Industry research suggests many utilities are on the brink of broadening their payment options in a bid to improve customer satisfaction and stem bad debt. Vincent Belloc, vice President & managing director at PayPal UK, offers insights.
In an industry that’s constantly under the customer satisfaction spotlight, shouldn’t utilities businesses be poised to make the most of payment opportunities that can lead to better customer experiences?
The good news is – they are.
Recent research with a panel of senior professionals in the energy and water sectors, conducted by Utility Week in association with PayPal, reveals that many utilities are on the brink of significant payment-related changes. These improvements promise to deliver slicker service experiences, create confidence around the accuracy of bills and remove friction from the payments process so that it’s not a focal point for dissatisfaction or the exacerbation of bad debt.
Utility Week’s survey asked research participants to rate their existing digital service offerings and share insights into plans to improve them. Alongside payments-specific questions, we looked at digital service priorities, challenges, and comparisons with other sectors.
Payments changes are close at hand
We’ll be publishing a detailed report on the answers we received later this autumn. But as a flavour of what’s to come, we can reveal that around two-thirds of those we questioned have imminent or near-term plans to diversify their payment options. A key aim is to improve customer satisfaction and give customer more control over when and how they want to settle their bills – especially among an incoming generation of consumers. These plans are also seen as key to improving financial resilience.
In our view another benefit of imminent changes to payment options will be a reduction in customer churn. By offering better, personalised self-service and payment experiences, utilities can build the vital elements of loyalty and retention, while starting to cut down the marketing and operational costs of maintaining a strong consumer base.
Through the adoption of a wider range of newly available payment technologies, our panel told us they hope to deliver far more scope for tailored payment arrangements which suit the personal circumstances of their customers. This was especially important to representatives from the energy industry, where mounting bad debt as a result of the cost of living crisis – combined with growing regulatory and social expectations that companies should provide leniency and support to struggling customers – is a prominent concern.
In this context, adopting tools which make it easier for customers to make flexible payments, on-the-go and when they have the funds available, makes good sense. In fact, our research showed that supporting better on-the-go account management was the highest rated outcome of investments in digital service for our group of leaders.
Technology advances and global trends
On a related note, it’s fair to say that the world of digital payment options has expanded exponentially in recent years. And our group of senior customer service, billing and collections leaders told us they are exploring the value of a wealth of new payment technologies, from open banking solutions to digital wallet options and more.
This follows a global trend in payments diversification and a gradual reduction in dependency on more traditional payment methods. According to global, cross-sector research by business intelligence platform Statista,
Payments flexibility is also being advanced by growth in Buy Now Pay Later (BNPL) options, which allow consumers to split a purchase or bill into multiple instalments to be settled over time. It is estimated the BNPL lending market grew 2400% between 2019 and 2022.
And mobile payment technologies are advancing quickly too. The use of encrypted QR codes, which can connect payment technology systems and support remote contactless payment, has had a big role to play here. QR codes are now a ubiquitous feature in consumer life and are generally well-trusted as a means of supporting secure transactions, notably by younger generations, according to insights from Statista.
The full, forthcoming Utility Week report will outline the plans of utilities service leaders to advance their digital service offerings. We’ll dive into detail on the experiences of selected industry leaders, and examine what factors are influencing the way they select and trial certain payment options for the UK market.
Watch this space for more insight into the future of payments in the utilities sector and how a shake-up in payment options can help address key challenges around customer satisfaction, brand reputation, cash flow and more.