Dec 2020 | Articles |

It does not need repeating that 2020 has been an incredibly challenging year, with many people and businesses feeling undue financial pressures. In particular, businesses that provide services which are paid for in instalments, or on a subscription basis, will undoubtedly have encountered customers struggling to make ends meet as non-payment or part-payment can be an obvious sign of hardship.


Many customers may hold a feeling of anxiety and discomfort towards admitting they are facing financial hardship. Businesses, therefore, should take a proactive and customer-centric approach in order to identify and support those in real need of their assistance.


Spotting those in need


Experian works extensively with Local Government and through this work we have seen that many of those at risk of financial hardship can often be the last to ask for help. Due to either embarrassment, adopting a wait and see approach or even a lack of understanding that help is available, this vulnerable group can represent a large contingent of an organisation’s customer base.


The ability for an organisation to pre-emptively reach out and offer assistance through discounts, delayed payment options or downgraded services can make all the difference to securing a long-term customer and ensuring cash flows remain predictable and constant.


Audience profiling for financial hardship in action


Experian has partnered with one of the largest utilities providers in Australia to help them understand the financial health of their customers. The project, which involved detailed audience profiling and data enrichment, would provide the organisation with the key indicators needed to better assess which clients needed their support most.


During the profiling exercise a customer was identified due to the irregularities in their water usage versus previous months, where it had increased dramatically. The utilities provider contacted the customer to enquire about their water usage and the health of their finances.


During the conversation it became very apparent the customer had made no major changes to their water usage and was nervous about the impending bill. The utilities provider was able to suggest a free pipe inspection during the call as any leak would explain the sharp increase in usage.


The inspection took place and a leak was found. It was repaired, and the customer was afforded significant bill relief due to the leak driving up the perceived usage. Truly a fantastic client outcome all round.


Support clients, protect revenues


It typically costs five times more to acquire a customer than to retain an existing one. Losing a customer now because they were not shown support during this time of uncertainty can likely mean they will just not return. Therefore, the incentive for businesses to help their customers is not just humanitarian but financial.


Another issue is the possibility of customers ‘masquerading’. This is where, typically more savvy customers, will attempt to take advantage of goodwill and hardship support mechanisms to benefit themselves. By not separating those who are in actual need versus those who would like to take advantage of a generous concession, a company can quickly find themselves in a difficult and unprofitable situation.


Using key indicators of financial hardship


A number of indicators are often needed to determine financial hardship. The difficulty from the perspective of an organisation can be trying to acquire these indicators from their customers. It can often be deemed invasive, and the activity holds the potential to do more harm than good. For example, asking your customers about their employment status can be an extremely sensitive conversation and one that could have a severe impact on your reputation if not handled with care.


Utilising third-party data, such as that provided by Experian, and a varied range of indicators help in correctly identifying those who are in most need of assistance. From here customers can be prioritised and supported in a way that is both beneficial to the customer and to the business.


It’s safe to say that customers will remember an organisation that supported them through the more challenging times.


For more information on identifying financial hardship in your customer base please complete your details below.