As credit professionals we are always on the lookout for ideas that will improve our credit goals. Surprisingly, those ideas may come from unlikely places.
It’s not very often that we think of the intersection between marketing and credit. In fact, we usually see the marketing department supporting sales and advertising. But one idea that credit can take away from marketing is the gathering, compiling, and analyzing of data on potential and current customers.
One of the tools that many marketing departments use in their quest to understand their present and future customers is to send out e-campaigns with information of value. These e-campaigns can run the gamut from newsletters to advertorials to polls to straight promotions, all in an effort to understand the interest level of the recipients.
In almost all e-campaigns, there are two types of very useful data that can be obtained via the campaign software:
- The open rate – which tells you who is opening up the e-campaign and on what date (and even at what time)
- The click rate – which tells you who is clicking on the specific hyperlinks within the body of the content
Why is this data important? It’s because when we know who is consistently opening up the e-campaigns and clicking on the specific links over a period of time, we can begin to form an idea of the recipient’s interests and needs.
So now you’re asking yourself, what has this got to do with the credit department and its credit goals. Let me offer a couple of ways why this is useful in supporting the goal of expanding sales safely, as well as using this tool to refine your collection activities.
1) Potential customer readership data can be augmented by credit information – If for example a recipient of several marketing e-campaigns has open and click rates of 90%, at first glance this would seem to be a very attractive prospect for sales to pursue.
However, if it turns out that after spending a lot of time and effort to pursue a given company it has a poor credit rating, all that time will have been wasted. In other words, if those priority recipients with very high open and click rates were credit rated prior to being pursued, the sales department could spend their time on those leads that from the get go are only creditworthy. This kind of proactive function would clearly support the credit goal of expanding sales safely.
2) Using e-campaigns to facilitate better billing procedures and support collection efforts – Just like the marketing department is using e-campaigns to obtain interest level data on their prospects, the credit department could use the same kind of e-campaign platform to measure and forecast certain payment activity and data.
For example, many companies send out invoices by email as a PDF attachment. In doing so, whether that invoice arrives to the recipient or not is always a question. And even if it arrives, a customer who is having some financial difficulties could always claim, “I never received it.” However, rather than sending the invoice as part of an email, by sending it through an e-campaign platform, as an e-invoice, you would be able to measure which customers are:
(1) Opening the e-invoice on a particular date and time
(2) Clicking on any embedded hyperlinks, especially those that link to online payment portals
Let’s say that out of 500 customers who are billed at the beginning of the month, 450 customers (90%) have opened the e-invoice within one day, and of those recipients, 270 customers (60%) have clicked on an embedded payment date confirmation link. Just with this data alone, you would know very quickly how much is going to be paid by what date, which is a tremendous boost to forecasting your cash flow.
Conversely, by understanding those customers that have not opened up the e-invoice, you could either resend it and/or call before you send it to give a heads up that the e-invoice will be forthcoming shortly. This is another wonderful way to keep close tabs on the arrival and processing of your invoices.
But it doesn’t have to stop at the above. When payments are not forthcoming, measuring the open and click rates resulting from e-statements and e-collection correspondence may be a determining factor as to which customers need to be placed with third party collection support.
As many e-campaign platforms have ways to segment data, you could always include polls or notifications with e-invoices to segments of your customer base that might address discounts, invoice timing, communication procedures, and any other issues that would help you to improve your billing and collection cycles. Seeing the click rates on the hyperlinks to these issues would help you to gauge their interest. Even if the customer doesn’t respond to you directly, there’s no reason why you can’t reach out to them regarding their interest, understanding in advance what hyperlinks have been clicked.
With the above in mind, I hope that you can see that every piece of data we can receive and analyze from customers, potential and current, through tools that might already be in use at your company, is how we credit professionals can continue to refine the credit operation and maximize our credit goals.
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This article has been edited by Steven Gan.