The New Playbook to Beat Recession

We are in a recession. Textbooks might not define it that way yet, but we are nonetheless. Having weathered the last real consumer recession of 1990-1991, I know how this will play out. Delinquencies and charge offs will rise. Agencies will see placements spin up by as much as 30%. Liquidation will plummet by as much as the same.

All variable costs will go up, and agencies, debt buyers and creditors will look for ways to increase contacts to keep up with increased volume. However, since average payments per transaction will plummet, agencies need these contacts at the lowest possible cost.

The traditional approach was to buy a dialer, upgrade an existing dialer or add dialer licenses. Great solution…10 years ago.

Here’s the rub. Dialers are and have always been a binary purchase. You need to buy the dialer AND the telephony infrastructure (read: lines per agent) to make it hum. The best dialer in the world works only as well as the line capacity married to it.

Premise-based dialers are dead and dying not because of their technology, but because consumer behavior has changed and it simply takes more telephony infrastructure to maximize efficiency.

Ten years ago, a collector with two or three lines for outbound calling was as busy as he or she could be. Now, they need more horsepower to maintain right-party connects. Wait time is up. Moral is down. Today, to guarantee a premise-based dialer remains productive, you would have to buy 10 to 50 lines per agent. Who can afford that? Who wants to become a telephone company?

The future of contact management is virtual. Hosted systems add as many lines as necessary to ensure agents, your most expensive variable expense, are talking to RPCs at the highest rate possible without sacrificing quality. For virtual solutions to be the future, they must understand agent presence, which IVRs lacking an ACD fail to do.You need a product that knows agent status so RPCs aren’t left on hold and then hang up. The only sin as bad as underutilizing your collectors is losing precious RPCs.

During tough times, we reach for the playbook. The old playbook said to get a premise-based dialer. The new playbook demands a hosted solution that doesn’t tie up your cash during a time when cash might be tight. Premise dialers require big, up-front checks, while hosted solutions have basically no cost barriers to entry. For low volumes, hosted solutions charge in the range of $.05 per connected minute, ridiculously low.

Premise-based dialers are the tool we love to hate. We need them for contacts, but we hate them for their clunkiness, expense, tendency to break, and the need to repurchase every two or three years.

Add temporary, virtual capacity through hosted vendors that scale as you need them. Don’t write a big, up-front check for permanent solutions and technology that might not be relevant or needed six months or a year from now.

Hang on to your seats when we come out of this recession. Those high-FICO consumers in trouble now will start repaying their debts as soon as better times return. Tough and painful now, but good times ahead.


Chief Marketing Officer for LiveVox and chairman and founder of Fidelis Recovery Solutions, John McNamara is a 25-year industry veteran with experience in all phases of collection and recovery operations with intense focus on technology applications. John was previously COO for AMO, SVP of Operations for Nationwide Credit/ACB and VP of Operations for United Recovery Systems.