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Your consumer scoring tells you more than you might think. In fact, this tax season it can create a significant difference in the outcome of your letter campaigns.

As your agency begins to formulate a budget for lettering, consider not only how many letters that budget represents, but to which accounts those letters will be sent. By using your consumer scoring model to segment inventory into a range of higher- to lower-value accounts, you can target campaigns more appropriately and ultimately recover more.

Higher-value accounts are typically described by larger balances attached to consumers with a better propensity to pay. Most agencies quickly devote more resources to these higher-value accounts, going after a quick cash pickup that looks great in the short term, but ultimately recovers less than the maximum. That’s because higher-value accounts are more likely to pay in full – Meaning a settlement letter will yield less than what would have been recovered otherwise should the consumer have been reached by phone or other means. Likewise, lower-value accounts make for poor letter campaigns, since consumers attached to them are more often unemployed and/or less likely to pay. The middle 50% of your scoring index usually makes for the best results.

So how do you go about identifying which accounts get letters? Start by reviewing these three factors:

  1. Consumer score range
    Start by segmenting your inventory and examining the range of scores available to you – Many models score an account on a range of 0-999. Divide that range into 10 buckets, and focus on the center.

  2. Balances represented by range
    Look at how many dollars are owed in each of your range’s segments, and what the resulting payments have been. Assess the value each of these buckets provides, considering both balance and history. Compare and contrast each segment appropriately.

  3. Dollars collected by range
    Calculate each bucket’s liquidation rate by comparing total dollars owed to total dollars collected. The balance expected from each might change depending on the model you employ, so be sure to consider those mechanics beforehand.

Remember, the data packaged with your score of choice is almost certainly based off of listings. So evaluate each segment of your score range according to your last listings, and ask yourself what those balances are worth to you.

As you work through these steps, you are more than likely to find moderate scores often correlate with working people who have received a forgotten bill. So even though their propensity to pay or balance might be lower, they often respond more favorably to settlement than a payment-in-full request – Netting higher recoveries for your operation. Your strategy should be to focus the number of letters you have to spend on that account inventory, before considering the remainder for alternative dialing campaigns by agent or IVR.

As tax season rolls in, you might find it’s an easier means of collecting than the traditional top-down approach. What possibilities would that open for your operation?


Disclaimer: Ontario Systems is a technology company and provides this blog article solely for general informational and marketing purposes. You should not rely on the content of this material for any other purpose or as specific guidance for your company. Ontario Systems’ advice, services, tools and products described herein do not guarantee compliance with any law or industry standard. You are ultimately responsible for your own company’s actions and compliance efforts. Because everyone’s situation is different, you must consult your own attorneys, accountants, and/or other advisors to obtain specific advice on your company’s compliance, legal, tax, regulatory and/or other business needs. Despite Ontario Systems’ efforts to provide current and up-to-date information, you need to recognize that the information contained herein may become outdated quickly and may contain errors and/or other inaccuracies. 

© 2017 Ontario Systems, LLC. All rights reserved. Information contained in this document is subject to change. Reproduction of this publication is not permitted without the express permission of Ontario Systems, LLC.


About the Author

In his role as Lead Business Consultant, Terry Glidden is responsible for providing inventory analysis and operations recommendations for Ontario Systems’ clents. He has 12 years of experience with Ontario Systems, focused on business development and operations management. Terry also successfully operated a small agency focusing primarily on medical collections.

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