Helping Customers Prevent Missed Utility Payments Through Times Of Crisis
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- Apr 2, 2020 4:07 pm GMTApr 2, 2020 1:16 pm GMT
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With the Covid-19 pandemic growing around the globe, businesses everywhere are bracing for harsh economic shifts. One might think of utilities, along with Zoom and Netflix, as the kinds of companies that might survive this uncertain environment. People are “social distancing” in their homes during the day to slow the spread of the virus--they need to keep the heat on wherever it’s cold, cook meals, entertain themselves and stay connected with friends and family in order to thrive.
But utility companies have deep concerns over the fate of their customers, both health and safety-wise, as well as having worries over their own financial solvency. Utilities are seeing big drops in energy consumption. And, around the world, part-time, contract, and service-related employees are missing out on work hours that would normally keep them afloat. More than 3 million Americans have applied for unemployment in recent weeks, and millions more are inquiring as to whether they can or ought to.
The restaurant, hospitality and entertainment sectors are getting especially hard-hit during this crisis. These businesses are typically staffed by younger, hourly workers who will struggle to keep up with bills after having their shifts slashed or losing their jobs altogether. Our research shows these may be the very same people who are already at risk of missing their utility payments.
Furthermore, 3 in 10 adults in the United States have no emergency savings, according to Bankrate.com, leaving them with few resources when paychecks dry up. And 69 percent of Americans have less than $1,000 in savings, say financial experts at GOBankingRates.com. This is hardly the sort of rainy day fund people will need to weather the coming economic storm.
A Billpay Squeeze is Looming on the Horizon
Through our work with energy providers across North America, we see that the majority of residential households pay at least one bill late over the course of a year. We expect that number to greatly increase over the coming months. It’s likely that customers who’ve never missed a payment before--those who are unable to work right now--will start to fall behind on their bills. As a result, significant financial strain may begin to plague the energy industry. And ordinary citizens, already struggling, will become even more vulnerable.
We know that this crisis will end eventually, but unpaid bills will still loom large for people even after they emerge from work disruption. And we know that utilities are wondering:
How can they keep these financially-at-risk customers engaged in order to avoid having to send them to shut-off or collections?
How can they maintain the trust of the community and the regulatory framework they are obligated to while managing to stay solvent?
What we see are utilities beginning to answer those questions proactively. Every single one of our utility customers has delayed shutting off service. Many are waiving new late payment fees. Each is working with customers to keep them engaged throughout this tumultuous time.
Through our work with utilities for several years on proactively addressing late payments proves that when you know as much as possible about who is struggling among your customers, you are better equipped to help them. Of course, details vary from area to area, utility to utility, and customer to customer, but our system has revealed important details that energy providers can use to help those most at-risk of financial setbacks.
Generally, what we are learning is that the people who will be at highest risk of falling behind on their energy bills, as the expected coronavirus-related financial downturn unfolds, are going to be young, typically Millennials and some Gen Xers, who live in homes where they are the sole breadwinner. These are customers who have lower incomes but are not always the poorest of the poor.
We saw frequent late balances among these persona types prior to the coronavirus crisis, but they might not be behind at this very moment. Some of these people live in dwellings that might see a new family every year, but quite a few have lived in the same place for multiple years, and many of these customers own their own homes.
Thankfully, warmer weather is coming, so keeping the heat turned on won’t seem as crucial for them through the Spring and Summer. But with the coming change of seasons, severe storms and extreme high temperatures are sure to follow. Being able to keep the power turned on could be potentially life-saving for them.
Meeting People Where They Are
What can utilities do to keep customers like these afloat in the coming months, before they fall deeply behind?
Engage them. Our work shows that utility customers engage and disengage in cycles. Negative touchpoints, such as missed payment reminders and accrued late fees can cascade to customers not picking up the phone. They can end with shutoffs or collections, leaving customers with a lingering taste of bitterness for their utility company.
Likewise, one positive touchpoint leads to another, leads to another, and so on. A helpful customer service rep, for example, solving an account inquiry, or a well-timed notification about a planned service outage can leave a customer feeling delighted about their utility provider.
In a time of crisis such as this, messaging that is more likely to resonate could include information about billing assistance programs, ways to prevent heat from escaping despite poor insulation, or how to keep homes cool without air conditioning.
Reach at-risk customers via mobile. These younger households that we know to be at risk of late payments live on their phones. We see them highly index for every mobile program our customers offer. Reaching them via text or app is a great way to keep them talking to you, especially when they need help.
Customers facing economic hardship may respond more positively when given the ability and platform to ask for help, especially via text notifications or mobile apps. Text-message-friendly, bite-sized information on how to enroll in budget billing or average monthly payment programs, for example, can yield higher enrollment. Engaging in this way is better (for both customers and for utilities) than allowing late bills to mount up with no intervention at all.
Keep an eye on households who have fallen off of assistance programs. Dive into your utility’s data to look for any household that has cycled out of an assistance program. Typically, our research shows, families leave these programs due to cumbersome paperwork; not because their financial circumstances have improved.
Our work reveals that families who leave these programs end up, oftentimes, worse off than when they started. That means these households are key candidates for having their power shut off. But if they can get re-enrolled in energy assistance programs, they will reap positive benefits, like stability and security, above and beyond just the assistance payments themselves.
We recognize these recommendations don’t take into account how the downturn will affect the commercial or industrial sectors, as workplaces go dark to keep people at home. We expect to see deeper concerns as overnight accommodations, universities and fitness centers use less water and electricity.
As new information unfolds, we will be certain to share what we learn. But we offer these insights today in support of our friends in the utility industry, who are bracing for the impact that this global pandemic will have on their residential customers, and in the hopes of serving our communities’ most vulnerable.