Decision Marketing Data Clinic: Vulnerable finances

DM ClinicIn the latest in our series of articles, designed to provide advice on data-driven marketing strategies, we look into the financial services sector.

The Decision Marketing Data Clinic, in association with REaD Group, is open to all companies and organisations big and small. If you have a burning issue which you would like advice on please email us on

As the cost of living crisis deepens, an increasing number of consumers will be struggling to pay their bills. A recent survey by comparison site Uswitch suggested many people are already behind on energy bill payments with total debt owed three times higher than in September last year.

And, according to a recent report by the DMA, awareness of price increases is high among consumers, particularly for groceries, utilities and fuel. Some 82% of consumers say grocery prices have risen. As a result, more consumers are cutting back: 39% of those who spend on eating out are cutting back, while 18% have stopped spending on this completely.

For financial services providers, it has never been more important to be able to identify and communicate appropriately with vulnerable customers; those who, due to their personal circumstances, are especially susceptible to detriment.

According to the Financial Conduct Authority, 14.2 million adults in the UK have “low financial resilience” and one in six UK households are now in “serious financial difficulties” with half of households are expected to end up in fuel poverty over the next six months.

How do we know who is vulnerable?
It’s often possible to identify vulnerability signals in your own customers through changes in transactions and behaviour. It may be necessary to identify different segments or groups of customers who are classed as vulnerable for different reasons. The once seemingly ‘financially stable’ consumers, through increased cost of living and rise in inflation, now feel financially stretched and are at greater risk of financial vulnerability.

There are also third-party datasets that can support the identification of these groups which provide information on changes in personal circumstances, short-term finance requirements, loss of income or employment and changes to relationship or residential status.

How do we identify these vulnerable customers?
For responsible brands, the first step is to be able to proactively identify vulnerable customers to exclude from particular direct marketing campaigns, where additional credit or non-essential purchases could increase the pressure on their personal circumstances. This is an ethical approach to direct marketing which also sees companies increase ROI and improve campaign success.

Through the use of both internal first-party and third-party data, it is possible to build up a detailed picture of customers to identify the existing vulnerable groups, as well as the emerging vulnerable groups within a customer base.

At REaD Group, we help our clients identify vulnerable and potentially vulnerable segments of consumers, which includes self-declared vulnerability or that shared by a first party, such as a bank, on behalf of the consumer, along with high-cost short term credit applications; houses of multiple occupation (HMO data); and Consumer Vulnerability Segments.

These are designed to provide a detailed understanding of levels and types of vulnerability so that brands can work responsibly. Gaining a better understanding of differing vulnerable segments in a customer base helps drive effective communication strategies, while ensuring fair treatment.

How does Customer Vulnerability Segmentation work?
This Customer Vulnerability Segmentation model, created in partnership with Leeds University, More Metrics and REaD Group, is built using data from the 2011 Census, validated using REaD’s data repository, containing data for over 40 million individuals with a wealth of information spanning:

– Demographics: age, income, housing, education, financial products, affluence measures

– Transient states of the consumer, e.g. health

– Market forces acting on the consumer and susceptibility

– Individual’s market preferences

Is there anything else we should be doing?
Keeping your consumer data clean and accurate has never been more important. Data that is up to date will help brands make more informed and responsible decisions about how they communicate with customers and prospects. We should be mindful of the many more people who are now vulnerable and communicating with care should be a brand’s mantra for the foreseeable future.

Ellie Engley is account director at REaD Group

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