At the cross-roads of two of the industry’s hottest catch-phrases – e-commerce and one-to-one marketing – lies Electronic Bill Presentment and Payment. EBPP allows consumers to view and administer statements on-line, and allows businesses to better market their offerings.
Side benefits include huge savings in printing and mailing costs, and the ability to deploy legacy print applications in a Web-enabled world.
Most businesses mail bills and statements to their customers, and in the case of large utilities, phone, insurance or cable companies, that may mean millions of envelopes going out every month. At a total outlay of $1 to $2.50 per statement, the expenditures are enormous. But if a paper bill can be replaced by an on-line version, costs drop dramatically.
In one scenario, a customer receives an e-mail stating, for example, that a cable payment is due. By clicking on the URL in the message and then entering a password at the biller’s site, the customer can view the details of the bill and, if appropriate, authorize a payment. Such payments are usually made through automatic debit arrangements.
Because each electronic statement means the contents of one envelope do not have to be printed and mailed, savings add up.
“Let’s say you save 50 cents on each statement – and you could save 90 cents – and you have 12 million customers. If five per cent of them decide to use the Internet then that saves you $600,000 a month,” said Ray Simonson, president of EBPP vendor BlueGill Technology Corp. in Waterloo, Ont. “It doesn’t take long for that to become real money.”
That type of saving is being projected at BC Hydro. The utility, which launched an EBPP initiative in February, hopes that 25 per cent of its 1.5 million customers will sign up for Internet-only bill delivery within five years, at a savings of up to 50 cents per statement.
But cost reduction is not the driving factor, according to David Lum, managing consultant at Westech Information Systems, a subsidiary of BC Hydro in Vancouver. The utility wants to move beyond the limitations of paper mail and add innovative marketing and customer-information features to its on-line statements.
That motivation is common amongst the users of this technology, according to Marian Lewandowski, vice-president at Xenos Group, an EBPP vendor in Richmond Hill, Ont.
“For every customer we have implemented our solution for, cost savings are not a driving factor. Improved customer service, one-to-one marketing and customer retention are the drivers,” Lewandowski said.
On-line, a bill can include hot-links to a current sale or promotion, offer access to customer-account information or link the user to other products the company offers. In marketing parlance, this is known as cross-selling and up-selling, and this is where the real advantages lie, Lewandowski said.
“The interface to electronic commerce and one-to-one marketing is the electronic statement,” he said. “It’s a good interface because, for most large organizations, the only touch-point with their customers is the printed statement.”
The effectiveness of this touch-point is limited with traditional printed statements, he said. “In the paper world it’s difficult to…do one-to-one marketing. When you get a statement in the mail, there’s usually things called statement stuffers – (promotional) literature which is given to every customer, and not personalized for you.” This shotgun approach is simply not very effective, he said.
According to BlueGill’s Simonson, marketing departments are very interested in this functionality. “The marketing people are saying that bills and statements on the Internet are a great way to get customers to the company’s Web site, and to cross-market to them. So you get your phone bill and…you go to the Sprint or Bell Canada site. They know in real time who you are, how much your phone bill is, and they can put out a special deal for you on a pager or a cell phone.”
In another scenario, an application on a credit card company’s site could identify numerous restaurant charges on a statement and e-mail out a coupon for a restaurant that, according to its geographic database, is in the same town as the customer.
Along with that new functionality also comes a new revenue stream, according to Jules Street, vice-president at Killen and Associates in Palo Alto, Calif. “You have demographic information (on your customers) and you can do data mining, but you can also sell that to others.”
Killen is projecting that by 2001 companies worldwide will save US$8 billion annually through EBPP.
For IS departments, the good news is that these systems can employ existing billing and print applications. In a company with an old mainframe application, for example, the EBPP system monitors the legacy billing print stream and separates out the customers who have signed up for on-line statements. That data is turned into XML objects which are then used to generate Web pages.
“The beauty of the solution is we have nice Web pages [based on a] legacy system,” said Westech’s Lum.
But despite the advantages, on-line statement presentment has not yet taken off, although vendors and analysts are predicting that this will be EBPP’s big year.
Many projects are still in the pilot phase, according to BlueGill’s Simonson. “Most customers are not turning paper off yet, but once the pilots move into full production you’ll see users say, ‘Don’t send me any more paper.’
“I think there’s enough people on the Internet now who want this and are asking their billers about it and there’s enough billers starting to do it that it’s starting to drive other billers to think they have to do it. We’ve been swamped lately by people who call up and say they have to be up within 60 days, because they’ve heard a competitor is doing this.”