Collector Incentive Benchmarking

collector incentive benchmarkingCollector Incentive Benchmarking

By: Stephen Brannon, Director, Business Development

As a collections software development company, we see first-hand the amazing and productive incentive programs designed and implemented by our clients. Obviously, nothing is better than real-world proven examples and experience. 

The basic theme from my experience is defining specific KPIs (key performance indicators) based on the current organizational goals. Using KPIs will trend toward different financial goals.

For example, if you are looking to bring more cash into your organization as soon as possible, you would use a KPI such as Dollars Assigned / Dollars Collected x Avg. Days Assigned (the lower this number, the better). 

A different KPI example might be used to prevent long-term delinquency and to reduce eventual charge-off scenarios such as combining the percent reduction of an aging bucket (30 DPD) and the average days it takes a collector to get a promise after the account is newly assigned. This motivates the collector to prevent and cure past due amounts, possibly getting a lesser amount now, but establishing a long-term payment schedule.

Other typical KPIs I’ve seen involve using combinations of the items below to define formulas that best match your financial and collection goals as an organization:

  • Past due %
  • Dollars collected
  • Dollars collected per aging bucket
  • Resolution cycle time
  • Reduction of various aging buckets
  • Cash and credit reduction
  • Average days to pay per collector
  • # of right party contacts

Once you have your KPIs defined you probably know the rest of the story. You incentivize teams and collectors both weekly and monthly based on the best performances. You keep the incentives fresh. You can distribute a weekly trophy per department/office that goes to the top collector. However, my understanding is that team incentives are always more effective than individual. Recognize top collectors by publicly displaying their monthly incentive amount in your newsletters. Less hourly wages and more incentives! Money is good, but paid time off is also very effective. I’m sure you know to keep it fun and be imaginative.

Another important aspect of incentive programs is goals. Once you define your KPIs and you know what financial goals you are trying to reach, publishing the goals to each collector and providing a daily/hourly status on where they are is critical. This keeps them sprinting to that finish line.

From a collections software standpoint, you will obviously require access to all the data necessary for these types of programs to be implemented. Since the KPIs may vary over time or objective, the data needs to be reportable by more than just base system reports. Some incentive programs can be delivered out of the box by the software system, but flexibility should be the goal. An organization should be able to configure their KPIs and goals into a collector performance analysis engine. Managers should be able to drill down to see pie charts (% based) as to types of activities teams are doing, # of contacts, configurable buckets, etc. When it is noticed a collector is performing noticeably well or poor, a manager needs the ability to drill down and view summary and detail activity for that collector. 

Your software supplier should be a partner who is enthused and willing to discuss the solutions and ideas that will help your team to thrive. If you’d like to partner with a company that’s willing to work one-on-one with you and help your team do its best then contact us at Shaw Systems today. Email us at solutions@shawsystems.com or call us at 804.272.3800 or 713.782.7730.