Building on our Financial Vulnerability campaign, we have heard from industry leaders across energy, water, customer focused charities and providers, that together represent 80% of UK Households’ utilities providers.
In this article, we share an overview of the perceived challenges, solutions and key success factors highlighted by our clients and industry partners around the topic of financial vulnerability. Quotes taken from the round table discussion are not attributed to any specific individual or organisation, as agreed by participants.
Our hope is that themes shared here influence the ongoing conversation on this pressing topic throughout 2022 and beyond.
A rapidly deteriorating economic situation that is already impacting customers
The UK is facing the worst economic situation in our lifetimes. The average family faces at least a £2000 hike in annual bills, with Baringa analysis suggesting a 1.75% interest rate increase could reduce disposable incomes by 8% for the poorest in society. We discussed that financial vulnerability is now a very real feature of customer’s lives; borrowings are “jumping back up”, indicating that the COVID-19 savings piggy bank is emptying, and the number of pay day loans being taken to cover energy bills is increasing. Businesses must be aware of the risks:
- Self-rationing: Customers may be self-rationing as a function of distress, not energy efficiency.
- Emotional Distress: As economic pressures add to the toll on customers, increasing numbers of people are referencing suicide and violence to both organisations and charities (Christians Against Poverty have seen a marked increase in clients reporting suicidal thoughts).
Our round table was focused on the theme of how businesses can be part of the solution to financial vulnerability, exploring the challenges, solutions, and wider factors that will enable success.
PART ONE: Proactive identification of customers in, or at risk of, financial vulnerability
It’s important to start using the tools that are available, speech analytics; service by design, tools that enable organisations to identify vulnerability.
Helen Lord, CEO, Vulnerability Registration Service
PART TWO: A customer-led ethos to develop propositions and support mechanisms
- Empathy gap: “We don’t always have access to customer information and/or lived experiences”, and the spectrum of financially vulnerable situations is very broad when designing customer led change. This makes life challenging for agents who are under increasing pressure to show empathy.
- Process & tools: Existing debt systems and processes are often “too slow and too rigid”, and there are limited “forums and feedback channels to learn from customers before they get into difficulty”.
- Loyalty perceptions: Customers are confused whether to be loyal to, or switch, organisations to secure the best value deal. We need to “address fairness through loyalty”.
- Close the empathy gap: Recognise that “no two people are in the same situation or life experience”; services need to be tailored to the individual, introducing new language that “reduces focus on terms like debt and vulnerability”, and train agents to “detect the more subtle triggers in conversations”.
- Empower the front line: “Understand agents are human too, offer time and support to recover for colleagues after difficult calls”, encourage testing & learning solutions, and provide tools for teams to offer their customers (e.g. debt management tools, assistance funds).
- Educate customers: Utility bills “aren’t always interesting to customers”, so we need to get creative and innovative in finding ways to get their attention (e.g. “linking financial help to reduced consumption and education on net zero”) and solve upstream problems, not just immediate needs.
- Leaders leading: Senior leadership being visible, active, and credible “trickles down through the organisation”, showing it is a top business priority, and enabling organisational change.
- Accelerate net zero: Accelerating the shift to net zero “will benefit all in the long-term”, reducing dependence on gas, improving energy efficiency, and reducing bills.
- Government support: “Can utilities solve this crisis without further government intervention?”. The industry needs to be realistic on what it can do by itself, and unified in lobbying for change where it needs support.
We are now seeing a greater polarisation between those of us that can afford to actually pay for better levels of service and those that cannot.
PART THREE: Agile and flexible response to rapidly changing circumstances
We see people that will struggle for the first time; we are looking at affordability options for them such as payment breaks, data sharing with customers on payment credits and flexible payment plans.
The financial vulnerability round table demonstrated a level of cross-company and cross-sector collaboration that will be one of the key ingredients to success as we look ahead to a challenging 2022:
- No one wins where debt is concerned: it is bad for society and bad for business.
- “Considerate Companies” that take a customer-centric approach will emerge as winners in race for customer loyalty.
- There is no “silver-bullet” solution to the challenges we face, there are many small, incremental improvements to be made
How are you supporting your customers through the cost-of-living crisis? Contact one of our experts to join the ongoing cross-sector discussion and work together to be part of the solution.