Mind Games
A person's decisions are often influenced by how easily vivid examples come to mind around a topic, said Seth Carter, vice president of consumer psychology and collection sciences at Altisource Portfolio Solutions, S.A, parent company of Nationwide Credit, Inc, at last week’s Collections & Credit Risk conference.
Hence the importance of what collectors say on their phone calls to debtors to ensure their "vivid examples" of collection calls aren't terrible. Carter, for one, recommends a variation of the following statement to achieve better collection results:
Using psychology to yield better financial results is not just limited to calls, but should also apply to letter campaigns.
Altisource, for one, used to send an initial demand letter, followed by a specific offer, followed by a final demand letter, but after focusing in on psychology more than a year ago, it expanded its letter campaign to include: initial demand, representative letter that includes testimonials, scarcity letter that explains there is a limited time discount that only so many borrowers received, chased by a specific offer, and ending with a final demand letter.
And to know what approach works best for one’s shop, Carter suggests identifying best practices by interviewing best collectors, etc. Once the most effective communication strategy is determined, he suggests quantifying the outcome, and to constantly evaluate the strategy over and over again.
“Psychology does work,” said Carter.
Hence the importance of what collectors say on their phone calls to debtors to ensure their "vivid examples" of collection calls aren't terrible. Carter, for one, recommends a variation of the following statement to achieve better collection results:
“Borrower, I understand your concerns. This year alone our programs have helped over 77,000 homeowners in similar situations to yours save their homes from foreclosure. That’s equal to over a quarter of the entire population of Pittsburg.”
Using psychology to yield better financial results is not just limited to calls, but should also apply to letter campaigns.
Altisource, for one, used to send an initial demand letter, followed by a specific offer, followed by a final demand letter, but after focusing in on psychology more than a year ago, it expanded its letter campaign to include: initial demand, representative letter that includes testimonials, scarcity letter that explains there is a limited time discount that only so many borrowers received, chased by a specific offer, and ending with a final demand letter.
And to know what approach works best for one’s shop, Carter suggests identifying best practices by interviewing best collectors, etc. Once the most effective communication strategy is determined, he suggests quantifying the outcome, and to constantly evaluate the strategy over and over again.
“Psychology does work,” said Carter.
Tags: altisource, psycology, sourcemedia
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Comment by Jack Gordon on October 26, 2009 at 10:08am - Psychology and powerful direct-response marketing are close cousins. I love the strategy Altisource has enunciated here, and have often thought about what might have happened had I tried some of that in my shop. I would love to see a followup to this story that gives some analysis of their results compared to the old strategy.
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Comment by Brian Schuett on October 26, 2009 at 11:59am - This is great! I've been using Consumer Psychology to boost collections for years. I've done my own research and found that their are 6 major psychological strategies you want to use when constructing a settlement letter. I'd love to share them with anyone thats interested, please message me if you are interested.
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Comment by Richard Irvine on October 26, 2009 at 4:23pm - To expand on this subject we have found success in all facets of communications after reading and following some of the valuable insite in a book by Tony Alessandra & Michael O'Connor called "The Patinum Rule." Different from the Golden Rule...."Due unto others as you would have them do unto you" the Platinum Rule ...."Do unto others as they'd like done unto them." This book helps us better understand other people that we come in contact in both our personal or business life. Identifying personality styles and learning how to communicate with different styles is powerful knowledge. "Your communication is only as good as your understanding of the person you're communicating with."
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