Winning back the trust of vulnerable customers

Vanessa Clark describes the steps energy companies need to take to win back the trust of vulnerable customers who have run into financial difficulty, or are at risk of doing so.

The issue of fuel poverty is one that is never far from the headlines, but precious little is known about what these customers actually want from their energy providers. A recent study by Baringa Partners on vulnerable customers provides one of the first dedicated reports into those in need in the energy sector.

The findings were insightful and, at times, shocking, giving us a valuable understanding of vulnerable customers and what type of service they receive. The report covered a variety of issues, however three key findings emerged that should make everyone within the sector take note.

The first was the identification dilemma. The initial problem for energy providers is identifying their vulnerable customers in the first place. Our results show that one in three people in the UK would identify themselves as financially vulnerable and one in five customers do not have enough savings to cover an unexpected bill of £300. In the energy sector specifically, 35 per cent of financially vulnerable customers do not always have sufficient funds to cover their basic needs.

There is clearly a benefit in finding these customers and addressing their concerns. Our research shows that customers who have been identified will be more likely to feel they are being supported by their provider.

However, many customers also tell us they do not want to be proactively identified by their providers, perhaps because they feel uneasy about being contacted to discuss financially sensitive matters. The challenge for energy firms is to approach vulnerable customers in a subtle and discreet way, offering clear and straightforward solutions.

Once financially vulnerable customers have been identified, they need to be given the customer service support required. Our research shows that vulnerable customers especially hate automated menus and digital systems. They are looking for friendly and empathetic advice given by a human being. Solutions do not have to be complex; for example, half of financially vulnerable customers agree that a free customer service advice line would be a vital source of support when facing financial difficulties.

Our research shows that customers prefer to receive financial advice when they first start experiencing difficulties, and they’d rather hear it from their providers than debt agencies. However, they think energy companies can potentially play a role in putting customers in touch with third parties who are able to support them.

Another strong loyalty factor is the need to provide suitable and affordable products that meet the specific needs of vulnerable customers. A good example of this is prepayment meters. Although some customers feel it adds to their financial pressure, others say it helps them with their budgeting.

Nearly 20 per cent of prepayment customers who experience serious financial difficulty have self-disconnected for more than 24 hours in the past year. While the choice of meter will always lie with customers, providers need to improve their identification of vulnerable customers who use prepayment meters and create processes to offer emergency support for those who self-disconnect.

Price-matching guarantees are also an important way of building trust with customers. Only one in ten customers who considers themselves financially vulnerable believes they are given access to the best deals by their energy provider.

Nearly half of vulnerable customers rely on price comparison websites and consumer publications to determine the best tariffs, so a clear and comprehensive price match guarantee can send a clear signal to customers that they are getting the best possible tariff. This approach is preferable to using special tariffs for vulnerable customers, which are generally less trusted and competitive.

Our research has shone a spotlight on the sheer number of energy users who are facing uncertain financial situations. In a world where corporate social responsibility forms a key part of business strategy, firms need to make sure they focus on supporting their customers who are experiencing difficulties.

Vanessa Clark, director, Baringa Partners