Receivable/Accounts - Information for Credit and Collection Issues

Sunday, September 23, 2012

Making Empty Promises

The Problem With Service Industry "Guarantees"

Companies everywhere make promises – whether it’s “30 minutes or it’s free”, or “we guarantee the product for a lifetime”.  Promises like these, based around a physical product, have substance.  However, in the service industry, where there isn't an actual pizza or widget end product, there are many promises that sound great, but are really empty and without consequence.

Ever since I went from credit management to the world of third party collections well over twenty years ago, I have been constantly been bombarded by the promise and company byline “No Collection, No Fee”.  It’s wildly prevalent in our industry, from one-person collection shops, all the way to national corporations employing hundreds of staff.

Companies everywhere offer promises, mostly to entice potential clients.  It might be a guarantee of a certain level of service, or a certain cost-level, delivery time, or the assurance that if their promises are not met, the service will be free ... and in the collection industry, we have this oft-spoken promise “No Collection, No Fee”.

This, ladies and gentlemen, is a worthless promise – you, the potential client, whether you are a business owner, credit manager, or controller, are receiving the assurance that if you give your valuable receivables to “Agency XYZ”, their promise is that if nothing is collected, it will cost you nothing.  Stellar.  They’re promising that if you waste your time with them, they won’t charge you. 

(By the way, this same industry we belong to won’t entertain the equally open-ended promise from consumers that “the cheque is in the mail”.  Does anyone else see the irony here?)

This tagline is commonplace in the extreme -- I Googled “no collection no fee” and received back over 44,000 hits.  Do you want your company to make the same tired, outdated promise as 44,000 other companies in your industry?  Why would any potential client use your company over the other 43,999?

I wonder sometimes if people forget that there is a trust gap to overcome between the potential new client and the service provider.  In our industry, the trust gap for the creditor to choose a collection vendor is huge ... it’s not ordering paperclips, or hiring a shredding company – as the client, you are entrusting thousands, if not millions of dollars of receivables to an unknown agency, tying in your company’s professional reputation, and developing a source of ongoing revenue for your organization as your chosen agency recovers a portion of your bad debt write offs. To top it off, you are often solicited by dozens of new collection agencies each year, each begging for you to give their company a try.  So why would agencies try to sell to these clients on a basis of failure, and try to underplay or dodge their service-cost model?

In any professional service industry, be it collections, management consulting, accounting, marketing, or what have you, where your product is expertise or manpower-based, you should offer promises based around customer support and quality of the relationship between the two companies – that is what will set your company above the others, and bridge the trust gap.

Promises We Should Make, That Are Worth Something

In this age of social media, where complaints are broadcasted and captured by consumers on Twitter or Facebook, Google reviews give the positive and negative, people have access to company CEOs through Linkedin, and hundreds of competing companies are all available at a simple search engine query, people in service industries need to think about their business model and make promises that should engage with the potential client, and start a conversation, rather than offer a generic tagline under the company name.

This shouldn’t be a slick power point presentation or pamphlet, or a sales pitch that talks about deliverables or key performance indicators – it should be an open, honest, human conversation, which boils down to displaying the people that will represent your company, and how they will do it.  Let’s face it, in my example, third party collections isn’t rocket science, and it isn’t a super-secret art – there are lots of books out there describing credit management and collection techniques, and it’s not hard to talk to thousands of debtors who have been on the receiving end of a collection agent.  So why try to keep everything in an unopened black box?  The reason creditors seek collection agencies out as a service provider, is because we have the tools, scale, and experience to be more efficient at it than the actual creditor itself.

If you can have a conversation at a business conference, or a networking meeting, or an email through Linkedin about your company and the services you provide, the things you offer in writing should be the same things we talk about in person:

·         Come See Us

If you want to come in and see our company, feel free to drop by – no appointment necessary.  Someone will sit down with you and show you around.  If you want to talk to our staff about how they represent your company, or monitor performance, anyone can help you.  We have nothing to hide.

·         We Will Provide All The Information You Need

Do you want an inventory report?  Performance graph?  Stats on how many times your files were called in the last month, and what our conversion rate on right party contacts were?  We can provide that.  All you have to do is ask, or we can schedule a regular report to go to you, at your convenience.  We believe in transparency, and you should be made aware of what we are doing on your behalf.

·         We Won’t Tie You Down

Some companies ask you to sign a service contract locking you in for years at a time, but we won’t do that.  We have a service agreement that outlines what we will do for you, but it says that if you are unsatisfied with how we are representing you, you can stop using us at any point.  We’d be sad to see you go, but we won’t hold you hostage.

·         We Will Guarantee Our Performance

In the service industry, there will be expectations – ROI on marketing, zero complaints from customer service outsourcing, timeliness of responses to computer network failure, and so on.  There should be a solid promise for a minimum level of performance, and if that performance isn’t met, there could be a discount, penalty, or even providing the service for free.

Real Promises Require Real Conviction

These examples of promises – real promises – are likely to energize or horrify other service providers out there, depending on your open-mindedness, bravery, confidence, or ego.  And these same promises will likely spark a range of reactions from potential clients.  But regardless, the whole point is to start an honest conversation.  After all, you the potential client, want to meet and get to know your service provider, don’t you?

If your company provides a service, take a look at what you are promising potential clients, and think about whether it’s got some substance.

If you have any questions about social business, service agreements, competitive contacts, or engaging with your clients, please reach out to me by email or phone.  I’d be pleased to speak with you.

Blair DeMarco-Wettlaufer
Kingston Data and Credit
Cambridge, Ontario


  1. It is often difficult to successfully separate the calm professional from the sleasy bottom feeders. My usual benchmarks are fairly straightforward. Does the company use weasle words? Does the company use phrases like "best in its class", which of course allows them to shift the class to suit right? Or not define what they mean by "better"? (ever buy a car which was NOT the most luxurious in its class?) I am not the only person who does this, I believe in fact that most people do it, so therefore it behooves a company CEO to ensure that their advertising department does not give out the "sleasy" vibe and actually "communicate". Wouldn't that be nice?

  2. It works for us! At Searchify, we provide marketing and advertising services with one promie only: "No Sales? No Pay!". It works great, as it saves us a lot of effort and sales and opens opportunities for a good client/agency relationship.

    That said, we always agree on solid KPI's in our performance based contracts, so clients know what to expect and that our services are guaranteed to provide them high-quality traffic.