One of my final assignments on the before I emigrated from the UK to South Africa was as Head of Outsourced Collections for a large UK business which had collections contact centres both in-house in the UK and outsourced in India.
Then, I never really considered South Africa as a strategic location for collections work. Costs in India were still much cheaper, and the strategy was simple: Early stage, easier to collect debt went to India where it could be processed in high volumes to catch the forgetful customers, reminder triggered and habitual late payers.
Then, what was left, was retained in the UK and was made up of customers who were genuinely struggling to pay and needed a tailored and sustainable debt recovery solution. They were the "Can't pay" customers in any debt book. Then there was the "Won't pay", who needed to be actively managed to protect the debt book from increased bad debt charges.
The model worked well but what was always challenging was the continuity between customer service as debt preventers and the credit team as debt collectors. The customer service team inherently wanted to make the customers happy and make them have a great experience so having a potentially negative, slightly awkward conversation about an overdue balance was difficult, even if that was what was really the best for the customer at that moment in time. When I listened in to collections calls, it often felt like the customer service agents in the UK were a little bit afraid of causing offence by bringing up the debt.
A very British trait of skirting around the difficult subject to remain courteous and polite!
When I came to South Africa and became "Supplier Side“, one of the first pieces of work I got involved in was a debt collections process for a large UK client. We started almost from scratch; new offices, new workforce, new managers, we only had a handful of the management team who'd worked on an international collections campaign previously. The pressure was on to make this a success.
Despite the immaturity of the team from a collections perspective, everyone was enthusiastic, and set out to make a positive impression right out of the gate. This was new territory for the team as a whole and whilst I kept my thoughts private, I did wonder if we really could replicate the sensitive blend of "assertive empathy" I had experienced previously in high performing collections centres.
What I did experience over the first few months of that campaign challenged a lot of my preconceptions. The South African agents took to collections like a duck takes to water, they were able to identify and empathise with customers who were reaching out to be helped with their financial situation but were also quick to spot the customers who were simply trying to avoid paying for the service they had consumed.
Performance was outstanding and within a few short months we had eclipsed the results of the client's onshore centre and inevitably began to grow. It was a double whammy for our client as not only where they enjoying an offshore cost that was halving their cost of collections, their bad debt charge and write off liability was dropping quicker than ever before, it was costs down, margins up.
The other key performance indicator that was moving in the right direction was customer experience measured by Net Promoter Score (NPS). From the customer comments, It was clear there was a sentiment of feeling genuinely helped by the company and that they felt the person they spoke to understood and empathised with their situation.
Over the next few years, we went on to build several successful collections campaigns and whilst everyone had its inevitable challenges and learning curves, the outcome was broadly the same, South Africa was outperforming the client's other centres on collections. We were so confident in our ability to outperform in South Africa, I would offer prospective clients a "Pepsi Challenge" where I would offer to go head-to-head with the client’s collections centres to prove we could do better at a lower cost.
I’ve spent a lot of time since reflecting on why UK collections work just works so well in South Africa.
When you look at the demographics of the country it soon becomes surprisingly obvious. Many young South Africans working in the contact centre space support families, most often their elders, there is an incredibly strong culture of family in South Africa and it can often be the younger generations who are the primary breadwinners. This means that young South Africans have financial responsibilities much earlier in life than the UK, and to a large degree, India. They are adept at budgeting, and are used to there being more month than there is pay-check. Stretching and pooling available resources to make sure just enough really is enough is part of life much earlier here.
And it is this early education of financial resilience, budgeting and managing of the pay-check much earlier in life that translates so well in a collections environment. The empathy is genuine, and the sympathy is real but there is no skirting around the subject, services must be paid for and “As your collections adviser today, we are going to find a solution on how we get you out of debt, keep you out of debt and still pay for the services you need from us, don't worry, we'll make a plan that works, together."
You can't train that kind of experience and skill, and I know this because I've tried!
Whilst I’ve been part of great collections centres in other countries, I simply haven't been able to replicate the same balance of rapport building with solution delivery that can be achieved in South Africa.
This natural ability to genuinely identify with the customer's situation and draw on real-life experience to find sustainable solutions to get customers out of debt is the "Secret Sauce" of outsourced collections in South Africa.
At BPM Advice we wouldn't hesitate for a second to recommend SA as a prime destination for UK outsourced collections work either as complimentary to your existing centres or as your centre of excellence for collections.
You do however need to match great agent capability with strong leadership and a culture well aligned to your own organisation when choosing an outsource partner, and that's where BPM Advice can really maximise your return on investment.
If you're reviewing your debt book and bad debt charge provision and wondering whether it's time to action or maybe do something different, I strongly recommend talking to us about the viability of South Africa as part of your solution.