Is there a payment generation gap…?

I was recently reading a blog post from a LinkedIn connection about how Gen Z Consumers Shop. I’m not really interested in how they shop, but I thought it might provide some insight into how they pay. Interestingly enough, embedded in that article was a link to another blog post about how different age groups prefer to pay. Now we’re on to something!

Coincidentally, if you’re as confused as I am about Gen X, Gen Y, Millennials, and Gen Z, here’s a great explanation. What will the next generation be called? Gen AA? That’s a little spreadsheet humor…

Relevance to your utility

What is the relevance of all this to a utility? I think it boils down to knowing your customer demographic. If you serve a primarily aging Baby Boomer customer base, you probably still see lots of check payments, so you might want to consider some type of remittance processing system.

Similarly, if your customers are more likely to have a landline phone than a computer at home, an IVR system may make more sense than online bill pay.

On the other hand, if your customer demographic is younger, you probably see more use of online payments, either initiated through your customer’s bank or from your website.

And, of course, you want to offer bank drafts for all age groups!

Consider your options

The point of all this is so you can keep in mind your customer base when deciding what payment options to offer. Even though you personally might never use a particular payment method, it doesn’t mean your customers won’t.

Have you completed the 2019 Utility Fee Survey?

If you haven’t yet completed the 2019 Utility Fee Survey, please click here to complete the survey. It should take less than five minutes to complete.

If you have any questions, please feel free to e-mail me at gsanders@edmundsgovtech.com or call me at 919-232-2320.

Please feel free to share this survey with your peers at other utilities.

Thank you in advance for taking the time to complete the survey and for sharing it with other utilities.

Connect on LinkedIn

In the opening paragraph I mentioned LinkedIn. If you’re on LinkedIn and we aren’t connected, please send me a connection request!

Unsure what payment methods you should offer?

If you’re wondering if your utility is offering the best possible payment options, please give me a call at 919-232-2320, or email me at gsanders@edmundsgovtech.com for more information about how a business review could help you find out.

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© 2019 Gary Sanders

Have you considered offering an incentive…?

Last week, I renegotiated my plan with my cell phone company. That’s always a tedious, time-consuming task, but my carrier does offer one nice feature.

The easiest way to pay

I’ve written before about why bank drafts are the easiest way to collect payments. And I’ve followed that up not once, but twice with advice for how to get more customers to sign up for bank drafts.

Which brings me to my recent experience with my cell phone carrier. They offer customers who sign up for autopay – their term for bank drafts – a $5.00 credit per line.

Why offer an incentive?

Clearly, this company has recognized that enticing their customers to sign up for bank drafts is in their best interest.

For every customer who pays by bank draft, that’s one less mail payment, or worse yet, walk-in payment your staff has to handle. If you use a lockbox to process mail payments, this saves the per transaction fee for each customer that switches from mailing a check to paying by bank draft.

As a for-profit company in a very competitive market, my cell phone carrier doesn’t charge a convenience fee for credit card payments. If they can entice customers who historically pay by credit card to switch to paying by bank draft, they save themselves the credit card fees for those customers.

What’s a reasonable incentive?

I realize that $5.00 a month is more than most utilities can afford as an incentive, but what is realistic? I know of utilities who have tried both of these options:

  • a one-time $5.00 credit
  • a $1.00 credit for the first year the customer is on bank drafts

Both of these seem reasonable and may be all it would take to encourage a customer to sign up for bank drafts.

Complete the 2019 Utility Fee Survey

If you haven’t yet completed the 2019 Utility Fee Survey, please click here to complete the survey. It should take less than five minutes to complete.

If you have any questions, please feel free to e-mail me at gsanders@logicssolutions.com or call me at 919-232-2320.

Please feel free to share this survey with your peers at other utilities.

Thank you in advance for taking the time to complete the survey and for sharing it with other utilities.

Is a bank draft incentive a good idea for your utility?

If you’re wondering if offering an incentive for bank drafts would be in the best interest of your utility, 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 learn the answer.

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© 2019 Gary Sanders

Early observations from the 2018 Utility Staffing Survey

As you know, the last issue of the Utility Information Pipeline was an invitation to participate in the 2018 Utility Staffing Survey. In addition to asking questions about the number of staff in various positions and how your office handles labor intensive practices such as payment processing and bill printing, the survey also includes questions about what percentage of payments are received by various methods.

Early survey results

Of the responses to the survey received so far, 25% of the respondents who supplied answers to the percentage of payments received by payment method responded with 0% for bank drafts!

I’ve written before about how bank drafts are the easiest way to collect payments and even offered suggestions for how to get more customers to sign up for bank drafts, not once, but twice!

When I advocate for bank drafts, I’m talking about sending an ACH file from your billing system to the bank. I’m not referring to going to your bank’s website and changing the amount to be drafted for each customer each month and I’m definitely not talking about filling out paper drafts by hand!

When I started in this business in the early 1980’s, it wasn’t unusual for a utility clerk to have a drawer full of rubber banded stacks of preprinted bank drafts that looked much like blank checks. The clerk would have to date the form and fill in the amount to be deducted from the customer’s account. Believe it or not, I recently encountered a utility still doing bank drafts this way!

Why aren’t you accepting bank drafts?

Knowing how easy it is and what a time saver bank drafts are, I’m frankly surprised when I encounter a utility that doesn’t accept bank drafts.

If your billing software won’t allow you to process bank drafts, it’s past time to replace you software!

If your bank won’t accept an ACH file, it’s time to find a new bank!

If it’s your own reluctance holding you back because “that’s the way we’ve always done it“, trust me when I say once you’ve implemented bank drafts you’ll be glad you did it!

Complete the Utility Staffing Survey

If you haven’t yet completed the 2018 Utility Staffing Survey, please click here to complete the survey. This should take less than five minutes to complete. The results will be published in a future Utility Information Pipeline.

Please feel free to share this survey with your peers at other utilities.

Thank you in advance for taking the time to complete the survey and for sharing it with other utilities.

2018 rates dashboard for North Carolina

I’ve written in the past about resources, including the Environmental Finance Center at UNC. The EFC has just released the North Carolina Water And Wastewater Rates Dashboard for 2018. This dashboard contains rates for 495 utilities in North Carolina.

Is your office offering 21st century payment options?

If you’re not currently offering bank drafts, or think your office is otherwise behind the times with the payment options you offer, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could help your utility.

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© 2018 Gary Sanders

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