spite of this, about once a year we have a customer seriously consider bringing
the bill printing and mailing process back in-house, ostensibly to save money.
Is it really cheaper to mail bills ourselves?
all factors are considered – CASS certification software
and ongoing maintenance, paper stock and toner or ink to print the bills, the
time involved in printing, bursting, folding, inserting, and packaging bills
for the Postal Service – I don’t believe it’s any cheaper to print your own bills
addition, many outsource printers combine all their mail for the day – yours
and any other utilities or businesses they may be mailing that day – to
maximize the postage discount. Postal discounts are based on the number of
pieces of mail being sent to the same 5-digit ZIP code, then to the 3-digit ZIP
prefix, if there aren’t enough pieces to qualify for the 5-digit ZIP discount.
For example, Raleigh’s
3-digit prefix is 276. You may have a few pieces being mailed to ZIP codes
starting with 276, but not enough pieces to qualify for a discount. If the
outsource company has mail from other mailers going to the Raleigh 276 prefix,
they are able to combine yours with the other mail to qualify for a better
discount. This simply isn’t an option if you are mailing your own bills, even
if you are using CASS certification software.
A little known fact
outsource printers have a postal service employee on-site to inspect outgoing
mail and insure that all USPS policies are being followed. In cases such as
this, mail from the outsource printer enters the mailstream directly without first
going to a regional facility.
This isn’t the case when
you mail your own bills. You must take your packaged mail to the local post
office. From there it most likely is sent to a regional facility for sorting
before it enters the mailstream. This generally adds at least a day to the time
it takes your customer to receive their utility bill in the mail.
Want to really save money?
As discussed in the last issue, a way
to offset the cost of mailing bills is to offer ebilling and encourage your customers to request ebills
rather than receiving a paper bill in the mail. For each customer who opts in
to ebilling, you save not only the cost of postage associated with mailing
their bill, but also the cost of the paper stock and envelopes.
To encourage ebilling, some
utilities offer incentives such as a one-time or monthly recurring credits on
the customer’s account.
Are you trying to decide
if you should move to outsourcing (or continue to outsource if you’re already
doing so)? If so, please give me a call at 919-232-2320 or e-mail me at firstname.lastname@example.org
to learn how a business review
could help inform your decision-making process.
I recently saw a listserv post inquiring about the pros and cons of moving from postcards to full page bills, as well as asking about the costs associated with making the switch. In the same vein, I know we have customers who have resisted transitioning from postcards to full-page bills due to the increased costs, primarily postage.
Postal rate increase
postage rate increase went into effect on January 27. You can see these new
rates here. Using these new rates, let’s
examine the difference in postage between postcards and full-page bills.
If you use an outsource printer,
they will perform the CASS certification and
presorting to qualify for the best possible discount. Under the new price
structure, automated presorted mail sorted to the 5-digit ZIP code now costs
$.383 per piece. This would include the majority of your bills that are mailed
to local addresses. Bills mailed to out-of-town addresses will be slightly
more, depending on how many are mailed to the same 3-digit ZIP prefix.
best rate for a postcard is $.257 per piece, but you have to be using CASS
certification software to be eligible for this rate. If you are just presorting
by ZIP code, without using CASS certification software, the rate is $.28 per
postcard. And if you’re not presorting at all, you’re paying the full rate of
$.35 per postcard.
For purposes of this illustration, let’s assume
your software prints postcard bills in ZIP code sequence and that’s the only presorting
you’re doing. Here is the comparison between postcards and first class postage:
Difference in price alone
The above illustration shows nearly a 27% increase in postage cost for switching from postcards to full-page bills. What this doesn’t take into account is the intangible benefit of being able to present more information on a full-page bill and being able to include a return envelope.
Most outsource printers include a window return envelope which allows your return address, with barcode, to show through the window. If your customer mails their payment, the inclusion of a bar-coded return address speeds the processing through the postal sorting facility over a hand-addressed envelope that must have a barcode manually applied.
