Talking to the SME bad debt specialists

Debt Guard is a recently-launched debt recovery system aimed at small and medium sized companies. Here, chief operating officer Mark Burgess discusses the company's plans moving forward, from customer acquisition to marketing.

What’s the concept of Debt Guard?

Within our company we have staff experienced in debt recovery, and we think the court process is the most cost-effective way to carry out debt recovery for businesses whatever their size. However, we also found there is little in the way of a service offering to the SME market for this type of product because most solicitor companies don’t target this market largely because they don’t have the capability to process it in a cost effective way.

SMEs tend to have a small number of debts, so from an acquisition point of view it’s expensive to go after the marketplace. When you win a customer they have many fewer debts than a larger customer would. We have found a way to deliver the service through an online approach, to many small customers rather than to a few big ones.

In terms of user experience, the customer completes a simple registration process, and once registered they put the debts on the system themselves. Once we’ve sent an automated letter to their clients we then email them to tell them what the next actions are and give them the choice if they want to consider court action as a next step. Mostly, of course, this is not necessary as the debtors will usually pay on the receipt of the first solicitor’s letter.  

How did you approach marketing?

We have two approaches. Our first is a direct customer method using the traditional methods of PPC and SEO. We are also doing some direct mail campaigns and we start next month doing some e-shot campaigns to over 200,000 potential clients. So that’s the direct to market route.

Our other route is to talk to partnerships that have SMEs as their customer base. We’ll be talking to those partners, presenting the product as a value-added offering they can sell on to their customer base and we also give those organisations the chance to earn some revenue from those people that ultimately sign up.

As time moves on, we expect that word of mouth will become a big feature of our acquisition as satisfied customers start to understand the solicitor route as a cost-effective way to collect debt so we already have planned a recommend-a-friend scheme. You get to a point where you don’t need to do as much direct marketing because word of mouth takes over, your customers tell their friends about it because it works.

What’s the long-term plan?

By the end of five years we want to be servicing somewhere around 20,000 clients. The short-term plan is to refine what we’ve set up. One of our key drivers at the moment is we’re talking to customers who have registered, we’re finding out what their experiences are, we’re developing the portal and making it easier to use, finding our feet in the marketplace and making sure we have the right customer offer.

What significant challenges have you encountered?

What we’re finding is we’ve got a lot of people who think the product is great, and the feedback we get is fantastic. But while people see it’s a value product, for the end user we need to hit them at the right time because they have to have a debt at that time for them to be motivated to register with us.

Once the small businesses understand what the service is and they use it, we know they will keep coming back. So for us it’s a big investment in upfront acquisition costs, because we that know once we’ve got a client we have a product they want to use.

Further reading on accounts

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Bad debt
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