How bills help support financially-stressed customers

As the cost-of-living crisis deepens, customers of all kinds are struggling with rising costs. There’s never been a more important time to ensure bills are clear, helpful and personalized according to Calvi’s Laura Broers.

Inflationary pressures are showing few signs of letting up. The European Central Bank forecasts that inflation will remain high throughout 2023. High inflation and uncertainty is weakening consumer confidence and consumers’ ability to pay on time, with knock-on effects to the business community.

While the telecoms sector is viewed as an essential service and fairly robust when it comes to this type of downturn, it’s not entirely immune to these effects.

According to a Europe-wide study conducted by Intrum, for example, 8 in 10 consumers are now worried about rising costs, 58% say this is having a detrimental effect on their well-being, and 6 in 10 say they have already changed their spending habits as a result. The same study also found that a quarter of European customers are likely to skip paying their broadband (24%) and telephone (23%) bills in the next 12 months. Worryingly, these were the second and third most likely bills customers would default on. 

This presents a difficult challenge to CSPs who face rising power and labor costs and are midway through ambitious network rollouts with hundreds of millions of euros already committed to full fiber and 5G. Inflation is not only putting pressure on them to raise their own prices but is limiting their ability to fully exploit premium network propositions.

In fact, EY has named CSPs’ response to the cost-of-living crisis as the biggest risk factor they currently face. It points to a recent study it conducted, which revealed 60% of customers are fearful of rising broadband costs and 44% don’t think their broadband provider is doing enough to direct them to the best deal.

EY comments that regulators are increasingly demanding CSPs to do more to improve affordability, with the company’s Adrian Baschnonga noting that customers often find pricing confusing and “difficult to interpret”, making it hard for them to work out where the value lies.

3 key ways well-designed bills help CSPs cope with the cost-of-living crisis

So how can bills help with these challenges? In fact, well-designed bills can help CSPs navigate the cost-of-living crisis more effectively in 3 key ways.

1. Communicating new charges clearly. CSPs may have little choice but to raise their prices as their own costs soar, although some CSPs are selectively decreasing certain tariffs to support vulnerable customers. (Proximus, for example, reduced the price on its basic internet package – Internet Essential – by €2.50 per month in May 2022.) But whether they’re increasing or decreasing prices, CSPs need to flag up any changes clearly on bills, with an explanation about why the charge is changing. If they don’t, customers will inevitably query the change – raising frustration levels, slowing payments, and increasing support costs.
2. Suggesting alternative tariffs and add-ons. By understanding real usage, CSPs can suggest alternative tariffs that better meet a customer’s needs. Taking such a proactive and personal approach helps CSPs minimize the risk of both bad debt and churn while encouraging prompt payment.
3. Explaining options to struggling customers. For struggling customers, the bill can act as an essential communications tool, explaining their options for spreading costs or directing them to further help. In particular, it can funnel customers to digital self-service channels, where they can communicate their difficulties and opt for a convenient option. This avoids the embarrassment many customers feel at having to explain their problems to a human on the phone, while simultaneously lowering the cost-to-serve for CSPs.

It’s never been more important for CSPs to ensure their bills are clear and easy to understand or to take a personalized approach to communication within the bill. Making better use of the bill as an adaptive communication tool that helps them stay engaged with their customers, while offering options and suggestions, and reinforcing the value being delivered, is both tactical in terms of navigating the immediate crisis and strategic in terms of building stronger relationships that position CSPs ready for the upturn.