More and more customers are falling into debt. What can businesses do to support them?
In this episode, we chat with our CEO and co-founder Amon about some of the ways that organisations can keep costs low, detect vulnerability sooner and offer personalised experiences for their customers facing financial difficulty.
Abi: Welcome back to Break The Cycle. This is part two of our conversation with Amon, our CEO and co-founder. Last time we were talking about innovation in the debt management industry, and today we're going to talk about why, against the backdrop of the cost of living crisis, that innovation is needed more than ever.
So Amon, what practical advice would you give to CEOs and what questions should they be asking themselves as we start to see the effects of the cost of living crisis?
Amon: Yeah, I think there are a load of different questions and answers to this, but I'll try to be as general as possible on this.
One of the questions any business should probably ask themself right now is "if my customer base that faces financial difficulty is increasing by 20, 30, 40%, how can I ensure that I provide a good customer experience to them when I know that my resources are constrained for me as a business owner?". So that's a really important question.
I'll give you a concrete example of this. If you think about customers in debt who are facing oftentimes very traumatic situations, the first thing they will do, or one of the first things they will do is probably try to get in contact with you and try to actually resolve or find a solution directly with your call centre. Now, the problem is that if the customer base increases by 30 or 40%, will you be able to increase your employee base by 30 or 40% as well to support more customers? The answer probably to that is no. That's reasonable. I don't think any business owner would expect to increase their call centre staff by 30 or 40%.
But then how do you actually manage that process, right? So how can you provide the same level of experience - or a better level of customer experience - when your resources are severely constrained but more customers are actually trying to get in touch with you? Well, it's pretty clear, right? You have to find an automated digital answer to that problem.
The reality from everything that I can see and we can see here at Ophelos is that people actually want to self-serve. So if you can provide a really strong digital experience to customers where they can, as an example, find a bespoke repayment plan, do an affordability assessment, ask for breathing space, et cetera, et cetera, in a digital journey, you will naturally see fewer customers actually flooding into your call centre because they're serving themselves. But that requires a strong product. And what we've generally seen in the past is that organizations haven't made the investment necessary to build out these customer journeys which is something that we are really focused on.
So that is a really important one, I think. So "how do I manage more customers while ultimately keeping my costs at an acceptable rate?".
The second one is "how do I better identify vulnerable customers?" And again we believe that technology here is the answer. So you can use machine learning and behavioural science to better understand the contextual conversation that a customer is having with an agent, for example. Or if they're displaying any potential signs of vulnerability through the actions they're taking and those inform decisions that you as a business need to take. That might be, again, breathing space or speaking to the customer directly. But ultimately the key aspect here is to really understand at scale and accurately the percentage of customers who are potentially vulnerable and that's something that only technology can really do.
Another important one is to accept that not everybody's financial situation is the same. Households and individuals face financial difficulties for many, many different reasons. And they face different levels of financial difficulties as well. Some might be short-term, some might be long-term, some might be related to a vulnerability like a mental health or physical health problem, and some might be related to a recent job loss. And so all of these indicators and factors need to be considered when a) engaging with a customer and b) finding the right solution for the customer, which ultimately gives the customer and the business the best outcome. And that's kind of the perfect example of how machine learning plays a role.
So when you think about what the status quo really is in the industry, well, it's a one size fits all approach. Every customer gets almost the same treatment, right? It might be on day one they will receive a communication via a letter, on day two they might get an SMS, on day three they might get an email, on day four they might receive a phone call. And that strategy is ultimately repeated for customer 1, 2, 3, 4, 5, 6, 7, 8, 9, 10. There is very little personalization in place today when you look at the traditional solutions which from my perspective creates a bad customer experience and also drives bad outcomes.
So what businesses really need to do is to start personalizing. So the way I engage with customer 1 who had a recent job loss and therefore is in short-term financial difficulty but has a new job on the horizon which starts in three weeks, is very different than customer 2 who is suffering from a physical health issue.
And so that means we need to engage with them differently when we talk to them, when we speak with them, but also when we consider what payment options we provide to them. And again, that's something that you can only do at scale with technology. That's something that can't be human-driven.
So personalization is a massive opportunity to create a better customer experience but ultimately also drive better business outcomes.
Abi: As much doom and gloom as there is around this topic, to what extent do you think the cost of living crisis also presents an opportunity to drive long-term change?
Amon: I'm generally an optimist and so I really believe this is a really powerful time right now, a really crucial time for us to rethink this industry for the better. I really do believe that we will come out of this. I can't tell you when it might be six months, might be 12 months, might be 24 months, but I am very confident we'll come out of this crisis as we have come out of all other crises before.
And so what this moment really presents to us is an opportunity. It's an opportunity to rethink and reevaluate how we as an industry and how many enterprises want to manage customers who are in debt and who are facing financial difficulties going forward, how they want to find long-term answers to these problem statements which can be scaled, and how we can ultimately become as innovative of an industry as the front end of financial services is, be it underwriting or KYC or ultimately payment technology. I really do believe that the debt resolution industry, the debt resolution sector can become as innovative as many other financial service sectors. And so we are now in a pivotal time to really drive that change because all eyes are on this sector. So I think it's a very exciting time and it's a very impactful time to be in the space as well, because ultimately, everything that we do has a very profound impact on not only business, but also customers. And so we ultimately need to do the right thing here and drive this forward in the right direction.
Abi: Great. Thanks for joining us, Amon.
Amon: Thanks, Abi.
Abi: If you'd like to hear more, you can subscribe to our newsletter on Ophelos.com.