5 easy ways to get more bank draft customers

Recently, during a sales presentation, I came to the bank draft tab in Logics’ Utility Management application. I asked, as I always do, if they accepted bank drafts. The City Administrator spoke up and said he wished 99% of their customers were bank draft customers. When I asked why not 100%, he replied “There’s always that one percent that won’t do it, no matter how much sense it makes.”

After everyone stopped laughing, one of the office staff asked if I had any ideas how to increase bank draft participation. Interestingly enough, I had just finished the first draft of an ebook entitled 5 Surefire Ways to Save Time Processing Payments. The first of the five ways is bank drafts and the chapter goes on to list five ways to promote bank drafts.

Here they are…

1. Waive the first late fee in exchange for signing up for bank drafts

Whenever a customer calls to complain about being charged a late fee, offer to waive the penalty if they sign up for bank drafts. Once they are a bank draft account, they will never be late again!

2. Offer incentives to sign up

I know of utilities that offer a one-time $5.00 credit for signing up for bank drafts. Others give a $1.00 per month credit for the first year the customer is drafted.

3. Ask every new customer if they want to pay by bank draft

Have you applied for a life insurance policy recently? Insurers practically make issuing the policy contingent upon the insured agreeing to pay by direct debit. Why not deal with new customers applying for service the same way? There’s an age-old adage in sales, “assume the close”, and the same technique can work for signing new applicants up for bank drafts. Why not hand them a bank draft form along with the application to sign?

4. Include a signup form on your website

Ideally, your customers should be able to complete an online form with the bank draft information. But, if not, at least post a downloadable sign-up form on your website so your customers can complete and return it to your office.

5. Promote bank drafts on your utility bill

Does your utility bill have a section for comments you can enter each billing? Why not use this to publicize bank drafts along with whatever other announcements you have that month? If you print full-page bills, you can also include a bank draft sign-up form as an insert with the utility bill.

How do you promote bank drafts?

What does your utility do to promote bank drafts? Do you have a unique or innovative way of encouraging your customers to sign up for bank drafts? Please leave a comment at the bottom of this post for other readers to see.

2017 Utility Fee Survey results

The next Utility Information Pipeline, to be published on July 18, will include the first set of results for the 2017 Utility Fee Survey. The survey technically closed at the end of the day, June 30, but I haven’t started recapping the results yet.

If you haven’t participated and would still like to, you may click here to complete the survey. It should take less than five minutes to complete.

Trying to streamline payment processing?

If you’re looking to reduce the amount of time it takes to process payments, or streamline any other part of your operation, please give me a call at 919-232-2320, or email me at gsanders@logicssolutions.com for more information about how a business review could help you review your entire office operation.

 

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© 2017 Gary Sanders

5 ways to get more customers to pay the easy way!

If you’ve been reading the Utility Information Pipeline for any length of time, you know that bank drafts are the easiest way to collect payments.

The challenge is – how do you get more customers to pay by bank draft?

This issue takes a look at several strategies you can employ to get more customers to sign up for bank drafts.

1. It’s as simple as asking

There’s an old adage in sales that goes “if you don’t ask, the answer is always no.” This is as true for signing customers up for bank drafts as it is for any sales situation. Sure, a few people will ask if you offer bank drafts, but you will get a lot more if you ask.

It’s been my experience that utilities with a significantly higher percentage of customers paying by bank draft ask every new customer if they would like to pay by bank draft.

2. Promote, promote, promote

Do you have signs prominently displayed in your collections and customer service areas that promote your bank draft program?

Do you list the various ways customers can pay, including bank drafts, on the back of your utility bill? Do you routinely include a bank draft sign-up form with your bill?

Does your website include instructions about how to sign up for bank drafts? Can your customers download the sign-up form?

All of these are simple ways to promote your bank draft program and encourage more participation.

3. Waive security deposits as an incentive

Admittedly, this is a bit unusual and I’ve only ever heard of one utility offering it. However, by not charging a security deposit to customers who sign up for bank drafts, this utility has an astounding 60% bank draft adoption rate!

Read about it here to see if this makes sense for your utility.

4. Remove first-time late fees as an incentive

How many calls have you taken from customers who have never been late before asking if you can remove the late fee?

