If you've worked in the debt collection industry for a while, then you know that revenue changes depending on the time of year. For example, during tax season, we typically see much higher revenue than we do during slower periods of the year.
With that in mind, we still sometimes see revenue dips that we don't expect. When your team has periods of low revenue, the best thing to do is conduct a root cause analysis.
A root cause analysis includes asking multiple questions to get to the “root” of a problem. This method is effective because often the root of the problem is much more complex than a surface-level explanation.
We can use an example of a recycling truck driver who missed part of his route. His boss receives angry calls from customers and has to do a root cause analysis to figure out why part of the route was missed. The boss will ask 5 questions to determine why the driver missed part of the route. See the table below to see how those questions could unfold based on the answers to each question:
Asking at least 5 questions will help you identify one or more root causes that may be affecting revenue. Make sure to continue investigating until you can no longer find possible root causes. Often, you’ll need to ask more than 5 questions to truly find the cause of a problem.
Let’s go over the exact way to do a root cause analysis to diagnose revenue issues.
1. Consider how your mood could be affecting the problem.
We all have bad days, and sometimes, we may catastrophize issues at work. If this happens to you, you’re definitely not alone. A key part of debt collection agency training is to recognizing when it’s happening to making sure you don’t perceive the problem as being bigger than it actually is.
If the data shows an issue that you feel is a reason for concern, and you don’t think the problem has been amplified by a bad day, move onto the next step. It’s time to start the root cause analysis!
2. Gather the necessary information and data.
To analyze a situation, you always need the data. Make sure you have reports for the current month and the surrounding months so you can compare them to this year's data as you ask your questions. Since a root cause analysis is fact-based, looking at the numbers will be key, so don’t skip this major step!
Once you have the appropriate data, it’s time to move onto the next step (which means it’s time to start asking questions!).
3. Find the perfect first question.
The first question is extremely important because it will be a catalyst to unlock the layers of the issue at hand. The good news is, you can typically ask a surface-level question to begin the analysis since your understanding is still at the surface of the issue.
Since we’re talking about a decrease in revenue, you may want to ask a question such as, “Have there been trends of revenue dips during this month in previous years?” or “Have we lost any clients over the past few months?”
Look at the data you collected in the last step to answer your first question. If you notice any trends, write them down. The goal of this step in debt collection agency training is to be able to answer the question so you can move onto the next one. So make sure you feel confident in your answer before asking your next question.
4. Ask follow-up questions until you find the root cause.
Once your first question is answered, you can move onto the next question. The way you determine the remaining questions is to find the most logical next question based on your answer to the previous question.
For example, if you ask, “Have there been trends of revenue dips during this month in previous years?” and you notice that for the past few years, revenue seems to decrease in August, you need to ask a question that will directly follow up with that answer. For instance, you could ask, “Have we lost any clients in August in previous years?” or “Have we ever been short-staffed in August in previous years?”
As you ask questions, you’ll get into more and more specific answers. Eventually, an answer will be so specific that you’ll finally see the cause of the issue.
This step may take a while. The good news is, debt collection agency training will show you that the results are worth the effort. You’ll be able to diagnose the revenue dip and start working toward solving the problem. Without a root cause analysis, you may jump to the wrong conclusion and misdiagnose the issue, which could cost time and money trying to solve a problem that doesn’t actually exist.
With all of that said…
Root cause analysis aside, don’t expect perfection from your team. It’s easy to be hard on yourself and your team when you have bad days, weeks, or months. That said, always remember that it’s about progress, not perfection. Just keep practicing, utilizing your debt collection agency training, solving problems, and being consistent. You will eventually see results. Even seeing small increases in revenue is better than seeing no increases at all.
By the way…
My online debt collection training program The Collection Advantage is a great solution to many issues that cause revenue dips. A few of those issues include…
Low morale
Communication issues with consumers
Lacking negotiation skills
Are any of these issues something you’d like to address at your agency? If so, book a call with me today, and we can talk about bringing my training to your collection floor.
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