When reality bites, we find ways to bite back

On March 29, Capita held another in our series of events tracking the cost-of-living crisis, its effects and what actions businesses are taking. The theme this time was ‘Reality bites: data, vulnerability and the opportunity for growth’.

At our previous event last November, we were all finding it hard going, with the basic cost of day-to-day life getting more and more expensive. Fast forward to now, and even though we’ve technically avoided a recession, with the Office for National Statistics’ revised estimate reporting growth of 0.1% for the last three months of 2022, in real terms we’re still paying more: grocery price inflation rose again to reach 17.1% in the four weeks to 19 February 2023.

At our ‘Reality bites’ session (see the full video here ), host Martin Hill-Wilson, CEO of Brainfood Consulting said, “We’re not out of the woods yet.” While this is true, could it be that we’re starting to see some gaps between the trees? There are signs that we’ve got to the point in a crisis where we’ve analysed the situation, we’ve looked at what’s happened, we’ve learned, we’re planning – and we’re finding solutions. 

In a stimulating discussion that spanned both the private and public sectors, here are seven of the key takeaways. 

1. Current behaviour changes can help sustainability

Everyone is having to make adjustments to cope with the current economic climate. However, one of our speakers, Trinh Tu, Managing Director of Public Affairs at Ipsos, told us that some of the behaviours we’re adopting at the moment to save money are actually benefitting the environment. For instance, we are buying fewer items and so creating less waste, and we are cutting down on our energy usage. 

“The economy may be dreadful right now,” Trinh said, “but it’s also an opportunity to modify behaviours to help us achieve our net zero goals. So how can we help government and policymakers to embed those behaviours into the long term?”

Our host Martin Hill-Wilson mentioned the recently reported story of a leisure centre using the heat from a local data centre to partially heat its swimming pool. Martin described the kind of creativity demonstrated in this so-called ‘digital boiler’ as “a win-win, a silver lining in us being more careful in how we spend money and consume things”. He went on to ask, “Is the motivation there at an organisational level? Is there a way that we can turn a necessity into a virtue and plug into social purpose?”.

Another of our speakers was David Fairley, Public Sector Manager at Capita. David said: “Sustainability is something that’s always front and centre of mind in the public sector. Mankind will always innovate. And authorities are trying to do more with less. If they can use technology, they can work smarter and do more with less. The challenge is the pace of change: it’s expensive, people are reluctant to change, but the technology in the internet of things (IoT) is there – even if the uptake is slow.”

Mark Billingham, Managing Director of UK Business at Capita Experience gave a private sector perspective. “Some companies have done it really well,” he told us. “For instance, certain energy companies have managed to produce sustainable green energy. Some retailers have moved into sustainable fashion. From a consumer perspective, people don’t necessarily want to pay more. So, particularly in a cost-of-living crisis, how do you balance the triangle of great product, right price and sustainability? 

“Interestingly, while customers are saying that they won’t necessarily pay more for increased sustainability, they will for better customer service.” 

2. While many still struggle, more of us are learning to cope 

Ipsos has been running its Issues Index for over 40 years, using the same questions to regularly track the public’s concerns. The cost-of-living crisis was the top issue for 2022 and has remained so into Q1 of 2023. And it’s an issue that cuts across society, with nine out of ten people worried about it – across all groups and sectors. 

However, there has been a change in how many people feel they are adjusting. Trinh told us, “We did our survey six months ago, and now just again recently, and what we found is that the size of the people who are just about coping has increased, and the number in precarious situations has reduced a little – although there is still a core group who are really vulnerable, but more of the precarious have moved into ‘just about coping’ in the last six months.”

Martin observed that there has been an increasing trend that’s especially prevalent in food shopping: people won’t just keep loyal to one store but will shop around during their weekly shop for the best deals from various brands.

3. While the current crisis effects everyone, there are degrees

Trinh spoke about the range of groups affected by the cost-of-living crisis, and the disparity with factors such as living area and affluence. 

She zoned in on age: “Younger people are affected a lot more than older people, who may own their home and be retired. It’s similar to Covid, in that young people had less savings, and might be on zero-hour-contract jobs. They are also the group that feels the loneliest.” 

And of course, many call centre staff are on the younger end of the age spectrum, meaning that often it is the most vulnerable staff who are speaking to the most vulnerable customers.

Martin made a parallel to Covid times, in that although we speak of a less-affected older cohort who don’t have a mortgage and so on, “maybe they’re actually helping the grandchildren out, with a huge transfer of wealth going there. And also the hidden costs of looking after those who are suffering: the ‘doing-OK’ looking after the vulnerable.”

4. For growth, companies are thinking long-term – even if it means taking a short-term hit

Martin asked the panel whether companies are still focussing on growth. 

“No company is not going to [target growth],” Mark replied. “But they will need to work harder to get that growth. Brands are trying to find ways to sell more, lock people in for a longer time with a better value deal and customer experience. Probably taking a hit on top-line revenue for longer-term profit.” 

Martin called this “a silver-lining for transformation, because there is a ‘needs-must’ imperative now to get smarter.”

