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Ask Gini: Marketing vs. Risk

Dear Gini,

Correct me if I am wrong, but it seems like the Marketing department has taken over the Risk Group! Any objections I have regarding taking on too much risk and trying to highlight that our growing bad debt problem can be traced to liberal acceptance strategies, is met with stony silence. How can I break through the barrier and get my voice heard?

Unhappy

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Dear Unhappy,

Wow, this is like a blast from the past!

Historically there was often friction between the risk managers charged with keeping delinquencies and losses low, and the marketing staff that wanted to grow the business through increased new account bookings and the anticipated revenue they would bring. Over time with the acceptance of basic risk vs. reward concepts and more sophisticated marketing strategies, the two groups started to get along better. This improved further when both departments were placed under a single management team charged with managing the whole business with a sharp focus on the bottom line.

That does not mean that there isn’t still an element of healthy competition between them! They are, however, still judged on different metrics and how they estimate the impact of a given promotion may not always be the same.

More recently, there has been a shift back toward professional marketing teams taking greater control of the process. This is due partly because of the nature of the beast; credit products are seen more and more as just a “product” to be sold, like soap or cereal. The branding of product features is key and a lot of mass marketing is implemented, “selling” lower interest rates, or points, or cash returns, or whatever product feature is in vogue. The credit risk staff is charged with making sure the intake pipes don’t get clogged and the filters are working hard to screen out the riskiest customers.  Much new business is the same customers moving back and forth between companies offering virtually the same product.

So how can you get your voice heard? In my opinion, our focus should be on better services and retaining customers, so they are not lured away by the vague promise of something better. It has been proven that customers will not move their business for a small advantage if they are happy with what they have.

Before you switch to the customer service department, remember you are a professional and your unique skills are needed to insure the operation runs smoothly. Only you can evaluate time on books performance trends, strategy performance reports, and make the required changes to acceptance and account management strategies.

Make a stand; the results will support your position!

 


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