As a gracious customer service gesture, why not offer to remove the late fee if they, in turn, agree to sign up for bank drafts? By doing so, they will never be charged another late fee and you have one more bank draft customer.

5. Offer rebates

Another option offered by some utilities is rebates for customers who sign up for bank drafts.

We recently did a presentation to a town that offers a $.50 monthly credit to bank draft customers as an enticement to continue on bank drafts.

Other utilities offer a larger, one-time rebate – often after a twelve month qualifying period – for customers who sign up and remain on bank drafts for the full year.

Are you looking for ways to improve payment processing?

Are you looking for ways your office could process payments more efficiently? If so, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could benefit your utility.

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© 2014 Gary Sanders

When is your real due date…?

When is your due date?

What date do your customers think is your due date?

If the answer to these two questions isn’t the same, you have a problem.

Conflicting due dates

In a sales presentation with a prospect last week, I asked, “when is your due date?” The two billing clerks contradicted each other – one stating their due date is the tenth of the month, the other insisting it is the first of the month.

The reason the second billing clerk insisted it is the first is because this is the due date printed on the bills. However, they don’t consider the bills to be late until the tenth, which explains the first clerk’s answer.

I can assure you, if you publish one due date but don’t charge a late fee until a later date, your customers will quickly catch on and, in their minds, they consider the “due date” to be the later date. Sure, your very best customers will pay their bills by the published due date, but as far as all the rest are concerned, the due date is the very last day they can pay without being penalized.

Grace periods

What purpose is served by offering a grace period between the due date and delinquent date? Absolutely none. Once your customers realize you won’t charge a late fee until the second date, you might as well publish the delinquent date as your due date.

If you offer a grace period, abolishing it is one of the easiest ways to reduce your days of exposure.

Postmarks

This same prospect, in addition to offering a grace period of 10 days, doesn’t charge penalty until two days after the delinquent date. They do this to allow payments postmarked by the tenth to be processed without being charged a late fee.

Verifying postmarks, or delaying charging late fees to accommodate them, is an antiquated process that few utilities take the time to do. Unless you are governed by state law or local ordinance that requires you to check postmarks, there is no reason to do so.

Mailing a check is no longer the only way to pay a utility bill. With options such as bank drafts,  online bill pay and IVR phone payments, your customers have no excuse for not paying by the due date.

Is your office still following outdated procedures?

Is your office still following practices that have outlived their usefulness? Could your office benefit from operating more efficiently? If the answer to either question is “yes”, or if you’re not sure, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could benefit your utility.

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© 2014 Gary Sanders

Does your office suffer from TTWWADI syndrome?

If you’ve ever asked a question and gotten the dreaded answer of “that’s the way we’ve always done it,” then your organization could be suffering from what I call TTWWADI syndrome.

Thats The Way We've Always Done It

Is TTWWADI syndrome holding you back?

Back in the day, the 3 R’s referred to reading, writing and arithmetic.

In an office afflicted with TTWWADI syndrome, the 3 R’s refer to resistance, reluctance and refusal.

I’m surprised at how often I run into utilities that are resistant to change. Do any of these situations sound familiar to you?

Is the same old way always the best way?

The TTWWADI syndrome isn’t found only in the failure to take advantage of new technologies. Often, antiquated ways of doing things become institutionalized in organizations to the point they are never questioned.

Sometimes, doing things the same way for years makes sense. But other times, when we stop to think about it, many practices – especially informal processes that have developed over time – no longer serve a useful purpose.

In forward thinking organizations, questioning why things are done a certain way isn’t chastised, it’s welcomed!                        

In forward thinking organizations, questioning why things are done a certain way isn’t chastised, it’s welcomed! If you do something a particular way with no real reason for continuing to do it that way, it behooves you to question why you’re still doing it.

Many times, those closest to a process are oblivious to how redundant or useless it has become. A knowledgeable, objective outsider observing and asking why things are done a particular way can lead to constructive discussions and improvements in how things are done.

Is it time to consider a business review?

Do you ever wonder if your office could be run more efficiently? Or would you just like confirmation that you’re doing things the right way?

In either case, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could benefit your organization.

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© 2014 Gary Sanders

How can I reduce walk-in payments in my office?

Recently, a customer inquired about ways to reduce walk-in payment traffic in their office. Unfortunately, there are no easy answers to this question because several key factors are out of your control.