In addition to the
intangibles, using an outsource printer results in very tangible labor savings
in your office. Your staff no longer needs to attend to a printer printing
bills or prepare the bills for mailing. This is all handled by the outsource
Another way to offset the
increased cost of first-class postage is to offer ebilling and encourage your
customers to request ebills rather than receiving a paper bill in the mail. For
each customer who opts in to ebilling, you save not only the cost of postage associated
with mailing their bill, but also the cost of the paper stock and envelopes.
If you can convince 27% of
your customer base to opt-in to ebilling, the switch from postcards to
full-page bills will result in no additional cost! Depending on the
demographics of your customer base, this percentage is not unreasonable.
Need help deciding?
Are you trying to decide if
moving to full-page bills or outsourcing your bill printing would be cost
effective for your utility? If so, please give me a call at 919-232-2320 or
e-mail me at email@example.com to learn how a business review could help inform your decision-making process.
One of the earliest Utility Information Pipeline issues (it was newsletter #12 and this issue is #187) dealt with the advantages of a fully integrated online bill pay system. Much has changed in the seven years since that issue was published and the topic is worth revisiting.
A good, fully integrated online bill pay system is like a Swiss Army knife – one tool that serves many purposes.
Do you offer online payments?
The most important question is are you offering online payments? If the answer is “no”, the obvious response is “why not?” Second only to bank drafts, online payments are the easiest way to accept payments. Especially if you charge a third-party convenience fee, because your customer pays the full price of processing the credit card transaction.
Even if your software vendor doesn’t offer online bill pay, there are many third-party options available. If a third party is your only option, I encourage you to consider it.
However, if your software vendor does offer a fully integrated online bill pay option, and you’re not taking advantage of it, here are some of the features you might be missing.
Real time integration
Third-party online bill pay vendors generally fall into one of two categories – companies whose primary line of business is payment processing and outsource print vendors. In the first case, an updated file with customer balances is usually provided to the third party once a day. Outsource bill print vendors who offer online bill pay generally rely upon the balance provided in the most recent bill print file.
The obvious weakness of either of these options is out-of-date information. In the first situation, payments made earlier in the day aren’t reflected in the balance. The classic case is a customer pays the bill in the morning and then, not knowing a payment has already been made, their spouse pays it again later in the day. The online bill pay vendor scenario is even worse – no adjustments or payments made all month are reflected in the balance.
A fully integrated online bill pay system solves this dilemma because payments are logged in real time and the customer’s balance is always up-to-date, eliminating the chance of overpayments on an account.
Additionally, third party systems require a file of payments to be imported the next day. This isn’t necessary with a fully integrated system because the payments are logged in the system as they happen.
History viewable online
Third-party providers generally provide little more than the customer’s balance and due date. A fully integrated online bill pay system should display billing history, payment history, and usage history.
The more information your customers can find online, the less they need to call your office for assistance, reducing the call burden on your customer service staff.
Over the years, fully integrated online bill pay systems have evolved into customer portals where customers can do much more than just pay bills and view history.
If you offer paperless billing, also called ebilling (and you should!), a fully integrated customer portal allows your customers to change their email addresses as desired, again reducing calls to your customer service staff.
Additional options provided by some customer portals include updating address and contact information, applying for service, initiating turn-off service orders, and sending messages to customer service.
Is your online bill pay system doing all it can for you?
Are you trying to determine if an online bill pay system is the right decision for your utility? If so, please give me a call at 919-232-2320 or e-mail me at firstname.lastname@example.org to learn how a business review could help.
Water and Wastewater Utility Management Survey results webinar
For the last eight years, Fiserv, a global company in the financial services industry, publishes an Annual Billing Household Survey. This survey reports trends in how consumers receive and pay their bills.
This graphic, from page 20 of the report, highlights how offering different billing and payment options impact customer satisfaction (clicking on any of the graphics will open a larger image in a new window):
Multiple payment options
Almost as if it were written for the audience of this blog, consider this quote from the graphic on page 21 of the report:
“The expectation of multiple payment options does not vary depending on the type of biller. In fact, consumers expect a local utility to provide the same options as a national wireless carrier or cable provider.”
