Member Article

How to reach, engage and support vulnerable customers

A stark rise in the number of vulnerable customers has seen the Financial Conduct Authority (FCA) issue guidance for businesses to act fairly in support of audiences who need extra safeguarding. As the socio-political environment in which businesses operate continuously evolves, the definition of ‘vulnerable’ customers continues to adapt. A vulnerable customer is seen as someone who’s especially susceptible to harm due to their personal circumstances, age, disability, or risk of abuse or neglect. With the cost of living rising, the number of people falling into this category is increasing drastically.

**Financial vulnerability: a growing audience ** The term ‘vulnerability’ has become vastly nuanced in recent years. Post pandemic, and in the midst of a cost of living crisis, a high percentage of the population is experiencing even higher levels of vulnerability than ever before, with 13% of UK households now living in fuel poverty. Their change in circumstances is blurring the lines of longstanding demographic segments that have previously enabled businesses to understand their audiences.

Given this growing nuance – and growing demographic – all businesses must now consider that the majority of their customers may be struggling, and may have changing needs, even if they don’t tell you. Vulnerability is not something audiences outwardly project, especially as many forms of vulnerability are invisible or entwined with other vulnerabilities, be they financial, medical or age-related.

But this is no excuse for businesses to turn a blind eye. Businesses have a responsibility to understand (not assume) the true needs of their vulnerable audiences, and to use this insight to design appropriate products and solutions to better serve their customers. This, in turn, helps growing numbers of vulnerable customers through the difficult times we now face. With this in mind, how can businesses both reach and support vulnerable audiences in ways that are helpful and productive for all involved?

The first priority: understanding reality

Low financial resilience is a key driver of vulnerability. In May 2022, the FCA reported 12.9 million UK adults as lacking in financial resilience on account of low or erratic wages, little to no savings, or high debt – an increase on the reported 10.7 million in February 2020 that has served to drive the overall proportion of UK adults with characteristics of ‘vulnerability’ up from 24 to 25 million. Of this number, 7.8 million (15%) said they are heavily burdened by their domestic bills and credit commitments.

A further survey conducted between February and June 2022 found that one in four UK adults are in financial difficulty, or would quickly find themselves facing difficulties if exposed to financial shock. Of those surveyed, 4.2 million reported having missed bill or loan payments at least three times in the sixth months prior to the survey. One report revealed just over a quarter of UK adults (27%) to be struggling with regular payments, while 26% say they’ve experienced heightened mental distress as a result of being chased for missed payments. Further to this, research undertaken by the vulnerability registration service tells us a third of UK adults who were already vulnerable are less likely to make financial decisions due to worsening mental health

What’s more, these results don’t differ much by region, with only marginally higher proportions reportedly worse off in the North East and North West compared to the South East and South West. When layered with 2021 census data for England and Wales that shows a 2.2% increase in those aged over 65 plus a 6% increase in household deprivation.

What does this mean for businesses?

Vulnerability is a more pressing issue than ever before, which means the needs of your audiences are far more complex than they’ve ever been. Some firms have no choice, and some sectors face greater consequences than others, but all businesses should be making a conscious decision to act fairly in support of their vulnerable audiences. The risk of not doing so? Putting the clear moral obligation to one side, it’s reputational damage, neglected opportunities for growth, and weaker strategies.

A shared responsibility

The impact of the cost of living crisis leaves all businesses with a responsibility to better serve their increasingly vulnerable customers. The government has intervened with a range of solutions. Starting October 2022, the Energy Bills Support Scheme saw consumers receiving £400 of financial support over the course of six months, with the most vulnerable households receiving £1,200 to support the cost of living. Given that the cost of living continues to rise, its impact is being felt across all sectors and areas of life. So how can businesses reach, engage and support the vulnerable?

The 3 P’s of vulnerability

There are many benefits to proactively identifying and supporting vulnerable customers. Tailoring business services and communications to account for the growing intersection of vulnerabilities across the UK not only counters the isolation that many face, it can also improve customer satisfaction, loyalty and retention.

