Why your business should think about retaining customers when hiring a collection agency

A business like yours likely has one goal when hiring a collection agency: to collect money from customers who pay late or have not paid at all.

You may also want to work with a collection agency because you do not have the internal resources or the time to chase past-due invoices, and it is time-consuming.

But another goal your business should remember is how a collection agency can help you retain your customers. Just because a customer hasn’t paid you, pays late or there’s a dispute, there are still ways to keep that customer.

There are also significant benefits to ensuring that you can keep your customers and the relationship intact after the debt collection process.

Check out the reasons why you should focus on retaining your customers even through and after your collection agency has communicated with them.

The value of a long-term customer

One of the best cases for implementing diplomatic and respectful debt collection procedures is that customers become valuable assets to your business over time. If you treat your customers respectfully in good times and tough times, you greatly increase the chances of keeping them for the long term.

Retaining that customer allows you to continue earning revenue over time which is more valuable than demanding payment through aggressive methods. If the relationship has been handled respectfully, it increases the chances of your customer still purchasing from you.

Retention costs are lower than the acquisition of customers

Acquiring new customers is not only substantially more expensive than retaining your existing customers but it also requires other resources such as time. If you can continue to retain a healthy book of customers, it reduces the need to increase marketing and acquisition budgets over time. Of course you should always be marketing in some form and looking for new customers but the value of a repeat customer cannot be undervalued.

Customer loyalty

Some businesses are transactional, meaning somebody may only purchase from you one or two times. But in the case of other types of businesses, such as lawn care, dental and home services, you want those repeat customers. Demonstrating that you value that customer even through tough financial situations can foster customer loyalty.

Positive word of mouth in the community

People talk about your business and that’s a fact. Whether they talk negatively or about the positives depends on how you treat your customers. A customer who feels respected during a challenging financial time is far more likely to share their positive experience with others. People talking about the positives of your business goes a long way to protecting your reputation and brand. Aggressive debt collection practices can damage your reputation.

A better relationship overall with customers

We have a phrase here and it’s called care and collections. When you demonstrate that care for your customers even if you have to implement collection activity, it can leave a long-term positive impression on them. This shows you’re not just out for the transaction and understand the value of their business.

Retaining your customers should be a top goal when trying to collect the money your business is owed. However, your business still needs to get paid and that can be done by diplomatically working out a resolution.