In This Edition

• 🤝 Let’s Meet Marge

• 🤏 Embracing the Margins

• 📈The Power of Compounding

• 🧠 Marge’s Many Skills

• 🎓 Links for the Learners

• 💡Tip of the Week

• ⌛Recap From Last Week

• 🙌 Sharing is Caring

🤝 Let’s Meet Marge

I think our natural inclination is to look for grand solutions to our problems. (“If I could increase our average payment size by 25%, our recoveries would skyrocket!”) But silver bullet solutions aren’t always possible. And when they are, they often require significant time, resources and specialized solutions to implement. 

A better approach is to implement a series of small, strategic tweaks. These small changes, when applied consistently across all aspects of the recovery process, can compound to create impressive results. 

There is true power in consistently finding improvements in the margins. I want to help you embrace this power.

Because the term “marginal improvements” is boring enough to put an insomniac economist to sleep, let’s use something more memorable. From here on out, we’ll refer to “marginal improvements” not as a concept, but as a person.

Meet “Marge”, our new best friend. She’s dependable and consistent. And though we might not realize it in the moment, she’s about to become our greatest asset.

🤏 Embracing the Margins

In my last article, we discussed the funnel equation, and how it can be used to easily predict the impact that can be realized by improving processes. In case you missed it, let’s look at a basic recovery funnel - and funnel equation - here again for reference:

The relationship between our variables creates a compounding effect. Increasing any one of the metrics by a sizable amount does result in an increase in total recoveries. But the increase pales in comparison to what can be achieved by increasing each metric by just a little bit.

Let’s see this in action:

The top row represents a hypothetical baseline level of performance. Options 1-3 display what would happen if we increased performance in one metric at a time by a significant amount. Option 4 displays what would happen if we created marginal improvements in each metric. 

Look at the results in the Total Recoveries column. Option 4 drives the biggest increase in recoveries. And it’s not even particularly close. 

The best part about this? Creating improvement like this is so darn attainable. 

I can’t snap my fingers and improve our RPC Conversion Rate by 20%. But I can think of a ton of different ideas that could drive improvements on the margins. And I know that the marginal improvements will add up to make a bigger difference nine times out of ten.

📈The Power of Compounding

One of (maybe the only?) downsides to this approach is that it takes time to yield results. You likely won’t notice the impact from those tweaks on the margins right away. 

Your patience will be tested at some point. When it happens, remind yourself that you aren’t just creating marginal improvements. You’re creating marginal improvements that compound.

In typical Nate fashion, I want to break this down with an example.