Sarah is a Millennial college educated professional, working as a manager in the collections group of a major bank. She is single, does yoga and owns a dog. She lives in the city, enjoying the dining and entertainment options there. Sarah is a cord-cutter who consumes media via her digital tablet. She seeks out organic food when she shops.
“Sarah” is an example of a marketing persona. She’s representative of a swath of consumers with common traits useful for selling things. Her traits are an important driver for how she makes buying decisions. The Sarah persona is ideal when you want to sell cars, entertainment options, retailers, devices, travel, etc.
But when it comes to collections? The Sarah persona doesn’t help. Collections personas are just different.
Benefit of personas
A good, more formal definition of a persona is provided by Simplifie:
A persona is a proxy for your target audience – a valuable shorthand for someone who has the same interests, priorities and concerns as your buyers. The persona is based on extensive research.
A benefit of personas is they bring to life the dry analytics that are the lifeblood of corporate life. This is actually very helpful for decision makers. Think of the persona as a proxy for a story about a consumer. Research finds that, “Stories can capture attention, evoke emotion, and entrance listeners in a manner that reduces resistance to a message.”
Designers recognize the need to open their minds to address specific consumer types. Personas tap into existing heuristics we have regarding certain characteristics. Accessing these heuristics is a powerful way to enhance designs. For example, Ford Motor Company designers use personas in thinking about their vehicles:
ANTONELLA is an attractive 28-year old woman who lives in Rome. Her life is focused on friends and fun, clubbing and parties.
She is also completely imaginary.
But her influence is definitely real. It is evident in the design of the Ford Fiesta, on sale in Europe now and arriving in the United States next summer as a 2011 model.
Antonella was the guiding personality for the Ford Verve, a design study that served as the basis for the latest-generation Fiesta. A character invented by Ford designers to help them imagine cars better tailored to their intended customers, she embodies a philosophy that guides the company’s design studios these days: to design the car, first design the driver.
In sum, personas become guidelines for deeper understanding of different consumers. Both customers and companies benefit from this.
What about collections personas?
Kyle is a married, college educated professional. He straddles the Millennial and Gen X generations. Kyle enjoys playing pickup basketball. He prefers German vehicles, and Italian coffee makers. When looking at a purchase, he will consult online reviews before making a decision. On the weekends, Kyle home brews his own beer. He and his wife own two cats.
While an example, this “Kyle” persona is typical of the genre. Great for marketing and customer product journeys. But what happens when Kyle loses his job, and is 25 days past due on his credit card bill?
Its applicability to collections work is dubious:
“Kyle, let’s get a bucket for your credit score by making a payment…”
“Kyle, get your account brewing by making a payment today…”
“Kyle, you have a 1-star review of your account because it’s past due…”
There are two requirements for what constitutes meaningful collections personas:
- Relevant characteristics of the delinquent customer
- Ability to take actions appropriate for the persona
Relevant characteristics
Demographic and lifestyle data are not so relevant when it comes to delinquencies. If you’re experiencing a cash crunch, it doesn’t matter whether you own a dog or a German vehicle.
Here at Scorenomics, we think of three dimensions that determine a delinquent customer’s ability to pay: cause, capacity, control.
Quick description of each:
Cause: The reason you missed your payment due.
Capacity: The financial resources to which you have access.
Control: The sense of empowerment you feel over your situation.
Note these are very different traits than what you see with marketing personas. A persona should be relevant to the tasks at hand. For Ford designing a car, it’s a sense of the lifestyle the driver has. For a collections group, it’s the characteristics that determine how long it will take to right one’s situation.
Example persona: “Scrambling after a setback” payer
This person has hit a temporary setback, one that disrupts the flow of their household:
Some unexpected things have come up, like family emergency (hospital) and trying to focus on job related items, all coming up at the same time.
Compounding this issue that their sources for emergency cash are unstable. Helping this person is their own sense of control that they can prevent delinquencies going forward, but obviously it’s limited.
Do we know if this person is a Millennial? Do they prefer white wine or beer? Suburban or urban dweller? Really, none of those matter. Interesting heuristics and demographics fade away as a crisis must be dealt with. That’s what make a collections persona very different from typical marketing personas.
The state of play for attributes right now in consumer credit collections is essentially:
- Days past due
- Dollar balance
- Previous delinquencies
Unfortunately, this leaves collections groups woefully under-informed about the delinquent customer. And it leads to inadequate actions with regard to remedying the late payment.
Appropriate actions
From that article about Ford Motor using personas to help with designs: “We found in the past that if they didn’t understand the buyer, designers would just go off and design something for themselves.” Think of it this way: Lack of understanding the specifics about a persona led to designs that were not match for the intended customer.
A similar issue plagues the collections world. There is little differentiation for customers in the initial delinquency bucket. Without knowledge of the persona and how to act on it, the tactics are limited to:
- Communication channel preference (text, email, phone, etc.)
- Time of day to contact
- Increased escalation of messages as the days past due increase
- Use of outbound calling the longer the amount due goes unpaid
What’s needed is a “next best action” approach for managing delinquent customers. An example of this thinking was described in the post, Collections groups: Should you offer that promise-to-pay? The idea is to be attentive to the customer and take actions that protect the creditor’s balance sheet while giving appropriate options to the customer.
Use collections personas to differentiate engagement with your delinquent customers, with an eye toward increased cash collected and more satisfied customers.
Click here to find out how Scorenomics BackOnTrack® can help you build personas covering all your delinquent customers, allowing you to develop next best action strategies to improve your results.
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