Debtor Psychology
“We All Benefit”
International Collections Conference in
Prague
June 2013
© European Credit Solutions 20...
Who are European Credit Solutions?
ECS brings together Executives with many years experience in the sector…
… and is at th...
3
4
“Everybody Does It” – Experience Engineering
Framing
68%
16%
0%
84%
5
“Sounds like a Winner” – Loss Aversion
Payment Plan 1: €100/month
Payment Plan 2: €100/month + End-of-year Bonus Payment (+€100)
Payment Plan 3: €200/month + End...
7
“Here, Have one of These…” – Incentives
Endowment Effect Feedback Effect
8
“You’re Just as Smart as You Think You are…” – Final thoughts
Others are
doing this
already…
You are doing
this already…...
9
Thank you.
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Dr. Peter R. Gillies: “We all benefit” – debtor psychology

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• “Everybody Does It” – Experience Engineering
• “Sounds like a Winner…” – Loss Aversion
• “A Recommendation, Please…” – Choice Architecture
• “Here, Have One of These…” – Incentives
• “You’re Just as Smart as You Think You are…” – Final Thoughts

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Dr. Peter R. Gillies: “We all benefit” – debtor psychology

  1. 1. Debtor Psychology “We All Benefit” International Collections Conference in Prague June 2013 © European Credit Solutions 2013
  2. 2. Who are European Credit Solutions? ECS brings together Executives with many years experience in the sector… … and is at the hub of a network of Associates David Hall (MD ECS, Commercial Director, Virgin Money) EVP and Managing Director (Europe) for Lindorff Group 2008- 2011. Responsible for building out Debt Purchase and Collections business in Continental Europe and the UK, including taking Lindorff Spain from launch in 2009 to market leader by 2011 and securing a number of transformational acquisitions and bank carve- outs. Previously 12 years’ experience in retail banking across Europe as an Executive with RBS. Tim Freeman (Senior Associate, CEO Sigma Group) 13 years industry experience with Olympia Capital, Aktiv Kapital and Lindorff Group. Previously 10 years’ experience in securitization and M&A related to residential mortgages with Baring Brothers and 5 years establishing GMAC Residential Funding’s residential mortgage businesses in the UK, The Netherlands, Germany and Spain. Now CEO of Sigma Group (a PE backed debt purchaser and servicer in the UK) Dr. Peter Gillies (Senior Associate, Owner GMD) A Change Management specialist with 20 years of international experience in a variety of industries. Previously responsible for building management teams and post-merger integrations in credit management in a variety of markets – including Spain, Germany, The Netherlands, Scandinavia and Latin America. Currently serving as Director Operations at Oxfam Netherlands
  3. 3. 3
  4. 4. 4 “Everybody Does It” – Experience Engineering Framing 68% 16% 0% 84%
  5. 5. 5 “Sounds like a Winner” – Loss Aversion
  6. 6. Payment Plan 1: €100/month Payment Plan 2: €100/month + End-of-year Bonus Payment (+€100) Payment Plan 3: €200/month + End-of-year Bonus Payment Payment Plan 4: €300/month Payment Plan 5: €300/month + End-of-year Bonus Payment Premium Payment: €500/month 6 “A Recommendation, Please…” – Choice Architecture Choice Overload: “Do you want bread with that?” “Sure.” (Thinking you will get a basket of sliced baguette) “Do you want it toasted?” “Um. No. No, thank you.” (Toasted?) “What kind of bread?” “What do you have?” (Now you’re in for it…) “We have rye, wheat, brown, 7-grain, white, Italian, and butter crusted.” 457 Payment Plan 1: €100/month Payment Plan 2: €100/month + End-of-year Bonus Payment Payment Plan 3: €200/month + End-of-year Bonus Payment (Recommended) Payment Plan 4: €300/month Payment Plan 5: €300/month + End-of-year Bonus Payment Premium Payment: €500/month
  7. 7. 7 “Here, Have one of These…” – Incentives Endowment Effect Feedback Effect
  8. 8. 8 “You’re Just as Smart as You Think You are…” – Final thoughts Others are doing this already… You are doing this already… Debtor Psychology offers the next level of sophistication Framing, Loss Aversion, Choice Architecture, and Incentives
  9. 9. 9 Thank you.

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