The effects of the pandemic will continue to be felt by subscription-based operations – especially as we now start the build-up to Christmas.
According to the Guardian, sixteen million people have cut back on food and essentials during the cost-of-living crisis. The figure comes from the Office for National Statistics’ (ONS) latest Opinions and Lifestyle Survey, and comes after grim forecasts from the Bank of England concerning the chances of a recession coming over the horizon.
UK residents have reduced their spending on subscriptions to the likes of Netflix and Disney+ as struggling households try to save money wherever they can. Service providers therefore need to be mindful of this and it’s vital that discussions take place now to ensure the most effective tooling and software is in place to manage the expected increased pressure on collections and billing teams.
Of concern to many providers, primarily as a result of lower sports subscription revenue, is that direct-to-consumer revenue will continue to be negatively impacted over future revenue periods, and may also suffer further as it becomes difficult to reopen the gone-away accounts of commercial customers.
Pressure from wider economic issues
With the impact of rising energy costs, increased inflation and cuts to benefits, collections operations will need to be diligent in demonstrating empathy and ease to customers and providing them with the best possible outcomes.
As customer affordability is stretched, service providers are feeling the effects of more complicated debt problems than ever before. Consumer expenditure on mandatory living costs is projected to continue to increase, and therefore many individuals are likely to fall behind on their payment arrangements. This will include individuals who will have never missed payments before.
This impact will be felt across all subscription-based industries, but a key one will be telecoms and media service providers. Many are already beginning to offer more incentives such as significant discounts to all customers who switch to a particular TV service, and bundles which include full Netflix access and NOW Entertainment featuring premium channels.
For operators, increased price sensitivity and competition is a given. Service providers not only need to partner more than ever before, they also need to understand their customers’ behaviour and their propensity to churn. Providers must also adapt their retention and acquisition strategies with a differentiated and more empathetic approach to their customer service operations – all while allowing for more ease in payments across the multiple service channels they operate in.
The race to reconnections
The race is on to understand customer behaviour, including their usage and habit patterns and how these are likely to change in the future.
A common issue facing operators relates to reconnections. Previously, companies have had a reasonable number of customers go through the expected stages/journeys and then be successfully reconnected with their service provider. However, over time, many are seeing that number decline along with the initial levels of engagement.
In an increasingly subscription-orientated business model, future success relies more than ever on building long-term relationships with customers.
Identifying customers at risk of not being able to afford price plans
The projected increases that service providers are likely to see, along with current challenges with re-engaging and re-connecting with those who have already fallen behind, will put a huge strain on collections and billing departments. For many operators, it’s already proving difficult to stay on top of and manage this effectively.
Operators must have in place the most effective solutions to manage those already in the collections process, while also being able to identify sooner and put plans in place for those account holders who potentially may fall under the collections team’s remit.
The key priority should be to identify performance areas and trends that require deeper analysis and focus, while also engaging with colleagues within both the credit risk and wider teams to deliver this.
Credit teams need to ensure they’re aligned with credit risk goals and that they have everything they need to succeed. Since credit referrals processes can be highly manual, it’s essential to automate as much as possible to eliminate friction in the customer journey – and it’s important to make these improvements at pace. This includes billing and payment teams needing to address affordability and fraud management processes which help to analyse software problems and recommend solutions.
The current financial uncertainty is likely to increase the challenge in understanding data, particularly in the peak periods leading up to Christmas. The knock-on effect is that it will be essential to determine the correct levels of staffing, and to design more automated and empathetic processes in handling collections and complaints.
You may also be interested in reading my recent article on data remediation