny… and I can see how it would be hard for a BK attny to not accept a retainer for a chapter 13 lead, and instead hand them off to a DS firm to settle. It’s a give and take, no money needs to change hands, just a mutual understanding and desire to seek what is best for the consumer. If done right it would grow both firms. It would certainly improve retention, that’s for sure..

    • http://GetOutOfDebt.org Steve Rhode

      One issue I plan to write about soon is the issue of time-barred debt and a debt relief provider restarting the clock opening the consumer up to being sued by acknowledging the debt or making a partial payment. It would be interesting to incorporate your idea of a pre-bankruptcy screening with an assessment of time-barred debts the consumer may have or have coming up in a screening process that involves more than just “avoid bankruptcy.”

      I strongly suspect the person asking the question has their heart in the right place and wants to help but for those that really want to help a more realistic and tougher screening process would result in less consumers qualified for the program.

      But as you say, a more qualified client base is going to succeed more often than not. So it’s a Catch-22. Do we filter out more people on the front end or let more people in to drop later? It could be said that not screening more strictly just masks the reality of the situation. Would you rather spend more time with half the clients and take them more the way?

      • http://northeast-properties.com Andy Faria

        If the DS product is not going to evolve from, “default on all your accounts and settle em”, then they should be targeting exactly who they’re actual client base is… chapter 13 candidates. Yes there are the people who believe that bankruptcy is totally wrong, and even though they qualify for a chapter 7, will choose to go the settlement route instead. But, those people are not good clients for a performance based DSC… are they? When the large chunk of the DSCs overhead is spent on the acquisition and set-up of a client, they lose their shirt on drop-outs, and it just doesn’t make business sense to enroll them in the first place.

        Sure, a hybrid program that allows for a DMP/DS/Acceleration approach would be the ideal product and would become the stand-alone bankruptcy alternative program if it ever came to fruition. All signs point to that it won’t though. A hybrid program would require the CCAs get involved. But they won’t, they hate DS and have made it perfectly clear that they have no intention of working with them to build a better product. It’s a shame and an example of the almighty dollar winning again.

        My point is… with the DS product being what it is, DSCs could improve their retention, intake screening process, and overall bottom-line by aligning with bankruptcy attorney’s than they will by continuing sell against both options.

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