First published on Utility Week on the 2nd November 2018
Dealing with vulnerable customers appropriately and sensitively has become an area of increasing regulatory focus. The energy sector has been proactively focused on improving support, but with the winter months of peak energy use looming, it has become more important than ever that providers get their approach right.
Regulators are pushing to ensure that companies address vulnerability as a core consideration and now discuss the approaches taken as part of their normal supervisory activity.
Indeed, vulnerable customers are a priority for Ofgem. Recently it outlined its plans for a price cap to give eleven million customers a fairer deal. The regulator has also said the retail market “is not working for consumers who remain on their supplier’s default deal… we are particularly concerned with the impact this has on vulnerable consumers”.
In its State of the Energy Market report for 2018, Ofgem identified six million electricity customers on the Priority Services Register for people in need, a 36 per cent increase from the previous year. Meanwhile, government figures released this summer showed there are more than 2.5 million households in fuel poverty (as of 2016), representing over 11 per cent of total households.
But customer vulnerability is a complex area and is about much more than customers on low incomes or those who are financially challenged. There are many reasons that customers may be deemed vulnerable – advanced age, physical or mental health, disability, life events such as divorce, redundancy or bereavement – and all can be severely affected by changes or interruptions to their energy service.
It’s also likely that the number of vulnerable customers will increase as the proportion of elderly citizens rises. Also, as the issue of vulnerability is more widely understood, the identification of contributing factors will rise, pushing up the number of customers deemed vulnerable.
It is vital to identify, recognise and manage the right approach to vulnerability, and this includes training and guidance to ensure front line staff have the skills they need to deal confidently with cases in a consistent and fair way. Proactive communications may also be needed – actively contacting customers in the event of suspected financial difficulties or personal challenges to avoid escalation down the line.
Ten measurable outcomes
Our research at Huntswood identified ten measurable outcomes that firms can track to ensure they are achieving this. These range from making products clear and easy to understand and that customers have a choice of ways to communicate with the business, to ensuring staff have the authority they need to offer flexible solutions where appropriate.
It is also important to take account of the fact that vulnerable customers will often have someone else acting for them – a carer or someone with the power of attorney. They must be treated with respect and consideration while maintaining data security.
Assessing practices against the ten vulnerability outcomes means the current picture can be analysed against what is needed to deal with vulnerable customers appropriately, while also identifying areas for improvement.
It is important to note that the emphasis here is on outcomes – not just processes. Testing a process often fails to test the fairness of customer outcomes, which is what fundamentally matters to a customer in the long run and is an issue of increasing focus for regulators. Equally, if firms are to truly place customers at the heart of their business, real-life outcomes should be far more important than process, satisfaction scores, and meeting other internal reporting criteria.
For example, a customer might be satisfied when they buy a new product or move to a new tariff. But what is more important is that the move meets their needs over the long term and is suited to their circumstances. If a firm only measures customer satisfaction just after the point of sale, the results are likely to be positive. But measuring satisfaction further down the line might reveal a very different story.
Benefits across the business
Getting the approach to dealing with vulnerable customers right is about far more than regulatory compliance or a box-ticking exercise. It is about customer-centricity, which should be at the heart of any firm in the first place. It builds customer advocacy, benefitting the organisation’s brand and reputation. By reducing the number of complaints, it drives up operational efficiency. Investing the time and resources to get it right also builds staff engagement, because they feel empowered to make a real difference to the customer in their dealings with them.
The staff dimension is critically important. They are at the front line of engaging with customers, so it is essential to give them the support and training they need. This must go far beyond general customer service training. Firms should consider putting in place specific and bespoke training around vulnerability, which encompasses definitions and types of vulnerability, ways to identify it through various triggers, when and how to escalate issues, and dealing with the difficult emotions that can arise in both the customer and the customer agent. Implementing a dedicated vulnerable champion, someone who is a specialist in considering the specific needs of the customer, can help guide and train others.
Also, a clear vulnerable customer policy should be developed and published, with an owner at a senior level. This policy should be disseminated and discussed across multiple areas of the business – from customer service teams to collections, complaints and other customer facing areas.
Everyone depends on energy to power their homes and keep them warm. It is an emotive issue. The way in which an energy firm supports, protects and helps those in vulnerable situations has become one of the key litmus tests for any energy firm. As such, vulnerability will likely continue to remain high on the industry’s agenda.