How collecting niche types of debt will help your debt collection agency succeed
Welcome back to another episode of Debt Collection 101. Alex and Spencer give you valuable insight and tips for the types of debt to collect when starting a collection agency. Finding a niche debt will set you up for success in the collection industry. Certain types of debt may be too difficult to collect. When almost every debt collection agency is collecting the same types of debt, the competition becomes fierce and success could become difficult to obtain. Find a niche debt that works for you. Watch the full episode and get some great ideas on types of debt you could collect. A transcription of this video is also below.
Hey everybody, its Alex, and Spencer again with Arbeit U, Debt Collection 101. Welcome back or welcome for the first time.
Alright, so, what are we talking about this week? Our topic is Niche debt collection spaces. So the reason we wanted to talk about this was somebody came up to us a couple weeks ago, was talking about struggling, the agency struggling, you know what should they do, and this was one of the suggestions we had because we hear it a lot actually at a lot of the ACA events. So the goal is obviously, you want to find a niche collection market, right? When someone finds something to collect, everybody is collecting on, everybody thinks its great to collect on medical, credit card debts, everybody is doing that.
Yea so what is, when you think of a collection agency, and we feel like 90% of people when they go to start one or make one this is where they want to go, they are like I’m going to go and buy a credit card file or loans, auto loans and I’m going to start working that, right? And we go to these ACA conferences and the ones who like really make it, have a niche right? They only want the niche debt they are collecting. They even have it down to a balance, they know what balance they want, they know what kind of files they want, they know how their system works.
You want to get really good at one thing, right, you want to find that niche and it’s amazing how many different portfolios are out there so to speak, or what you can’t and can collect on. So first, before we go on to that, we want to say that it’s hard to succeed when everybody is doing credit card debt, everybody is doing student loans, everybody is doing this or that. Unless you are some huge agency that can compete, you need to have some sort of huge advantage to succeed and it’s really hard to do that, so we feel like it’s one of those things, so finding a niche debt to collect is the way to go. Find a space that no one is in basically and stick to it.
World of WarCraft and debt collection
Funny story, so we met someone at the North Carolina ACA event and I was told they collect on World of WarCraft gold farmer accounts. That’s a super niche market for the people who aren’t nerds. So in case you don’t know, World of WarCraft is a video game and in the game it has a currency and people buy this currency with real life money. They buy the currency with real money and we assume that they charge this back or something on their credit card because a lot of these are buying it from China, so they are probably charging it back. So they are collecting on these chargebacks or those accounts. So then whoever is looking to place that debt, there’s one person they can think of off the top of their head and the debt goes to that company who specializes in that World of WarCraft debt.
It’s actually intriguing because the World of Warcraft is how the partners of Arbeit met and ultimate how we all got together and formed the company everyone knows today. Also, we are big World of WarCraft fans. If you want to know more about how we started as a business, read our blog on”What Is It Like to Start a Company and Grow It?”
Other niche debt and how Arbeit became successful
Other types of unique debt to collect would be bail bonds, catering, restaurants, small local business as a whole and even casino checks are types of niche debt you could collect.
For those of you who don’t know, we obviously make a dialing software, but there are applications outside of collection agencies for that software. But we don’t sell it to them, we choose to focus just on collection agencies. We may be the only contact solution provider that only focuses on debt collection agencies. We believe this is part of the reason why we have been so successful because we know this space. Some of the people who founded our company; Alex, Alonzo owned a collection agency so were almost experts in that field to a certain extent. We use the term expert loosely, but we choose to stay within this field.
We feel like a key to success for any small business is to find your niche and stick with it. Get really good at that specific field. We believe a lot of debt collection agencies struggle because they take on too many types of debt or hard to collect a debt and struggle on the regulations. If you stick with your niche market, like a lot of the small business niche market, your more likely to get quality debt because these businesses aren’t using a collection agency.
Do you work at an agency that collects a niche debt? We would love to hear your thoughts. Leave a comment below. Thanks
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