The Real Reason Virtual Negotiation Works
Live Negotiations Aren't Comfortable
If you’ve ever purchased a vehicle from a used car dealership before, chances are you remember the salesperson. You may also remember a point in the sales experience where the excitement of shopping had ended, and the discomfort of negotiating a deal started. That discomfort comes when you feel like you’re losing control of the situation. You are an expert on finding what you like, but the salesperson is the expert on the price. And he or she is a professional negotiator. Most of us are wired to avoid confrontation and situations where we don’t feel in control. We also don’t enjoy someone else telling us how much we can or can’t afford.
Not surprisingly, many consumers today are picking dealerships that offer no-haggle “online” pricing or let search engines find the lowest prices for them. Essentially, consumers want to feel in control—something they don’t feel when dealing with a person who negotiates for a living.
In much the same way, the process of negotiating a debt settlement carries a lot of the same emotional baggage. If consumer perception towards used car salesman has led to the creation of an entirely new self-help marketplace, why wouldn’t those same behavioral instincts apply to debt settlement? In fact, a good case could be made that consumers would prefer to speak to a collections agent even less than a slick car salesperson.
“I don’t think there’s any doubt,” says Jeff Mains, CEO of Intelligent Contacts. “When it comes to negotiating a debt, people would much rather handle it without having to deal with an actual person.”
The Science Supporting Consumers Moving Toward Virtual Negotiation
So why is that? The reason might be due to something called the Barrier Effect. “The barrier perspective has been influential in part because negotiations are often thought to be competitive interactions, such that what one party gains, the other party by definition must lose.” (Bazerman & Neale, 1992; Pruitt & Carnevale, 1993).
Another interesting difference between live and virtual negotiation involves human emotion. Consumers and agents are more likely to escalate conversations over the phone due to something called Social Presence Theory. This theory states that in face-to-face meetings we see others as social beings with personalities and feelings, however, over the phone, we treat others more like objects which “can be ignored, insulted, or exploited.” (Short, Williams, & Christie, 1976, p. 972)
The Creation of Intelligent Negotiator
Based upon the consumer trends towards self-help and the ARM industry’s need for a workable solution, Intelligent Contacts began developing its virtual negotiating platform several years ago. Today, Intelligent Negotiator outperforms its client’s best collection agents.
“Intelligent Negotiator provides every possible payment outcome based upon our client’s collection parameters,” adds Mains. “It doesn’t sleep, it never calls in sick, and it never has a bad day. It just collects 24/7.”
Virtual Negotiation Doesn’t Replace Live Agents, It Just Makes Them More Productive
In addition to being a preferred method of interaction, virtual negotiation saves a lot of time. Since the majority of debt accounts are relatively small, time spent negotiating a settlement, determining terms and methods of payment, are better handled programmatically. This allows agents to focus on larger, more complicated accounts. The result is higher collection ratios.
The statistics clearly back this up:
- 56% of Negotiator logins result in a payment
- Negotiator collects on average 13% more balance owed than live agents
The Compliance Impact of Virtual Negotiation Solutions
Another major advantage of virtual negotiation technology involves the issue of compliance. The Consumer Financial Protection Bureau (CFPB) is a major concern to the ARM industry. The CFPB keeps an ever-watchful eye out for deceptive or unfair practices under guidelines outlined in UDAAPs—Unfair, Deceptive, or Abusive Acts and Practices.
Since Intelligent Negotiator is software, it can strictly follow the language, steps, procedures, and proper responses lined out by the CFPB. In fact, the software is designed to provide said documentation to the debtors. This makes any audit from CFPB easily defended and quickly resolved.
Will virtual negotiation soon completely replace the live collections agent? Probably not. Will it outperform live agents on a per transaction basis? It already is.
Want More Articles Like This?
Get regular industry insights and updates sent straight to your inbox!
Who are millennials and why should you care about their consumer preferences?
A single generation is revolutionizing sales. Social media, telvision, mobile devices, and the internet mean they enter the marketplace fully aware that everything and everyone around them is out to sell them something. And they're eager to buy.
Millennials are the single largest consumer segment in the market today, holding both massive buying power and unprecedented influence. According to a recent Nielson report, they spend $65 billion a year and influence over $1 trillion in total consumer spending.
Is your business prepared to capitalize on their enormous spend? Discover five business "must haves" to engaging the growing millennial mindset in this free resource guide.