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Mail continues to be the predominant manner in which customers choose to pay their bills, but the steady decline in this channel over the past several years also proves that utilities offer more alternative methods in their{tag bill presentment and payment and customers are signing up.
According to data collected from 94 North American utilities, approximately 58 percent of payments are received via mail in 2008. By comparison, Chartwell reported that utilities received 71 percent of their payments via mail in 2005.
With a decline in mail-in payments, what other channels are customers using to pay their bills?
Electronic payments - defined as online, phone-in, auto-draft, auto-pay, electronic funds transfers, automated kiosks, etc. - are emerging as a new choice for utility customers. The average number of payments received by utilities electronically in 2008 was slightly less than 30 percent. More importantly, utilities experienced a growth of more than 20 percent, on average, in the number electronic payments they received in the past 12 months. This is good news for the industry, as utilities have seemingly struggled more than other industries in moving customers to the electronic payment channels.
In terms of online payments, more customers seem to be gravitating toward using a third-party site, such as those services offered by vendors Fiserv, Western Union or financial institution online banking systems. Chartwell found that more than 10 percent of payments are received electronically from a third-party site, whereas electronic payments made directly at the utility's Web site are a touch above 5 percent. Fiserv's annual Consumer Banking and Bill Payment Survey, released late in 2008, also revealed certain customers - when segmented by age and/or salary - also prefer paying bills via their financial institution's online banking system.
Ensuring that all customers have the ability to pay via the method they prefer surely is one way to improve customer satisfaction. For example, one investor-owned utility (IOU) in the South offers 17 billing, payment and bill management options to its customers, which exceed 4 million.
Non-electronic channels not going away
Even though receiving payments online may be the preferred method - these channels tend to be less costly and payments are posted in a more immediate fashion - utilities would be doing a disservice to their customers by halting some of the more traditional methods, which tend to be more expensive to the utility. Since mail-in and walk-up payments combined constitute about 70 percent of the payments a utility receives, it is obvious these non-electronic channels still are the two main methods customers use.
As the economy continues to spiral down, there could be a shift toward customers turning to walk-in methods, where payments are posted immediately and attractive to those waiting to pay until the due date. The number of walk-in payments made directly at the utility, which typically are the most expensive method for utilities, held steady at just less than 15 percent. Additionally, almost another 10 percent of walk-in payments are received either at an authorized third-party vendor or an unauthorized retailer. Certain customer segments, particularly those falling in the low-income category, continue to use this channel to pay their bills.
Another channel holding ground is payments made over the phone. Almost 10 percent of payments come in over the phone, either directly to the utility or through a third-party vendor. Phone-in payments tend to have an immediate posting, and may continue to increase in current harsh economic times as they appeal to the last-minute paying customer.
Moving to paperless option still a challenge
Getting customers enrolled in a completely paperless billing, however, is the new challenge moving fast across the horizon. Overall, Chartwell found the industry average customers receiving the bill in only an electronic format at just less than 5 percent. IOUs have the highest adoption rate, but these utilities typically also have offered an electronic billing option longer than other organizational types.
Not all utilities, however, require customers to suppress their paper bill when enrolling in electronic bill presentment, which helps explain why the number of bills presented purely in an electronic format is less than 5 percent even though enrollment in electronic bill presentment at the utility's Web site, or what is commonly branded as e-bill, grew more than 20 percent, on average, in the past 12 months.
Some argue that giving customers the choice to either keep receiving the paper bill or turning off has a greater impact on customer satisfaction. Even if the utility does not require suppression of the paper bill, there are tactics to encourage customers to move in that direction.
In order to make paperless billing more attractive, some utilities have moved away from the traditional pull method and pushing the electronic bill directly to the customers. Even though less than 10 percent of utilities currently offer the "push" method - where customers can securely view and pay their bills in a single e-mail - more than 40 percent of utilities told Chartwell they are either in the planning or considering stages of implementing such a program.
Promoting paperless billing
Most utilities rely on using the traditional methods, such as bill inserts or on-bill/envelope messaging, to promote electronic billing. One IOU in the Southwest with more than 300,000 customers was able to enroll about 20 percent of its customers in paperless billing after placing messaging on practically all of the material it produced. The utility also gave out incentives to its employees to help enroll customers.
While a mass blast may not be the answer for everyone, some utilities have found types of messages, especially those tying the environmental benefits to paperless billing, to be an influential tactic.
Many utilities have found success in stressing the environmental benefits of paperless billing, and several organizations have taken a step further and made donations to encourage customers to sign up for electronic billing.
Examples of utilities donating to such environmental services include:
* Arizona Public Service (APS) - The Phoenix-based utility donated $1 to the Tree Research and Educational Endowment (TREE) fund for every customer switching to paperless billing between March 1, 2008, and June 1, 2008. APS reported almost 17,000 customers turned off their paper bill during that time span.
* Commonwealth Edison (ComEd) - The Chicago-based Exelon subsidiary committed to donate one tree for every 100 customers switching to e-Bill or enrolling in direct debit in March 2008. ComEd planted more than 100 trees on Earth Day.
* Consolidated Edison of New York (Con Edison) - For every customer enrolling in the utility's e*Bill program, Con Edison gave $1 to the Trees New York organization. Two trees were planted at local schools in November through funds raised from the promotion.
With such turbulent economic times and customer preferences ever changing, utilities need to continually expand on their payment channels to maintain or increase customer satisfaction. |
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