Magazine article CRM Magazine

Paper Cuts: Most of Your Customers Now Say They Prefer Electronic Bills to Paper Ones. This Can Be Great News-Provided You Make the Most of the Opportunity to Strengthen the Customer Relationship

Magazine article CRM Magazine

Paper Cuts: Most of Your Customers Now Say They Prefer Electronic Bills to Paper Ones. This Can Be Great News-Provided You Make the Most of the Opportunity to Strengthen the Customer Relationship

Article excerpt

MORE AND MORE CUSTOMERS are going to their keyboards instead of their mailboxes to collect and pay bills for their homes and businesses. In fact, a majority of customers who have at-home Internet access now say they actually prefer electronic billing to the old paper-based way of doing business, according to the April 2007 Consumer Bill Payment Survey, conducted on behalf of e-billing vendor CheckFree by Harris Interactive and the Marketing Workshop.

For the first time since CheckFree began sponsoring the survey in 2002, the volume of online e-billing activity exceeds the volume of paper bills paid by households that have Internet access. More impressively, customers using consolidated billing services are 39 percent less likely to switch to a competitor. "It increases the lifetime value of customers by raising satisfaction and preventing churn," says Lori Stepp, CheckFree's managing executive of e-bill adoption services.

Curiously, the very concern that once kept consumers from adopting Web-based invoicing and bill payments--security--is now driving them to it. Customers realize that paper bills potentially expose their account information to many more prying eyes.

"The sea change has come with the understanding that establishing [an] online relationship is a very solid protective measure against identity fraud," says Bruce Cundiff, senior analyst with Javelin Strategy and Research in Pleasanton, Calif. "Most identity theft and fraud cases can be traced to the handling--or mishandling--of paper documents, such as a check or bill taken from an unsecured mailbox. Until recently, consumers felt that banks were initiating e-billing simply as a cost savings."

Consumers are also attracted to the fact that e-bills are greener. (See "A Green Light for Marketing," June 2007.) Javelin estimates that if all bills were viewed and paid online, the nation's landfills would be spared 800,000 tons of solid waste per year--about 18.5 million trees--and some 2.1 million tons of greenhouse gases would not be released into the air.


Despite growing acceptance, customer confusion about how e-billing works remains an ongoing hurdle. As CheckFree's Stepp puts it, "Consumers are still trying to figure out what e-bills are."

E-billing is nothing more than the replacement of a traditional paper bill by some form of electronic bill delivered and processed via an online site or email. It is often called electronic bill presentment and payment (EBPP).

Some companies present bills to the customer via a Web site--either their own, or that of a consolidator who aggregates bills from various billers. Others offer customers the option of paying directly via email. For these billers, the question becomes: Do you "push" the bill to your customer in an email or "pull" her to a Web site? According to Cundiff, the answer varies depending on "the nature of the customer base and how savvy the customers are in using the online channel."

The pull model requires the customer to log onto the Web site to view an invoice before authorizing payment. The push model presents the invoice in a secure email and allows the customer to authorize payment using a button embedded in the message. Because it does not require log-in, push minimizes the cost and overhead of helping customers when they forget their usernames and passwords.

Either way, the bills are paid by credit card or, to reduce the potential for fraud, by draft through an automated clearing house (ACH) that handles the transaction processing. Both methods also include all the things that customers would expect to find in a paper bill: the invoice, company and regulatory data, and information on other company services and offerings. So e-bills still provide the upselling opportunities that used to share envelope space with mailed bills.

For instance, Metavante, one of the nation's largest e-billing providers, offers its financial-services clients the ability to include loyalty reward offers such as travel certificates, gift cards, and merchandise. …

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