Mark agreed and elaborated on what ‘smarter’ means. “We’re seeing an acceleration of this [kind of thinking],” he said. “A huge focus on the front-end self-service, for instance on bot functionality to automate back-office functionality, and investment into automation and AI. Many companies are rebuilding their websites; focusing on first-contact resolution and other efficiencies (including failure demand); driving down the cost-of-service; prioritising better knowledge management and process improvement.”

He added that we will also see a lot of mergers and acquisitions this year, as those who go under are scooped up by their larger rivals.

5. We can’t make assumptions about people – we need firm data and tech

Mark recalled a stat that 40% of people say they haven’t been affected by the cost-of-living crisis, which suggests that luxury brands haven’t been too impacted – at least not yet. 

However, he was keen to stress that when it comes to statistics, there can be more to the story. “I’ve seen people on video calls, who I consider have very good jobs, wearing woolly hats because they don’t want to put the heating on,” he told us.

“We can’t make assumptions about who this cost-of-living crisis is affecting and to what degree.”

“There is a more complicated picture than the stats give us,” Martin agreed.

Mark stressed the value in having the right data, and of investing in the tools that can give companies the insights they need. “With our clients,” he said, “the rise of data analytics to proactively identify issues and the rise of different digital channels are probably the areas where we’ve seen the most growth. They can identify triggers of vulnerability with our assisted customer conversations (ACC) system that uses real-time speech analytics and identifies keywords and triggers that can then steer an advisor in the right direction.

“Meanwhile, customers who are uncomfortable speaking about their situation can use asynchronous messaging, which is familiar to them as it resembles WhatsApp; it’s cathartic, as they can use it at their own speed and we can reply in a non-invasive way.”

Mark described this level as sophistication as “a customer service industry in its own right”, one that gives “a much more rounded picture of vulnerability that includes data, AI and people – rather than just a simple people to people transaction.” 

Meanwhile, David explained how joining up data from disparate organisations – local authority, education, NHS, police – can give a more holistic point of view of a person and help to see patterns that could lead to early intervention. But of course, there are practical issues when sharing data. “The possibility of data being leaked makes some cagey, but this perspective is changing,” David said.

“Everyone recognises the power of sharing data. And the data must be cleansed – otherwise it’s garbage in, garbage out.” 

On the topic of the obstacles to sharing data in the private sector and learning from how the public sector does it, Mark said that if we are willing to pool data, in the way that open banking already does, then it could really help support customers. 

Martin agreed. “Debt collection data-sharing is obvious and sensible,” he said. “There’s no point an energy firm pressurising a customer when they know they owe money elsewhere as well. They could instead work with those other collectors in a collaborative way.”

In Trinh’s experience, she said that safety of data is paramount, but that the public are also keen to know what the purpose is. If there is a clear purpose and benefit, then most people are OK with their data being shared.

6. Empathy is the present and the future

All the speakers agreed that 10 years ago, empathy was not the first word people discussed in relation to a good customer experience. 

But today, organisations that have been investing in this area are the ones now thriving. Mark said: “We’re having better conversations with people in financial difficulties about what products suit them, and I think that’s what’s really meant today by ‘good customer service’: that the organisation understands me and provides me the right product. But it still doesn’t mean they’ll necessarily pay a higher price for it.” 

Mark elaborated on how the role of the call-centre agent has fundamentally changed. “The intensity compared to a decade ago, when there were mostly transactional queries, is huge,” he said. “Having empathetic skills has become crucial and so recruitment and training have changed. 

“We now have great knowledge management tools supporting the agent, and it’s also about building an empathetic ecosystem around them, especially with so many agents working remotely. This means having a coach always available for support, as they may no longer have colleagues sitting next to them to de-stress with. And making sure they know when to pass a call on to the experts.”

David mentioned that automation can mean shorter hold times, and indeed reduce the need to have to join the queue to speak to a person in the first place. And Martin put it succinctly when he said, “The greatest service you can provide to someone who is vulnerable is not having to put them through the effort of having to contact you.” 

7. Things will get better, but slowly

Trinh shared her predictions for rest of this year. “Nine out of ten people we asked are still concerned about the future,” she said. “So even if things have improved over the next six months, people still feel they will have to cut down their expenditure.” 

She continued, “When we’ve asked people about the causes of the cost-of-living increases, they’ve identified mainly external ones: global supply chains, the war in Ukraine. These wider issues are unlikely to be resolved by the end of the year.”

When we asked our audience what they were expecting between now and the end of summer in terms of the impact of cost-of-living on customers, 53% thought that it will increase, and 41% said it would stay the same. However, when we then asked them whether they segment customers by type/degree of vulnerability, 64% said that they either do already or are intending to, suggesting that the willingness to change what we have the power to is firmly embedded into our business practices. 

And Mark ended the session on a positive note by highlighting some industries that are doing well. “The financial services sector is far ahead,” he said. “For instance, there’s Consumer Duty on the horizon, which will push firms into putting the customer at the heart of what they do. Elsewhere, retail is another sector taking a serious stance towards vulnerability.” 

It’s clear that no matter what the unavoidable macro pressures may be during the current crisis, we all have the power to use empathy and the tools at our disposal to give our customers the best service possible and help make life as easy for them as we can.