How to say what customers don't want to hear
I was looking through some borrowers' files with a lender client yesterday. A common theme in a number of cases we looked at was the inability of the debtors concerned to face reality. They consolidated credit card debt into a new loan, then went out and applied for another credit card. They made unrealistic promises, then broke them. One manager talked about customers who couldn't accept the fact that they could no longer afford their house after their circumstances had changed. She had a number of current cases where she couldn't persuade them to sell the house themselves and trade down, rather than the lender selling it at a mortgagee sale. It was common sense to the manager but for some reason, the customers concerned hadn't (yet) been able to accept it.
In credit management (and in life) there is often a need to give people feedback that they don't want to hear. We've probably all told people - children, friends, siblings, spouses, workmates, customers, or whoever - things they needed to hear, only to find that they reacted badly or ignored it. You use your horn to warn a driver who is absent-mindedly drifting out of his lane and towards your car … and they give you the finger. Sometimes people don't want to hear the truth. People don't like bad news or criticism, even when it's constructive and well-meaning and valid. If it's not so constructive or well-meaning, they're even less receptive.
People will often deal with problems in predetermined ways. They've dealt with this decision before; they don't have to think about it again. If you haven't seen this, spend some time trying to teach a child who has decided he isn't capable of learning, and you'll see what I mean. We all have lots of situations where we know we're right, but for some reason, we our view doesn't carry the day. Ideally, what you want is for the person to respond in the right way. Of course, in some cases you might be able to impose your view whether they like it or not. "This is how you learn the times tables, so do what I say or I will smack you." "Sell the house by this date, or we will sell it for you." But what you want is for them to listen to what you say and to consider it objectively.
So how do you get this result? Well, unfortunately there isn't one simple answer to one simple issue. However, let's assume that there is a specific problem - one which is very common. When you try to tell the person something negative, they see it as a criticism. The point that you want to make, of course, is that they should change their behaviour or take some action. Instead they try to justify their actions, deny the problem, change the subject, attack the messenger, or in some other way miss the point.
What can you do about this? Well here's one idea which we know can work. You build up some credits with the person concerned, so that when you have to talk about more difficult matters, you have a level of trust and rapport which you can take advantage of. It becomes easier to say hard things.
(When a good friend's company was slow paying my bill I was able to call him and say, "where's my bloody money you thieving bastard!" With a friend, making a joke about it was a good way to raise the matter. In fact, if you can find a way to make the other person laugh in collection situations, you're almost always on track for a good conversation.)
One credit manager I know tells a story of struggling to get a particular customer, the owner of a small business, to pay his accounts on time. One day, when the credit manager was in the customer's city on other business, he made the time to meet with him for a cup of coffee. They talked about matters unrelated to credit, and shook hands on friendlier terms when they parted. The next time they had to talk about an account matter, it was easier.
It works even better if you can catch the customer doing something right and tell them about it. Smart collectors know that a very happy, friendly, feel-good call to a customer will be one that begins, "I know that you're a good payer; I'm just looking at your account here and it shows month after month of payments on time. So I thought I'd better give you a call to check that there was no problem."
Other ways for credit managers to "build up credits" with their customers include:
- Contact all new customers once the account is approved, and spend a few minutes saying hello and being friendly. Let them know that you're not an ogre; if there is a problem, you'll be calling to try to solve it, but even better would be for them to call you.
- Find some way to acknowledge your prompt-paying customers - a phone call, card, letter, cap with your company's name on it. When circumstances change and they stop paying promptly, you'll be in a better position to have a good discussion.
What about the real problem customers? Well, after you have extracted a promise which they then keep, try ringing to acknowledge that they've done the right thing and to thank them. In general, with kids, dogs, customers, staff - anyone - catching people doing things right and making a fuss of them at that point, rather than always catching them doing things wrong and making a fuss about that, is a good and effective strategy.
Peter Hattaway - www.hattaways.com - is a director of Hattaways, specialists in credit management training and consulting.