Walking into a casino, you are overwhelmed with choices. From penny slots to high stakes poker, there are so many different games to choose from, but unilaterally, everyone is there with one goal: WIN BIG! What choice of game would best optimize your chances of winning big? On the penny slots, you’re relying on a steady stream of small wins to add up to a large win. With high stakes poker, a single hand could return more than a day of playing the penny slots, but you might spend a day folding before you get to that winning hand. Both strategies certainly have their benefits, but focusing on one strategy alone is unlikely to net you the big wins you’d like.
Defining your dialer strategy follows the same path. There are many strategies available, but the overall goal is to WIN BIG, whether that is maximizing revenue, total liquidation, or account resolutions. Depending on the time of year, consumer demographics, and other factors, the strategy that gives the best return changes. What works for one set of consumers doesn’t necessarily work for another. When accounts are scored using probabilities, often times the accounts with the lowest balances have the highest scores. Scoring your accounts using only the probability of payment is like the penny slots; you’re likely to close a lot of low value accounts with a higher conversion rate, but you’re also leaving some big money on the table. Conversely, ranking debt based on the original balance is like playing high stakes poker. You might go days without a conversion, but eventually close the really high value accounts. Just like in the casino, statically focusing solely on debtors with the highest balances or the highest probabilities to pay is unlikely to net you the big win you’re looking for.
This is why NLP Logix generally focuses on a metric we call expected value. By simultaneously accounting for the likelihood of payment, the original account balance, and the liquidity for similar historic groups, the opportunity to win big is that much greater. We deliver each type of score for each account on a nightly basis, so not only is your strategy primed for the best opportunity, but your strategy can be agile and adjust to business needs. Most of the time, your dialer strategy will most likely focus on those consumers with the highest expected value. However, if the situation calls for a high number of conversions for a particular group of consumers, a probability focused strategy can be deployed for that segment without interrupting the expected value-based strategy for the remaining consumers.
Working with NLP Logix, we’ll ensure you have the team and tools you need to establish the best combination of strategies for each of the specific account types you are working. In addition to receiving the raw scores (probability and expected value), each account is also given a probability decile and an expected value decile. The top decile represents the top 10 percent of accounts, the second decile represents the next ten percent of accounts, and so forth. A simple dialer strategy might target the first and second deciles at 4 times the frequency of the third, fourth and fifth deciles, which are attempted at twice the frequency of the sixth through tenth deciles.
By defining your dialer strategy around deciles, you’ll consistently target the best accounts most frequently...and because your accounts are scored nightly rather than monthly or worse (like with the credit bureaus), you’re spending each day focused on collecting the best possible debt. Using this decile based approach doesn’t just help with maximizing total collections, as it also allows you to minimize the amount of time you’re spending dialing consumers who are unlikely to pay. And because you’re targeting accounts on a percentage basis rather than on a fixed cutoff, you can maintain a consistent work level at a fixed agency size, rather than fluctuating based on the amount or quality of debt to be worked.
So just like in the casino, no single dialer strategy optimizes for every goal. However, constructing an agile strategy that simultaneously accounts for the original debt amount, the consumer’s propensity to pay, and the historical liquidity for similar consumers can help get you closer to the big win! Contact NLP Logix to learn how we can help you in every step to deploying your data driven dialer strategy!