Credit and Collections Issues for Bill-Me Offers (2,137 words)
Says Harpham, "If the in-house letters are very soft, it affects the impact of collection letters as well."
How many billing notices are necessary is usually a matter of arithmetic. Most marketers use up to five or six, then pass big balances to a collection agency and write off small ones. In general, when to give up collecting a debt depends on the balance of the order, but the key is to track response and calculate return on investment for each mailing, just as you do for acquisition mailings. However, billing series generally succumb to the law of diminishing returns: Each mailing receives lower response than the previous one.
"The response curve should be exponential [approaching a limit of zero]," says Harpham. "You should always have responses come at lower rates each time, but you should never have a drop-off of more than 25 percent. If you do, something's wrong. It might be the creative or the product or the way it was fulfilled."
Even when you've optimized your lists, offer, billing and collection cycle, you'll end up writing off some debts. Not every debt is collectible, and even good prospects go bad now and then.