For millions of people across the UK, personal finances have been hit hard by the pandemic. For many, the detrimental financial impact was immediate when the country went into a prolonged national lockdown in March. Unfortunately, the crisis resulted in a strong correlation between the likelihood of someone being furloughed or losing their job, and them having previously been on a low-income. According to this joint Waterwise and NEA report the weighted average median pay in the five hardest-hit sectors is around £10.60 an hour, but it’s nearly 40% higher for the five sectors that have been least affected by Covid-19.

At the time that the report was published in November 2020, over 3.2 million claims for Universal Credit has been made; over 9.8 million people had been furloughed as part of the Government’s Coronavirus Job Retention Scheme; over 1.9 million requests had been made for mortgage payment holidays; and a further 1.7 million requests for payment breaks on credit cards and loans had been made.

Water consumption increase

To compound people’s financial woes, the pandemic caused a significant rise in water consumption in homes across the country. Increased time at home during lockdown and associated behavior changes, such as frequent and longer handwashing, and increased showering and washing of clothes, especially where key workers were concerned, resulted in a 15-20% increase in water consumption, with some areas seeing peak demand of up to 40% above normal consumption volumes. This represents a UK-wide increase of more than 2.2 billion litres of water per day being used1.

By early August 2020 over 70,000 payment breaks had been granted by the 17 water companies in England and Wales2. But whilst payment holidays have helped customers to manage temporary change in their financial circumstances, they are not the best support option for a longer-term financial shock. For customers experiencing financial detriment, missed payments and accrued accumulation of debt, is likely to lead to increased payments in the future. The possibility of increased bills may well coincide with the end of Government financial support and increased unemployment.

Energy consumption increase

Despite a 15-20% reduction in total electricity demand as many economic sectors were halted during lockdown, domestic energy consumption increased. Households where people stay at home are estimated to pay up to £16 extra per month on energy3. According to the UK Energy Research Center these figures are likely to be higher for people who live in properties with lower levels of energy efficiency, as it is calculated to be £2,000 more expensive per year to heat a home with an Energy Performance Certificate (EPC) that’s ‘G’ rated, compared to a home with an EPC rated ‘C’ or above.

According to the latest figures that are available (2018 data), fuel poverty already affects 2.4 million households in England4. Coupled with the negative impact COVID-19 has had on people’s finances, the pandemic is likely to increase fuel poverty figures further.

Indeed Ofgem research demonstrates that consumers have serious worries about their energy bills. According to their research, in May, nearly half of 16-24 year-olds surveyed (48%) were worried about falling behind on energy bills due to reduced income. Moreover, 16-34 year old Prepayment Meter (PPM) users were more worried they might not be able to top up because their income has been reduced (47% vs 30%)5.

According to the same Ofgem research conducted in May, three in ten (30%) PPM customers were worried they might not be able to top-up because of a fall in income; just over one in five (22%) drew on emergency credit; a further 6% asked their supplier for more credit; and one in twenty (5%) ran out of credit and were temporarily disconnected.

Low awareness of support

Water and energy companies were quick to respond to the financial impacts of the crisis. Water companies announced a range of support measures to be offered to anyone struggling to pay their bills – including payment holidays, flexible payment plans, the expansion of existing social tariffs and the suspension of debt collection activities and enforcement visits.

The Government also took quick action – working with energy suppliers to introduce additional support methods for consumers having difficulty paying their bills. However, although these measures were introduced in March, by May only 40% of customers surveyed by Ofgem were aware of at least one of the types of support available to them and only 24% of people with PPMs were aware that suppliers could help provide alternative top-up methods or emergency credit if householders couldn’t leave their home5.

Conversely a much greater number (65%) of consumers with payment issues said they had contacted someone for information or advice on how to manage their energy payments. According to Ofgem the most common contact points were: – Their energy supplier (27%) – Citizens Advice (18%) – Comparison websites (17%) – Friends and family (13%) – Local authority (10%) – Ofgem (7%) – Debt advice charities (6%).

It’s time to take a more proactive approach to help vulnerable customers

Relying on customers to voluntarily put themselves on the Priority Services Register is not enough. It has been a year like no other in modern history and it’s time for water and energy suppliers to take a proactive approach to identify and support their increasing numbers of vulnerable customers. And that’s where Advizzo, specialists in behavioral science based customer engagement programs for utilities and water companies, can help.

We can help you identify your vulnerable customers

We will take your customer data, combine it with open data and using data science, we will profile your customers to help identify those that might fall into a vulnerable category – whether that’s because they are of pensionable age, disabled or chronically sick, have a long-term medical condition, a hearing or visual impairment, a child under the age of five, mental health issues etc. We can then segment customers according to the category they fall into.

We can help them to reduce their consumption

The type of support that a ‘vulnerable’ customer requires will very much depend on their individual circumstances. Having profiled and segmented your potentially vulnerable customers, our customer engagement platform enables us to target individuals with personalized and appropriate suggestions designed to help them reduce their consumption and their bills, as well as advice on appropriate support measures that are available to them.

We can improve engagement

Our customer facing software uses behavioral science to understand and trigger customer engagement. With behavioral science techniques and personalized communications across multiple channels including web, email and mail, our solutions are proven to increase customer engagement with suppliers. With two-way engagement we can also increase our knowledge and data relating to individuals and households, to further enhance our insights and fine tune our communications and support.

The biggest challenge by suppliers today is to manage cash flow and also limit the increase in overall debt. Our platform can provide tailored insight and messages to prompt customers to act when needed to limit the inevitable increase in customer debt. Through a clear strategy Advizzo can help bridge the gap between customer and supplier and ultimately manage customer expectations better.

Throughout the pandemic energy suppliers and water companies have worked tirelessly to fulfill customer expectations. Electricity, gas and water have continued to flow, but with reduced staff and remote working, it’s been a challenge to address the increased numbers of calls relating to bill payment concerns and requests for assistance. The long-term economic impact of the pandemic is still unknown, but one thing’s for sure, the implications suggest there will be more customers than ever before requiring support. Let us help you identify and communicate with customers that may require additional assistance and proactively provide them with personalized support and reassurance.

Visit our page for more information on customer engagement solutions for utilities.