Credit Management: tailor-made or one-size-fits-all?


Credit Management: Tailor-made or one-size-fits-all?

Winning customer’s hearts– that is becoming increasingly important in the current state of growing competition. A saturated market makes it tougher to stand out in regards to products, services or pricing, to name a few. Companies need to distinguish themselves in another way, that is, through the customer experience. A positive customer experience results in a loyal customer who returns and further recommends the business to others. In my last blog, I highlighted the need for credit managers to play a large part in this process. Furthermore, they will increasingly have to take the place of the relationship manager. In this blog, I continue this theme by showing how easy it is for an organisation to create a positive customer experience. Here is a tip for you: offer tailor-made.

Customer experience depends on the entire organisation

Shaun Smith, a guru of customer experience once said, “The experience you give your customers every day in every contact, direct or indirect, increases or reduces the value of your brand”. That means that every point of contact with a business can influence the customer’s experience – both positively and negatively. Sales and service departments have all the tools they need to attract and retain customers by surprising them in a positive way. Yet just one negative experience can destroy this positive emotion with one stroke. So it is time for organisations to realise that optimising the customer experience is a company-wide initiative. Furthermore, they have to acknowledge that each customer journey through the organisation calls for different communications.

Segmenting and charting risks

Of course, it is demanding to continuously adapt policy to the individual wishes of customers. It is, however, possible to study the paths customers take from the point that they place an order until payment. Specialised software can turn each path into a positive customer experience. For instance, in credit management, there are differet categories of customers; there are customers who always promptly pay their invoices, customers who mistakenly have misplaced the invoice in a pile of old letters or the customers who systematically pay late. All of these different customers demand ‘tailor-made’ communications – not ‘one-size-fits-all’.

Identify who the customer is, their needs and how they like to receive communications – electronically or by post. Once all the necessary information is clear, it is possible to filter and then allocate the filtered information to different segments. Then you can design automatic dunning processes and actions on the basis of this segmentation, the risks, and the amount owed. Communications to a customer who systematically pays late should, of course, be completely different from those sent to a customer who has missed paying the invoice once. By establishing these processes, the software can ensure that the right ‘tailor-made’ communication is sent to the right customer. Never forget that both customers want a positive experience –  and a one-size-fits-all solution is no help with this.

Improving working capital

Naturally, credit managers have other goals than ensuring a positive customer experience with automatic processes and communications. They need to keep days sales outstanding and write-offs as low as possible, with the aim of improving working capital. The software can offer possibilities for obtaining a completely-integrated picture of cash flow forecasts and outstanding debts. So a positive experience and the fastest possible payment of the invoice is not an either-or.

It does not matter whether it is a message from the sales or service department or from credit management: a positive experience is the responsibility of the entire business. By investing in the right software for departments such as credit management, they can pay attention to customers – or debtors – from the moment that they place an order and become part of the Order to Cash cycle. With the right software and tailor-made communications, I am convinced you can increase customer retention, reduce DSO and continue to offer customers an optimal service. Whether they are in arrears or want to buy a new product – make sure you offer tailor-made and not one-size-fits-all. This way your customers will definitely have a positive experience.

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