How To Build A Strong Incentive Plan For Collectors

If you own a debt collection agency, one tool you must DEFINITELY have in your arsenal is incentives. It’s what successful businesses use to keep their workforce fired-up and committed. So, if you come across any collection agency where the phones are buzzing, the energy is electric, and collectors are closing deals left and right, a strong incentive plan is most likely the secret sauce!

Collectors face a lot of challenges in this cutthroat industry. They also have to put up with different kinds of personalities on a daily basis. In short, debt recovery can be very frustrating. As such, the right incentives can mean the difference between scraping by and smashing targets. Before you know it, collectors are making every call count and consistently hitting milestones.

But, like that popular saying, “Whatever’s worth doing at all is worth doing well.” Setting up incentive compensation plans for your workers will boost productivity. So, how about you do it right? Putting together a half-baked incentive scheme and calling it a day is a recipe for disappointment and disengagement.

That’s why today I’ll be showing you exactly how to create a strong incentive plan for your collectors. Let’s do this!

How To Build A Strong Incentive Plan For Collectors

The last thing you want is to create an incentive plan that will later blow up in your face. I’ve seen agencies implement plans that turned out to be downright counterproductive. It left their collectors feeling more frustrated than motivated, and their bottom lines were worse off than before. It’s like trying to use a hammer to fix a leaky faucet wrong tool, disastrous results.

The harsh truth is that creating an effective incentive plan goes beyond just throwing money at your collectors and hoping for the best. To get it right, you need a balance of key elements like psychology, strategy, and good old-fashioned number crunching. Get it right, and you’ll have a team of supercharged collectors ready to move mountains. Get it wrong, and you might as well be flushing your budget down the toilet.

What is an Incentive Plan?

An incentive plan is like a map that outlines the benefits of achieving specific goals. It’s meant to reward employees whenever they reach a milestone. Basically, it’s like you telling your workforce, “Hey, if you achieve X, you’ll get Y.” Simple, right?

An effectively designed incentive program is one of the most potent levers an organization can employ to drive progress. By creating a strong plan, you can transform your collection floor from one full of time-passing employees into a forceful army of achievers.

Now, you might be thinking, “Isn’t incentive just a fancy way of saying ‘bonus’?” Not quite, my friend. You see, bonuses are a one-time congratulatory pat on the back. Meanwhile, incentive plans are more of a continuous journey with a corresponding reward-based system attached to it. They provide strategic goals for your collectors to go all out day-in, day-out.

Here is the best part: When your collectors’ personal goals align with those of your agency, you are essentially killing two birds with one stone (though I’ve never actually seen anyone do that). This prompts your employees to double their legal or non legal debt collection efforts. That’s  because they know they’ll be getting something in return too. This improved employee performance will, in turn, lead to higher collection ratios for your agency. Everyone wins!

Do Incentive Plans Work?

When done right, not only do they work, they work wonders. Research has it that strong employee incentive programs can boost productivity by a whopping 25–44%. That’s not just a little bump we’re talking about potentially doubling your collection rates here!

But it is not just about the figures (although to be frank, those figures are pretty sweet). Incentive plans make a lot of sense because they leverage a key aspect of human nature.

Incentives stimulate those specific sections of the brain that respond to competition, desire for a reward, and passion to succeed. When you set up an efficient incentive plan, you are, in a way, setting the stage for your workers to be their best selves.

Now, here’s the real clincher: incentive plans don’t just help boost your collections; they reinvent your organizational culture. Now, you have collectors who are fully invested in taking the company to the next level. They’re ready to work and always look forward to going to work every morning. It’s not just a nine-to-five job for these employees; it is more like a call to duty. And let me tell you, nothing in this world can stop a team that’s on a mission.

Another important factor to note is the high rate of staff turnover in this industry. A well-formulated incentive plan is a sure way to retain top employees. Your star collectors are less likely to run to another company when they are already being celebrated and compensated for their efforts.

What Are Characteristics Of The Best Incentive Compensation Plans?

