The full impact of the cost-of-living crisis is yet to be seen, but support and intervention should not wait until despair strikes. Anna Roughley of the LSB explains why it is vital that firms step in to support those who need it most.
I join a Teams call with my colleagues a few minutes late and they’re mid conversation; ‘I’ve caved and put the heating on. I know it’s May but I can see my breath, it’s ridiculous!’’ one of them says. ‘I’m not sure I dare put mine on – I’ve opted for a hot water bottle instead, saying that, it probably costs as much to boil a kettle these days!’ is the response.
Everywhere we go, people are talking about prices increasing – food, electricity, mortgage payments – the list is endless. Most of us probably breathed a sigh of relief when Covid faded from the news and we could put the peak of the crisis to the back of our minds; but there’s a new epidemic in town – the cost-of-living crisis, the effects of which are inching their way into our lives and bank balances. And it’s affecting everyone – not just those who were already in difficulty with their finances.
The pandemic hit us quick, creating panic and subsequent immediate action. The cost-of-living crisis, whilst universal, has more of a waterfall effect. A steady flow of customers, meandering through a typical month and then rather suddenly, falling into a plunge pool of escalating costs and debt. Financial services firms report that the full impact of the crisis is not yet being felt, and the anticipated number of affected customers is yet to materialise.
With connotations of stealth, deviance, and imperceptibility – the ‘Creep’ seems the most accurate term to describe this slow decline in financial sustainability that many of us are facing.
Don’t get me wrong, I don’t say this to scaremonger anyone, instead to emphasise what we probably all know deep down, that this is very real, very serious, and we need to be prepared for the impact it’s going to have on people who are currently treading water.
So much of this is out of our hands; Brexit, the pandemic, and the war on Ukraine; a combination of factors fuelling the crisis. But within what we can control, there are steps we can take to tackle the Creep head on to prevent increased harm to customers.
Start with what you may already have. For example, analyse data and insights available to you to help you identify customers that are at risk of falling into difficulty. This could include looking at past trends of those who have fallen into difficulty, whether that be spending habits, flags in conversations, or missed payments. One recent example we’ve heard through our work is customers moving savings into current accounts or receiving money from family and friends. Although not necessarily a sign of difficulty, combined with other factors, this could indicate a customer struggling. Firms could use this information to proactively engage with the customer so they can better understand their needs and talk about the support that is available to them. And when I say talk, I mean engage – whether this be via telephone, face to face or via a digital channel. Use the insights available to you to intervene early and prevent others from struggling.
Firms could also use tools that assess income, expenditure, and the impact of rising costs on individuals to proactively engage with customers with a view to preventing their situation from worsening.
When engaging with customers, frontline staff have the ability to spot the signs and intervene. But without relevant training on how to spot triggers and then offer support, opportunities will be missed. That’s why specific training on the crisis and how to have effective conversations is critical.
Due to the universal, yet unique way in which the cost-of-living crisis impacts people, many customers won’t have been in this situation before and may not know about the support that is available. Raising awareness before things go wrong can really help here. This could be as simple as making communications about the crisis and the support available more accessible on customer facing materials – your website, leaflets, and social media, for example.
Customers may also feel embarrassed about their situation and not want to disclose the challenges they are having or reach out for help themselves. Proactively engaging with customers in an empathetic way, creating a safe environment, empowers both front line staff and customers to find the right resolution, early.
What is important is that we don’t wait to feel the full impact of the crisis. We must act now. Put prevention at the top of the agenda to intervene earlier and stop the plunge pool from deepening.
We can’t stop the cost-of-living crisis, and we can’t prevent everyone from feeling the effects, but by making simple changes and using what we already have access to we can reduce the impact, ensure customers feel supported, and work together to keep the Creep at bay.