Bills, Bills, E-Bills

AT&T, Verizon, Visa, Citibank, Time Warner Cable, and American Express. The names and industries may be different, but they’re all a part of the never-ending bill parade we all experience.

Not a week goes by in which the average consumer doesn’t receive or pay a bill. In fact, bill payment and transaction mail represents almost half (49.1 percent) of all first-class mail in the United States today, according to the Direct Marketing Association (DMA). Add to that the rising costs of postage, paper, and printing and a challenging economic environment, and you have strong catalysts for change, innovation, and opportunity.

Consumers and marketers alike are taking notice of the tremendous inefficiencies and costs associated with maintaining this expensive paper dialogue. For consumers, it means looking for alternatives. A recent DMA study found that more than half of all respondents under age 25 and 42 percent of those from 25 to 34 said the recent postal rate increase would lead them to look for bill payment alternatives such as electronic billing.

Indeed, according to a Jupiter Media Metrix/NPD consumer banking survey last year, more than 7.8 million U.S. households are expected to use EBPP this year, and that number is projected to increase to 44.5 million households by 2006. That’s an increase no marketer can ignore.

For marketers, EBPP’s consistent growth and steady increases over the next several years will allow us to forecast predictable returns from billing system investments, including the automation of these efforts.

EBPP does, in fact, represent a golden opportunity to build efficiency, return on investment (ROI), and an ongoing dialogue with customers.

For companies that deliver postal mail on a substantial scale, the move to electronic billing and email notifications can mean millions of dollars in immediate cost savings. For example, a large credit card issuer with 20 million customers could have spent up to $81 million last year to deliver monthly statements via traditional mail, depending on its typical postal rate. Today, that company must budget nearly 9 percent more — more than $88 million. That’s not pocket change.

If the issuer migrates just 30 percent of its customers to online billing — using email notifications — over a five-year period, then 6 million customers will receive email alerts versus traditional billing statements. At a projected cost of $0.01 per email including set-up and automation, or $0.12 per year versus more than $4 for postal mail, we’re talking significant savings: nearly $26 million dollars each year excluding any investments needed to build the necessary infrastructure to support online account services. And let’s not forget the potential additional benefits, such as customer satisfaction, decreased call center volume, and higher customer loyalty.

A recent Forrester report highlighted Bank of America’s success with EBPP, finding that EBPP generates real results that can dramatically and positively affect a company’s bottom line. Among those benefits discussed and currently enjoyed by Bank of America are:

• Lower costs. Bank of America found that EBPP customers are less expensive to serve. EBPP customers make 30 percent fewer calls to the call center and rely more heavily on self-service and online account functionality.
• Higher retention. Bank of America EBPP customers have a lower attrition rate — 80 percent lower than typical offline-only customers.
• Increased balance growth. Bank of America EBPP customers had 35 percent higher loan and deposit balances.

But how can companies help their customers make the move to EBPP painlessly? The answer is email.

Smart marketers are quickly realizing EBPP can be a winning solution on multiple levels. Email offers marketers the opportunity to efficiently push messages and alerts to consumers rather than wait for them to remember to visit online account services. The real key to success, however, lies in not just implementing email alerts and pushes but building an automated and integrated solution tied directly to an individual’s account profile. Doing so further builds the overall efficiency and effectiveness of any EBPP effort by incorporating a level of timeliness and mass personalization that is not available in print at a comparable price point. With automated email solutions, marketers can quickly add services that can further drive revenue, build loyalty, and reduce costs.

Here are some of the key communications often used in EBPP:

• Statement alerts. An email informs a customer that her account information and/or statement is available online for viewing and paying.
• Credit limit alerts. An email reminds the customer he is approaching an account limit, based on a previously determined dollar amount.
• Payment posted notices. Once a customer makes a payment, an email is triggered and delivers a payment-received confirmation.
• Nonpayment alerts. A time-triggered email alert is sent to the customer just before the payment due date.
• Credit alerts. A message is delivered to a customer when credits are posted to the account.
• Balance/purchase alerts. A customer can set parameters that trigger emails to be delivered when her account balance reaches a specified amount or a purchase is made above a specified amount.

Though email will never completely replace traditional billing, it represents an efficient and effective alternative to supplement current systems. Consumers and marketers alike are marching toward EBPP for a number of reasons, including cost and convenience. And those marketers who “get it” are starting to realize real benefits from implementing these kinds of e-billing solutions, enabling them to build dramatic savings and competitive advantage.

So the next time you receive a bill in the mail, check out the online account services and available email alerts from the marketer. You might surprise yourself and become one of the growing number of consumers “charging” toward EBPP.

Till next time,

–Al D.

Join us at ClickZ E-Mail Strategies in Chicago on Thursday, August 8.