As the graphic shows, 79% of customers expect your utility to provide the same options as much larger national companies:
Preferred payment options
According to the survey respondents, as shown in the graphic below from page 8 of the report, the majority of online households prefer to pay their bill at your website, ahead of paying by check:
In third place is paying the bill online at the customer’s financial institution website. The text accompanying this graphic says:
“Between the Seventh and Eighth Annual Billing Household Surveys, there was a 72 percent increase in consumers making payments at both biller and financial institution websites. Paying bills at a financial institution’s site also grew significantly by 55 percent.”
Clearly, the trend is toward paying bills online, whether that is your website or the customer’s financial institution’s website. The next Utility Information Pipeline issue will deal with automating payments made by your customers using their bank’s online bill pay.
The final statistic I want to highlight is how important paperless billing is becoming to customers. The graphic pictured below, from page 14 of the report, shows that 79% of households receive some of their bills electronically, and 25% receive all bills paperlessly.
In addition, only 22% have no interest in going paperless! Clearly, paperless billing is the way of the future.
Are you offering your customers the choices they want?
Are you offering your customers all the payment options they desire? Are you offering paperless billing? If the answer to either question is “no”, please give me a call at 919-232-2320 or email me at email@example.com to learn how a business review could help you learn how your office could better meet your customer’s needs.
In December, Fiserv released the updated 2014 Billing Household Survey slideshow. Below is an infographic highlighting several key points from the 2014 Survey. Clicking on the infographic will open a larger version from the Fiserv website.
In this article, I’ve recapped some of the highlights of the 2014 Survey.
Multiple payment methods
According to the survey, the average household uses three different payment methods each month (slide 5) and offering multiple bill payment options increases customer satisfaction (slide 7).
Customers paying with a mobile device increased 69% from 2013 (slide 12). Over half of all tablet owners have used their tablet device to pay a bill (slide 16) and the most common way to pay a bill by mobile device is your website (slide 15).
What this says to me is, if you’re not offering your customers online bill pay, they aren’t going to be happy with you.
36% of customers pay bills late for several reasons, and second only to cash flow problems is forgetting the due date (slide 8). Over 75% of customers say due date reminders increase customer satisfaction (slide 17).
Offering due date alerts can increase the chances of those same customers adopting e-billing (slide 18).
If you aren’t alerting your customers of an impending due date (and I’m not talking about old-fashioned printed second notices), you’re missing out on an opportunity for improved customer service.
Paperless billing options
Almost a quarter of all U.S. bills are sent electronically with no paper bill produced and nearly half of all customers indicate that receiving paperless bills increases customer satisfaction (slide 19).
Almost a quarter of all U.S. bills are sent electronically
As could be expected, the youngest customers are most interested in doing away with paper bills (slide 20). However, nearly half of all bill payers choose to receive a combination of paper and e-bills (slide 21).
Knowing the demographics of your customer base can help predict the adoption rate of offering paperless billing.
If you have questions about offering additional payment options or improving the way you communicate with your customers, please give me a call at 919-232-2320 or e-mail me at firstname.lastname@example.org to learn how a business review could help your utility.
Still time to complete the 2015 Utility Fee Survey
Just a friendly reminder – if you haven’t yet participated in the 2015 Utility Fee Survey, there is still time to do so. Please click here to complete the survey. It should take less than five minutes to complete.
I am the Senior Consultant with Edmunds GovTech | Logics in Raleigh, North Carolina. I have over 35 years experience developing and implementing utility billing and financial software and consulting with utilities and municipalities. My bi-weekly email newsletter draws from my experience in working with over 200 utilities and local governments to offer insight into how utilities can improve operations and better serve their customers. If you have a comment or a suggestion for a future email, please contact me by calling 919-673-4050 or sending an email to email@example.com