Converting customers to paperless billing can be a costly strategy.
"What!?" you might say, "The heat must have finally gotten to Porter. Everyone knows that it costs a fortune to send paper, compared to electronic documents."
No argument there. The materials, production, distribution, and handling costs for paper bills and payments are a lot higher than the electronic alternatives. If you look at the billing process solely as a cost-center then any strategy that turns a paper document into an electronic one is justified.
But billing isn't strictly a payment mechanism. The creation and delivery of a transactional document is a personal engagement with a very important entity --someone who has chosen to do business with your company or donate to your cause! In their relentless pursuit of economies, some document professionals (and a lot of accountants and executives) have lost sight of the fact that bills and statements are a critical component of customer relationship management. Cutting operational costs can damage or weaken customer connections, leading to increased customer churn and decreased revenues.
Why So Anxious to Eliminate Paper?
I think it is safe to say that bills and other transactional mail get opened and read more often than any other type of B2C communication. Those monthly bills are the most consistent connection (sometimes the ONLY connection) companies have with their customers. That was the whole argument for transpromo, remember?
What happens if these documents are converted to electronic-only? One recent survey indicates the open rate decreases from 50% for consumers who receive both paper and electronic bills to 15% for electronic only. That's a big hit. Unless your organization has no competition and has nothing important to communicate, losing a monthly touch point with 35% of your customers should be cause for concern.
How can organizations make up for this loss of contact?
· Direct mail - Oops, there go those environmental savings that were used to convince customers to convert to paperless bills. Relevant and personalized campaigns take time to develop and test. They are costly. Maybe even more expensive than paper bill production (which tends to be one of the leanest and most efficient workflows in the whole organization).
· Email -- The open rate on marketing emails is probably in the single digits; sometimes less than 1%. And if 85% of monthly e-bill notices are ignored, these won't be very effective either to cross-sell, up-sell, or communicate important information.
· Social Networks -- Keeping up on conversations in social media requires human interaction. Otherwise it is just another form of broadcasting or mass media. Additionally, you've got to entice your customers to follow you on these platforms.
· SMS or autodial phone messages -- These are annoying and unpopular with customers. They are unlikely to get the same attention as messages delivered with paper bills.
· Your web site or blog -- Customers won't go there without a good reason. Another piece of communication needs to be the driver.
Auto Payment -- Further Eliminating Customer Contact
An offshoot of electronic billing is electronic payment. Though e-billing penetration has stalled, the payment part of the transaction is hugely popular -- even among customers who steadfastly insist on paper bills. Recognizing the efficiencies of remittance processing and lock box operations, many organizations vigorously encourage customers to establish auto-pay arrangements. Perhaps this explains why only 15% of electronic bills get opened. Consumers who auto-pay may not look at the bill or any accompanying messages.
An organization that is successful at converting a customer to paperless billing and automatic payment has saved operating costs associated with their monthly transactions. But they have also eliminated a consistent and acceptable channel of communication. This doesn't sound too smart to me.
Instead of trying to eliminate the paper bills altogether, perhaps organizations should concentrate on exploiting this established channel of communication with their customers. Implement changes to reduce the operational costs of paper bill production -- while still keeping this valuable customer connection active.
The Cost to Your Reputation
As billers continue to press forward with paperless initiatives, they should be mindful of customer perception. There is a customer relationship price to be paid here as well.
I've got more ideas on this subject. See a continuation of this topic in my blog, accessible via www.printmailconsultants.com.
Mike Porter is President of Print/Mail Consultants, an independent consulting firm that evaluates document operations workflows and helps clients make and implement strategic improvement decisions. Connect with Mike directly at mporter@printmailconsultants.com or follow @PMCmike on Twitter. Mike invites readers to visit www.printmailconsultants.com and sign up for Practical Stuff -- the free newsletter dedicated to document operations professionals.
"What!?" you might say, "The heat must have finally gotten to Porter. Everyone knows that it costs a fortune to send paper, compared to electronic documents."
No argument there. The materials, production, distribution, and handling costs for paper bills and payments are a lot higher than the electronic alternatives. If you look at the billing process solely as a cost-center then any strategy that turns a paper document into an electronic one is justified.
But billing isn't strictly a payment mechanism. The creation and delivery of a transactional document is a personal engagement with a very important entity --someone who has chosen to do business with your company or donate to your cause! In their relentless pursuit of economies, some document professionals (and a lot of accountants and executives) have lost sight of the fact that bills and statements are a critical component of customer relationship management. Cutting operational costs can damage or weaken customer connections, leading to increased customer churn and decreased revenues.
Why So Anxious to Eliminate Paper?
I think it is safe to say that bills and other transactional mail get opened and read more often than any other type of B2C communication. Those monthly bills are the most consistent connection (sometimes the ONLY connection) companies have with their customers. That was the whole argument for transpromo, remember?
What happens if these documents are converted to electronic-only? One recent survey indicates the open rate decreases from 50% for consumers who receive both paper and electronic bills to 15% for electronic only. That's a big hit. Unless your organization has no competition and has nothing important to communicate, losing a monthly touch point with 35% of your customers should be cause for concern.
How can organizations make up for this loss of contact?
· Direct mail - Oops, there go those environmental savings that were used to convince customers to convert to paperless bills. Relevant and personalized campaigns take time to develop and test. They are costly. Maybe even more expensive than paper bill production (which tends to be one of the leanest and most efficient workflows in the whole organization).
· Email -- The open rate on marketing emails is probably in the single digits; sometimes less than 1%. And if 85% of monthly e-bill notices are ignored, these won't be very effective either to cross-sell, up-sell, or communicate important information.
· Social Networks -- Keeping up on conversations in social media requires human interaction. Otherwise it is just another form of broadcasting or mass media. Additionally, you've got to entice your customers to follow you on these platforms.
· SMS or autodial phone messages -- These are annoying and unpopular with customers. They are unlikely to get the same attention as messages delivered with paper bills.
· Your web site or blog -- Customers won't go there without a good reason. Another piece of communication needs to be the driver.
Auto Payment -- Further Eliminating Customer Contact
An offshoot of electronic billing is electronic payment. Though e-billing penetration has stalled, the payment part of the transaction is hugely popular -- even among customers who steadfastly insist on paper bills. Recognizing the efficiencies of remittance processing and lock box operations, many organizations vigorously encourage customers to establish auto-pay arrangements. Perhaps this explains why only 15% of electronic bills get opened. Consumers who auto-pay may not look at the bill or any accompanying messages.
An organization that is successful at converting a customer to paperless billing and automatic payment has saved operating costs associated with their monthly transactions. But they have also eliminated a consistent and acceptable channel of communication. This doesn't sound too smart to me.
Instead of trying to eliminate the paper bills altogether, perhaps organizations should concentrate on exploiting this established channel of communication with their customers. Implement changes to reduce the operational costs of paper bill production -- while still keeping this valuable customer connection active.
The Cost to Your Reputation
As billers continue to press forward with paperless initiatives, they should be mindful of customer perception. There is a customer relationship price to be paid here as well.
I've got more ideas on this subject. See a continuation of this topic in my blog, accessible via www.printmailconsultants.com.
Mike Porter is President of Print/Mail Consultants, an independent consulting firm that evaluates document operations workflows and helps clients make and implement strategic improvement decisions. Connect with Mike directly at mporter@printmailconsultants.com or follow @PMCmike on Twitter. Mike invites readers to visit www.printmailconsultants.com and sign up for Practical Stuff -- the free newsletter dedicated to document operations professionals.
