It’s no secret that winter is a costly time of year for many. Shorter days mean our lights are on earlier, colder temperatures mean our heating is on longer and Christmas often requires some budgeting for.
But with the pandemic causing many to spend more time at home, a perfect storm is brewing for prepayment meter (PPM) customers and firms need to prepare.
For many, daily life is a financial balance and an unexpected expense such as replacing a child’s coat, or a delayed benefit payment can upset the balance which can take months to regain.
So, imagine having to self-isolate and being unable to work, needing to go out to work but being clinically vulnerable or having family childcare arrangements suddenly unavailable. It’s easy to see how many might find this winter overwhelming.
How are PPM customers feeling?
A recent report1 from OFGEM on experiences with energy during the pandemic makes for stark reading.
It found that 1 in 3 customers are worried a fall in income, perhaps due to self/household isolation, being furloughed, redundancy or being ineligible for support, will mean they don’t have enough money to top up their meter.
Further, 3 in 10 customers are worried they won’t be able to top up their meter because they can’t leave the home. With many unaware of or uncomfortable with alternatives to shop top ups, some must decide should they shield or venture out to top up to heat their homes.
Additionally, 27% of customers are also worried they might not be able to top up their meter because the shop is closed.
When worries become reality
During the pandemic, nearly 1 in 5 customers have used all their credit and couldn’t afford to top up their meters.
Some may borrow money from safe lenders such as trusted friends and family. However, others may turn to payday loans, gambling, pawnbrokers, or illegal lenders who target low-income families and later apply high interest rates making it almost impossible for the individual to pay off.
A third of customers have used their emergency credit, a debt which is paid off when the meter is next topped up or, by request, can be paid off a little at a time.
1 in 8 PPM customers have experienced a period of temporary disconnection during the pandemic. Many know it’s coming. They know that at some point that day the Wi-Fi, a lifeline for many, or heating will stop working.
The perfect storm
For many PPM customers, winter is a challenging time but add in the effects of the pandemic and it’s a bleak picture.
At this time of year, consciously or otherwise, customers deploy tactics to reduce their energy usage. They…
- spend more time in public places e.g. libraries and shopping centres
- take longer trips on public transport
- visit friends and relatives more often and for longer
As well as lowering their energy costs, these actions bring much needed social connections and a boost for their mental health.
But the restrictions in place to prevent the spread of Covid, means many of these options aren’t available or are recommended against especially for the elderly and clinically vulnerable. Instead, they’re at home more, consuming more energy and becoming more isolated.
The research shows the picture has worsened comparing May to October.
| May 2020 | Oct 2020 | |
| I’m worried about being able to afford to top up my PPM because of a fall in income. | 30% | 33% |
| I’m worried I might not be able to top up my meter because I can’t leave my home. | 26% | 30% |
| I’m worried I might not be able to top up my meter because the shop I use is closed. | 23% | 27% |
| I’ve used emergency credit. | 22% | 35% |
| I’ve run out of credit and temporarily disconnected. | 5% | 12% |
With 55% of customers saying they would try to reduce their energy usage when prioritising household costs, the often poor conditions of homes occupied by the financially vulnerable and Covid being a respiratory condition, the conditions are there for the perfect storm this winter.
Support awareness
Just 17%, a decline from 24% in May, of PPM customers are aware suppliers can provide support if they can’t top up their meters. Often, just knowing support is available is enough to alleviate worries and concerns and give some the breathing space to get their finances into better shape.
Telling customers about the support available doesn’t mean they will take it. But it could just be the mental boost they need to get through this winter.
A family friend, John, is in his 80s, has COPD and lives by himself.
John’s attempts to top up had failed and, despite being clinically vulnerable, over the following week he tried several other shops all of which failed.
He called his energy company but couldn’t navigate the options to get through. Concerned he’d be disconnected, he contacted me for support.
Moving forward
This is not a place to compete. Firms must collaborate to share learnings and proven practices to help customers and firms get through this winter.
This is not exclusive to energy though. Many of the safety nets, engagement methods and support offered by banks, communications companies and the third sector will work in other industries.
Once this pandemic is all over, organisations will be remembered for being unforgiveable or unforgettable. To make sure your organisation is unforgettable talk to and listen to your customers, understand and be ahead of their needs and be there when they need you.
Feelings drive emotions and emotions drive trust.
So, how are your customers feeling?