Factors impacting walk-in traffic

In my experience, the biggest factor affecting walk-in traffic is the demographics of your customer base. Utilities that serve older or more low income populations tend to have more walk-in traffic than those serving younger or more affluent communities.

Another factor that seems to impact walk-in payments is the location of your office. Offices that are in the central business district of most small or mid-sized cities and towns are likely to have more walk-in traffic than if they were located farther out of town.

But there are a few things you can do that might entice your customers not to visit your office to pay each month.

Bank drafts

Simply put, bank drafts, or ACH payments, are the easiest way to collect payments. You collect your customer’s banking information, create an ACH file, send it to the bank and your billing system creates payment transactions for each bank draft customer. If it’s not that simple with your billing system, it’s time for new software.

Do you aggressively market your bank draft program to your customers? Some utilities ask every new customer if they would like to sign up to pay by bank draft. Have you purchased a life insurance policy lately? That’s exactly how they do it.

Periodic bill inserts is another way to publicize and market your bank draft program. Be sure to include a bank draft enrollment form with your bill insert.

Online bill pay

An integrated online bill pay system not only provides your customers with a convenient way to pay, it also can answer many questions that would otherwise require a call to your office, reducing both walk-in traffic and phone calls. Does it get any better than that?

An effective online bill pay system should provide answers to the questions most frequently asked of your customer service staff:

  • How much is my bill?
  • When is it due?
  • Did you receive my last payment?
  • Can I pay online or over the phone?
  • How does my usage compare to previous billing periods?

IVR payments

Another way to limit walk-in payments is an IVR (interactive voice response) system. Interactive voice response systems provide a way for your customers to pay by phone even when your office is closed.

After all, what have you accomplished if you offer phone credit card payments as a way to reduce walk-in payments and it takes a customer service representative longer to process a payment over the phone than it did face to face?

Convenience fees

Any discussion of credit card payments always leads to questions about convenience fees. Should you or should you not charge a convenience fee?

In my opinion, if you are implementing online bill pay or IVR payments as an alternative to walk-in payments, then you shouldn’t charge a convenience fee. If you truly want to see a decrease in foot traffic in your office, you should do all you can to encourage your customers to pay through other means, including removing any impediment such as adding a convenience fee.

Are you ready to try something different?

If you are interested in reducing walk-in payments, or solving any other customer service issues, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could assist you with the process.

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© 2013 Gary Sanders

A novel alternative to security deposits

One of the great things about my job is getting to meet people from utilities across the country and learning how they do things. One such experience happened last week while speaking at a conference and I heard a new idea from one of the attendees. I found it intriguing enough to share here…

Who doesn’t want more customers on bank draft?

During the discussion about security deposits in my presentation, a participant offered that his utility will waive the security deposit for any new customer that agrees to sign up for bank draft.

As I’ve discussed here before, bank drafts are the single most efficient way to process payments. Because of this policy, the utility this gentleman works for has over 60% of their customers on bank draft. In my experience, 30-40% of a utility’s customers signed up for bank draft is impressive, but 60% is unheard of!

Significantly increasing the number of customers paying by bank draft can only help to make your utility operate more efficiently.

What are the risks involved?

Obviously, the biggest risk is the exposure of the utility if the customer doesn’t have sufficient funds in the bank to cover the bank draft. This particular utility allows one returned bank draft without penalty (assuming the customer promptly pays to cover the returned draft). After the second returned draft, the customer is required to pay a deposit.

Of course, you have all the normal recourse in the event of a bounced bank draft, including a returned bank draft fee and disconnecting service if the customer does not make restitution in a timely fashion.

Is it worth it to your utility…?

The big question you must ask yourself is – “Is it worth the risk of a few more write-offs to double (or triple) the number of customers paying by bank draft?” As with any policy, each utility must decide if implementing another utility’s policy makes sense for them.

For the utility I’ve cited here, obviously they have decided the benefits outweigh the risks. The answer boils down to how much it costs your utility to process payments.

Do you know what it costs you to process a payment?

Have you calculated what it costs to process various types of payments? If you haven’t, it might be very enlightening for you to do so. If you would like my assistance with conducting a study to determine what it costs to process payments, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com.

© 2012 Gary Sanders