Below are the must-have features of top-tier incentive compensation plans:

• Ideally, the best plans set targets that are challenging but not impossible.
• Great plans use metrics that are easy to understand and track so your collectors know exactly where they stand.
• They provide equal opportunities for all collectors, irrespective of their working experience or previous success rates.
• They align with the company’s goals.
• The targets are reviewed on a regular basis and adjusted as needed.
• The best plans provide a balance between rewarding individual performance and reinforcing teamwork.
• Also, the best plans provide non-monetary incentives like recognition, career advancement, and personal growth opportunities.
• The best plans encourage ethical behaviors; ensuring your agency’s reputation stays squeaky clean.

How To Create An Effective Incentive Plan For Collectors

Developing an efficient plan is not as difficult as it’s often made out to be. However, it does require some careful thoughts and planning. Below are easy steps for expertly creating a solid incentive plan in no time! 

Step 1: Define Your Objectives

Before you start your planning, you must have a goal in mind. Are you looking to boost overall collection rates? Improve customer satisfaction scores? Or perhaps, shorten the days needed to balance credits? You need to define your objectives very well because they will be your guiding light when crafting the plan.

You can’t just pull objectives out of thin air. Instead, immerse yourself in your agency’s data, analyze where the agency can improve, and create SMART (specific, measurable, achievable, relevant, and time-bound) goals. And one box you must always tick is ensuring these goals align with your agency’s broader objectives.

 Step 2: Choose Your Metrics

Having identified the destination, it’s now the opportune moment to determine how you will track the level of success. This is crucial, folks. Choose the wrong indicators, and you could be rewarding the wrong actions as well.

So, target metrics that are as close as possible to your objectives and within your collectors’ control. The most effective negotiation strategies, total dollars collected, number of accounts resolved, or average call handling time could all be contenders. Just make sure they’re easy to track and understand. Also, ensure your collectors can readily access these metrics and track their progress.

Step 3: Design Your Reward Structure

Financial incentives like pay rise and gift cards for top performers are great, but don’t restrict yourself to just that. Instead, leverage other forms of motivation like extra off days, public recognition, or a shot at a promotion. 

Build a reward system that matches the degree of achievement. For instance, you could set a basic amount for hitting the minimum target, with additional rewards if it is surpassed. Oh, and don’t forget about team incentives – a little competition can do wonders for team morale.

Step 4: Communicate and Educate

You have your shiny new incentive plan all lined up and set to roll. Now is the time to sell it to your team. Don’t just send out a memo and call it a day. Call for a team meeting, create FAQ documents, and be ready to answer lots of questions.

Ensure that every collector is familiar with the plan. Show them how to track their progress and what they need to do to enjoy these incentives. The more your workforce understands and buys into the plan, the better the outcome will be. 

Step 5: Implement and Monitor

This is where you blow the whistle (figuratively) to kickstart your incentive plan implementation. Thereafter, it’s important you monitor what effects this tool may or may not be having in the workplace.

Are collectors responding positively? Are you seeing the improvements you hoped for? If yes, you are on the right track. But if otherwise, you may need to revisit the plan to make tweaks and adjustments as needed. 

Effective incentive plans are never set in stone; they’re constantly being adapted to your agency’s and collectors’ needs. That aside, set up regular check-ins with your team to gather feedback and take notes of where to make improvements.

Step 6: Review and Refine

Finally, the incentive plan should be reviewed periodically. At least once a year, take a step back and look at the big picture. Is the plan still aligned with your agency’s goals? Are there new challenges or opportunities you need to account for? Having periodic updates makes the plan more relevant, interesting, and attractive.

Create incentive plans that don’t just motivate employees for a day or a week, but keep them consistently performing at their peak.

Incentives are that subtle-but-powerful tool you can use to win over your workforce and ignite in them the zeal to be productive. Follow the steps discussed above, plan it right, and watch as positivity envelopes your work environment.

However, excelling in the debt collection industry doesn’t begin or end with the use of incentives alone. There are other  things to do, steps to take, and skills to acquire if you want to dine with the upper echelons in this industry. And that is where Connections2Collections comes in. 

This isn’t your run-of-the-mill job board. It’s a thriving community of debt-collection professionals who are all about helping each other climb that career ladder.

Joining the Connections2Collections family, either as an individual or company, is quick and easy. Who knows? Your next big opportunity or your next star employee could be just a profile away!