The utility industry has faced consistent challenges with customer satisfaction, and is rated lower than the UK average for transparency, customer ethos and emotional connection1.
The pandemic means this sentiment is likely to get worse before it gets better…
The financial impact of the Covid-19 pandemic continues to take its toll on people’s physical, mental and financial health. Redundancies, business closures and reduced earnings have meant that nearly 51% of people have been forced into debt since March 2020, having to use credit cards, overdrafts or loans from friends and family just to stay afloat2. And the Citizen Advice Bureau reports that between 2.8 and 3 million have fallen behind their energy and water bills respectively.
Understandably, many people are worried about their ability to cope financially, and this has turned the spotlight onto the way that organisations are treating their customers – especially those who are vulnerable.
Organisations providing critical and essential services, including the utilities industry, have stepped up to support their customers, offering payment holidays and other mechanisms to ease the pressure. But this isn’t sustainable.
We commissioned Savanta, an independent market research company, to gain a deeper understanding of the issues facing people who currently have or expect to have unmanageable debt and how they want to be treated by their creditors during the collections process.
The results clearly demonstrate that – like others - the utilities industry needs to rethink their collections strategies to make the debt collection process fair and supportive. Those willing to do this will benefit from customers’ loyalty in the future.
Educate your debtors
58% of those currently facing unmanageable debt said that this was the first time that making repayments had been an issue for them and listed credit cards, bank loans and utility bills as the main sources of their debt. This means they are unfamiliar with the options available to them, so it’s essential contact centre staff take the time to explain the choices available and work through to ensure they choose a repayment plan that is affordable and realistic. Information should also be easily accessible through website and chat too.
Train your people to support vulnerable customers and identify distress
There’s no doubt that financial distress, heightened by Covid-19, is affecting people’s mental health. Older people, in particular, feel embarrassed about their debts and abandoned by the companies that they owe money to; they even feel scared to talk to them, which makes their financial situation even worse. This may be driven by the traditional perception that older people are living within their means and using credit reluctantly but many of our research participants – of all age groups – have admitted avoiding communication and waiting for the company to contact them first.
Engage early with customers
By extending the collections journey to include pre-emptive involvement and increasing end-to-end monitoring and automation, companies could engage with customers as soon as they’re deemed to be at risk of getting into debt, to discuss the best way to tackle the situation. There’s scope for companies to engage with customers more proactively, using data to understand them better and avoiding putting them into a ‘’one-size-fits-all’’ approach to collections.
Thames Water, for example, is looking at segmenting its customers better so that it can offer more help to those who are having problems paying their bill. There could even be possibilities of identifying debt patterns across energy, water and telecoms services.
Companies must accommodate customers’ needs in their collection process to take into account that flexibility and fairness are seen as the most important factors by those in debt3. For example, some of the heads of collections who we spoke to during the research said that the traditional fixed payment date, where customers pay their bill on the same day every month, is changing to accommodate those who have a flexible income. Could this approach be adopted by other companies to allow for the ever-changing nature of employment contracts? As well as making it easier for them to pay their bills on time, it could make customers feel that they’re being treated responsibly by a supplier that understands the nature of their employment situation. This applies to contacting customers too.
Businesses can’t assume that all customers want to be contacted in the same way during the collections process, as everyone’s circumstance is different. Despite admitting that they were ashamed to speak to creditors, 67% of our research participants said they preferred to talk to a customer service agent rather than self-serve on a website.
A blend of human and automated interactions can centre collections around empathy, proactivity and data analysis. By combining empathetic conversations, tailored support and data-driven outreach, companies can create a personalised collections journey that can help to identify at-risk moments, prevent debt, improve customer satisfaction and increase long-term loyalty and retention.
So, with these studies in mind, will the utilities sector work to rebuild customers’ trust and loyalty that can lead to sustained business success?
Put simply, the utilities industry must do more to help its vulnerable customers. People have high expectations that contact should be easy, compassionate and, above all, tailored to their situation. Many feel that they are treated like a number and not like a human being. So, companies must be flexible and fair when collecting debt and communicating with customers.
Crucially, treating customers fairly at a time when they are most in need can increase loyalty, which will help businesses to grow their revenue in the future.