A message from BlastPoint CEO and Co-Founder, Alison Alvarez
With the Covid-19 pandemic growing across the globe and in North America, the world is bracing for some major economic shifts. One might think of utility companies, along with Zoom and Netflix, as businesses that can survive this harsh, new environment. People are “social distancing” in their homes during the day to slow the spread of the virus. They will 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, health and safety-wise, as well as having concerns over their own financial solvency. Utilities are seeing massive 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. 3.3 million Americans have applied for unemployment in recent weeks, according to the latest figures reported by The Philadelphia Inquirer, and millions more are inquiring as to whether they can or ought to.
The restaurant, hospitality and entertainment sectors are getting especially hard-hit. 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.
3 in 10 adults in the United States have no emergency savings, according to Bankrate’s Financial Security Index, leaving them with few resources when paychecks dry up. 69 percent of Americans have less than $1,000 in savings, says Cameron Huddleston of GOBankingRates.
This is hardly the sort of rainy day fund people will need to weather the coming economic storm.
The Billpay Squeeze 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, putting significant financial strain on the energy industry and making ordinary citizens, already struggling, even more vulnerable.
We know that this crisis will end eventually, but unpaid bills will still be waiting there for people as they emerge from work disruption. How can utilities keep them engaged without sending them to shut-off or collections? How can utilities do that while maintaining the trust of the community and the regulatory framework they are obligated to?
Thankfully, 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.
At BlastPoint, we have been working with utilities for several years to proactively address late payments. As a company, we believe that when you know as much as possible about who is struggling the most, you are better equipped to help them. Our system has identified specific personas that indicate who, among utility customers, is struggling to make consistent bill payments. Time and again, our system shows that these are the people who don’t have savings to help them cope with a disruption in paid hours.
Of course, details vary from area to area, utility to utility, and customer to customer. But generally, these people are young, typically Millennials and some Gen Xers, and they live in homes where they are the sole breadwinner. They have lower incomes but are not always the poorest of the poor.
We’ve seen frequent late balances among these personas prior to the crisis, but they might not be behind at this very moment. Some of these households 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 own their own home.
Thankfully, warmer weather is coming, so keeping the heat turned on doesn’t seem as crucial through the Spring and Summer. But with the coming change of seasons, severe storms and extreme high temperatures are sure to follow. Keeping their power turned on could be potentially life-saving.
Meeting People Wherever They Are
What can utilities do to keep customers like these afloat in the coming months, before they fall deeply behind?
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.
Give customers-in-need the ability and platform to ask for help, via text notifications or mobile apps. Offer text-message-friendly, bite-sized information on how to enroll in budget billing or average monthly payment programs, for example. 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 own 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. Utilities anticipate further, more drastic drops in energy consumption as overnight accommodations, fitness centers, universities and office buildings require 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 crisis will have on their residential customers, and in the hopes of serving our communities’ most vulnerable.