Utility Week

UTILITY Week 8th April 2016

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26 | 8TH - 14TH APRIL 2016 | UTILITY WEEK Customers Market view T he issue of fuel poverty is one that is never far from the headlines, but pre- cious little is known about what these customers actually want from their energy providers. A recent study by Baringa Part- ners 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 understand- ing 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 cus- tomers 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 identi- fied 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, offer- ing 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 cus- tomers agree that a free customer service advice line would be a vital source of sup- port when facing financial difficulties. Our research shows that customers pre- fer 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 com- panies 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 prepay- ment 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 custom- ers who experience serious financial diffi- culty have self-disconnected for more than 24 hours in the past year. While the choice of meter will always lie with customers, pro- viders need to improve their identification of vulnerable customers who use prepayment meters and create processes to offer emer- gency support for those who self-disconnect. Price-matching guarantees are also an important way of building trust with custom- ers. 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 guar- antee 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 fac- ing 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 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. NUMBER OF CHANGE OF SUPPLY EVENTS FUEL POVERTY IN ENGLAND, 2003-13 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 3.0 2.0 41.0 0.0 1,200 800 400 0 Number of MPAMs Number of household in fuel poverty (millions) Average fuel poverty gap in 2013 (£ million) May 12 Jan 13 Jan 14 Jan 15 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Energy UK Source: Decc Fuel poor households (millions) Aggregate fuel poverty gap, 2013 prices (£m)

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