Myths and Confusion regarding debt segmentation.
Statement 1: "I don't believe in scores"
Response 1: A score is simply a mathematical equation based on your payers vs. non-payers
Statement 2: "I have tried scores and they didn't work for us"
Response 2: Without a well developed and disciplined strategy, a score is just data
Statement 3: "No successful agency is utilizing debt segmentation"
Response 3: Really? Let me give you a list of those who have increased productivity immensely
What types of scores/segmentation models are available to the ARM industry? There are 4 common types of scores in this vertical; Dynamic, Custom Built, Credit Based, Geo-Economic. So let's discuss each in a little more detail.
- Dynamic Segmentation: based on multiple attributes of the account/consumer that can change
- Custom Built: created specifically for your type of business, strategy and end goal
- Credit Based: uses attributes from a consumer credit report to derive a score
- Geo Economic: utilizes the geographic location of the consumer and median income
So which model is right for me? Now that is a loaded question. Best case scenario you would utilize a combination of multiple segmentation models to develop one that fits your exact needs. However, that is not always the best solution since cost must be factored in. Your best option is to use a model that is proven in the ARM industry, but can be customized to each of your specific business types and/or clients. A "one size fits all" model will rarely, if ever, net the results you are in search of.
How do I know if my segmentation is working? What is monitored gets managed. Do you have reporting in place to assess each of your clients and determine if the accounts are getting the proper treatments? Are your levels of effort being directly associated with the propensity to pay? What about your vendors, are you looking to make sure vendor usage is directly associated with your strategy? I know, I know, that's a lot of questions. But, those questions must be asked. And the best way to address each question is client by client as a segmentation strategy is being implemented.
The Holy Grail of Segmentation: Can I improve my current segmentation and strategy? Yes, yes, and yes. Through proper strategy development, strategy execution, agent allocation, dialer penetration and a whole lot of other words ending in "ion", YOU CAN! Seek out a professional in the industry with at least several years of ARM experience. It is important that they clearly understand technology and operations. A one-sided approach will not net your best results.
Thanks for taking the time to read this article. I welcome any feedback, insight or comments.