Pro-activity

Disengagement is a common symptom of vulnerability. Struggling customers are much less likely to reach out, which means businesses need to reach out first – more than that, they need to use their customer data to help them reach out in the right way. Reviewing communications around missed payments and defaults, for example, is an opportunity to reduce potential intimidation and increase support. What’s more, having the right level of understanding, gleaned from data analysis, can help navigate challenging conversations with greater sensitivity and the right language.

Data can also inform a multi-channel approach that enables you to reach the vulnerable in ways that feel less challenging. We know that 75% of people with mental health problems have difficulty with at least one form of communication, for example, and often it’s the telephone. Adopting what we call an ‘outreach’ approach, using partners to help you identify vulnerable audiences, gives you a better chance of making contact with those who might otherwise slip through the net. Once you’ve made contact, however, it’s essential that your customer-facing teams are trained well.

People

Frontline staff and customer service teams are a source of insight, so businesses would do well to give serious thought to populating their teams with the right people to connect with vulnerable customers. Training in vulnerability awareness can also provide customer facing teams with an understanding of ‘a day in the life’ of a vulnerable customer. This can inform awareness, empathy and the skills to handle difficult conversations.

Where training meets its limitations, it’s a good idea to implement a triage system that gives frontline teams immediate access to specialist assistance when needed. It’s possible to build a community network with carer and counselling services, debt agencies and mental health charities in support of both your people and your customers, as it enables teams to direct those in need of extra support. What’s more, if you’re transparent about the constraints of what you can offer, this could strengthen waning customer trust.

Partnership

If you don’t have the necessary expertise in house, partner with organisations that do. The companies that succeed in reaching and engaging vulnerable customers do so in partnership with advising agencies and organisations. While charities can support your vulnerability awareness training and debt agencies can offer advice, there are other partnerships worth exploring that can help deliver holistic solutions. Consulting partners can help businesses reach vulnerable audiences in meaningful and constructive ways. The right partners can work with you to translate this insight into imaginative strategies.

The strategic advantage of data analytics

Given the continuous evolution we’ve seen in the past three years alone, and given that these changes have not been sector-specific, it’s a safe bet to assume that the customer landscape will look completely different in another three years or less. Future proofing your business therefore comes with continuous evolution in response to customer data.

Using sophisticated models, you can maximise the benefits of your customer data, and navigate the many nuances and intersections of vulnerability where data doesn’t yet exist.

The power of communication cannot be overstated as it ensures that all customers remain engaged, fully informed and also feel able to reach out in their time of need. What’s more, while communication is often conducted on an opt-in basis, businesses don’t need to rely on this since internal data can be used to shape a vulnerability strategy.

Conclusion

Reaching and engaging vulnerable audiences requires a level of sensitivity, knowledge and expertise to get it right, which is why we recommend following the REACH framework.

Respondent: Let customers be the expert on their own lives. They have unique insight into the challenges they face, so give them choice and control when it comes to the way they receive and respond to communications.

Empathy: Identifying and reaching vulnerable audiences demands a deep level of empathy. Integrating counselling techniques into research strategies and tactics creates a safe environment for the most vulnerable to communicate.

Accept: Let customers tell their own story in their own way while you employ deep listening and non-judgement. People can struggle to talk about the challenges they face, so give them time and space to speak without pressure or expectation.

Community: Take in the whole picture of someone’s life. Those who are vulnerable may be surrounded by a wider network of family, friends and carers who can provide further insight. Conduct interviews aimed at triangulation to get the full story.

Help: Make it easy for people to communicate with you by tailoring conversations to accommodate individual needs. Use a multi-channel approach to achieve sensitivity and transparency when recruiting people.

It has never been more important to care for the vulnerable. We all have a societal moral obligation, and businesses play a leading role in this. Morals aside, it will help to eliminate risk of reputational damage, missed growth opportunities and weakening strategies. The only way to do this effectively and authentically is to be driven by your customer needs, and this starts with in-depth understanding of your customers. All businesses face the same decision: lead the way, or be left behind.

Written by: Ceira Rutledge and Prina Rupareli, Partners, Yonder Consulting

This was posted in Bdaily's Members' News section by Yonder .