With electronic billing, customers make more on-time payments and fewer contact center calls.
For utility customers, receiving and paying monthly household bills is a part of life. As the source of the recurring bill, utilities have a significant opportunity to enhance their brand by meeting customers' demand for clear and easy bill management and payment. More and more utilities have satisfied the needs of customers by enabling them to receive and pay bills online, and customers have embraced online payment as a way to pay bills quickly and easily. While utilities have convinced many customers to pay their bills online, they have been challenged to convert a high percentage of customers from paper to electronic bills, or e-bills. To justify investing in promoting e-billing and reaching new e-bill customers, utilities are taking a deeper look into the value of e-bills beyond pure cost savings.
Con Edison, which provides electric service to approximately 3.3 million customers and gas service to approximately 1.1 million customers in New York City and Westchester County, New York, U.S., has long invested in technology to improve the customer experience and enable customers to view and pay bills online through multiple channels such as electronic billing. To help determine the return on investment of its technology and green incentive programs, the utility wanted to measure the value of e-bill users to its business. The utility sought to quantify the value of its e-billing service from Fiserv beyond the cost savings associated with mailing and processing fewer paper bills, so it hired AccuData to perform a study.
Con Edison's ongoing “Go Green with e-Bills” campaign, a multichannel customer educational campaign that emphasizes the environmental benefits of e-bills, provides an incentive for customers to activate e-bills. For new customers who sign up for paperless billing (e-bills), the utility donates to a nonprofit tree-planting initiative, such as the New York Restoration Project, the MillionTreesNYC campaign and the Friends of Westchester Parks Inc.
In the first seven months after Con Edison launched its green campaign, e-bill enrollment increased by more than 50% compared to the prior comparable period. The utility has been able to sustain considerable growth over the past four years, with an 82% increase in the average number of new e-bill enrollments per month since starting the campaign.
Impact Beyond Cost Savings
The Con Edison study showed that offering electronic bills, through online banking or the utility's website, leads to enhanced cash flow and reduced customer care costs. Through the research, the utility wanted to discover what other benefits e-bills provide outside of the obvious of helping the environment and reducing postage and other expenses. The study used data from more than 2 million customer records and looked at the correlation between the actual bill delivery method and factors including customer care calls, Internet inquiries, self-service usage and rate of arrears.
A common goal for utilities is to reduce the number of billing-related customer service calls and drive customers to the less costly online channels. According to the Con Edison study, customers receiving electronic bills from their bank were 64% less likely to call a live customer service representative each month than those receiving paper bills. Those receiving electronic bills from the biller were 39% less likely to call a representative than those receiving paper. Customers receiving e-bills from a bank made 1.57 online self-service visits to Con Edison's website, compared with 1.37 visits for those getting bills directly from the website.
Con Edison found that customers receiving e-bills through online banking and on the utility's website were 22% and 6% more likely, respectively, to make on-time payments compared with paper bill recipients. Banking sites offer due-date reminders, which may help customers pay their bills on time. By enabling customers to receive and pay their bills online at their bank or credit union, Con Edison has been able to reduce its days' sales outstanding metric for this customer segment. The bottom line for Con Edison and other utilities: Offer a variety of methods for customers to receive and pay bills to satisfy their preferences.
Recognizing that it serves one of the most diverse populations in the United States, Con Edison wanted to ensure it was satisfying the unique billing and payment preferences of a wide variety of customer segments. To help make this determination, the utility analyzed and segmented its customers by billing and payment channel using Equifax SuperNiche and Claritas Prizm Clusters and Demographic Intelligence. The results indicated customers who use different billing and payment channels have distinct characteristics. When using valuable segmentation customer information, utilities can more easily identify and target those customer groups who have a higher propensity to act on an e-bill. Knowing this information can help the utility to develop customized messaging and promotions for those customer groups.
Customers view billing and payment interactions as an extension of a utility's brand. It is important for utilities to provide customers the option to view and pay bills where and how they want. On the e-billing front, utilities like Con Edison have found the most cost-effective way to do this is by incorporating both the biller-direct and bank channels. By enabling customers to receive their bills at their preferred bill-payment domain — bank, credit union or biller site — utility billers can increase customer satisfaction, enhance brand image and entice more customers to abandon their paper bills.
Con Edison has made a considerable investment in promoting the benefits of e-bills and driving e-bill adoption. For utilities, it is not only important to stay in tune with customers' needs, but also to understand how needs vary by customer segment and not exclusively by channel. The Con Edison study showed that offering electronic bills, through online banking or the utility's website, leads to enhanced cash flow and reduced customer care costs, all the while optimizing their billing and payment offerings to help them meet the needs of all customers.
George Roach (firstname.lastname@example.org) was the central credit and collections administrator of electronic billing and payment programs at Con Edison when he retired in December 2011. In 1995, he developed the utility's various biller-direct electronic payment programs, which expanded in 2007 to include direct responsibility for administering Con Ed's electronic billing program. Roach is a member of the National Automated Clearing House Association's Council for Electronic Billing and Payment, and in 2009, he was selected by NACHA as the recipient of their George Mitchell System Excellence Award, the premier annual electronic billing and payments award. Roach also represents Con Edison as an original member of the NACHA-formulated PayItGreen alliance.
Con Edison www.coned.com
Fiserv Inc. www.fiserv.com