Who doesn't love a bargain?
Looking at the explosive growth of Groupon, Living Social and an expanding list of competitors, the answer is clearly "nobody!"
The popularity of their "buy one, get one" deals or BOGO got me thinking. Could a creditor, faced with a customer struggling to meet all of their obligations and at risk of falling hopelessly behind, make a similar offer and get the customer off the path to bad debt.
Most creditors have some sort of hardship or forbearance program designed to give customers a way to get their past due accounts current without paying the total amount they owe. The problem with these programs is not the intent, which is good, but they might as well be pictured as a rabid porcupine based on the decidedly negative way they are described:
"You can do it one time only for the lifetime of your account."
"I can take an interest-only payment, but the principal will be added to the back of the loan and your total cost will go up"
"I guess if you really need it, ok, but do you?"
If the objective is to cure the delinquency, get the customer out of collections, and reduce the risk of the account aging to write off , why not market these programs as something good for the customer? After all, the cost of the concession granted is typically less than the cost of continuing to treat the account or worse, writing it off.
If so, then you should promote the program like a Groupon. Instead of a BOGO, call it a POGO, as in "pay one, get one"...and help your customer bounce back.
In doing so, you'll be exercising one of the most powerful principles of persuasion, reciprocity. The theory, well explained by Dr. Robert Cialdini in his book Influence - Science and Practice, is that when you offer another person something of benefit without first being asked for the favor, they are strongly inclined to honor any reasonable request you make of them. Such as "now that your account is up to date, will you make your next payment in full and on time so we don't need to speak about this again?"
I've always thought collections was just customer service applied to a delinquent account. Perhaps I've been too narrow in that characterization. Collections is also sales and marketing, and POGO is just a great new feature available to customers if they "act now!"