As Postage Rates Rise, the Wise Will Find Hidden Value in Paper
The Postal Rate Commission announced in November 2005 the approval of a 5.4% postal rate increase. The increase took effect in early 2006, and for companies that mail high volumes of bills and statements the financial impact will be significant. Some may point to electronic bill presentment as a way to sidestep these increases, but the fact is that an overwhelming majority (between 85 to 90%) of utility customers still prefer to receive their statements in the mail and pay bills with a paper check. The reason? Customers have little incentive to change their habits and often find e-billing more confusing and time consuming than necessary.
In the face of the pending postal rate increase— coupled with slow adoption of electronic bill presentment and payment—utilities may feel that they are caught between a rock and a hard place; but there is hope. Smart utilities companies will find hidden value in their paper processes by looking more deeply at the value of printed statements and more closely at the reliability of the USPS. E-billing may someday provide significant cost advantages to billers, but until customer adoption is more fully developed it is wise to look at the many advantages of issuing statements and bills via P.O.P. – plain old paper.
The Advantages of Deliverability and Tracking
One consideration that is often overlooked in the buzz about e-billing is the issue of deliverability. For instance, when an invoice is put into the mail stream you have a high degree of certainty that it will be delivered. The USPS has a long history of reliability that is simply not proven with e-mail. Anti-spam filters, system outages and constantly changing e-mail addresses all combine to make e-delivery a less-than-certain process providing less-than-certain peace of mind for high-volume billers.
Another benefit of paper billing is tracking. The USPS offers highly developed tracking mechanisms that help ensure mail pieces don’t get lost in the delivery process. For example, using Confirm®, an automated tracking methodology from the USPS, along with “Planet Code”— a barcode applied to every mail piece that is scanned and documented at each postal facility —utilities can obtain daily updates on the progress of individual statements or invoices that enter and move through the postal system. These advanced tracking capabilities often provide unrecognized value. For instance, companies can verify mail delivery and synchronize those deliveries with coordinated telemarketing or other promotional efforts.
Electronic payments can certainly serve to decrease postage costs, but in the jump to save companies may find that they lose inherent advantages found in tracking paper. And while the use of electronic statements is growing, the savings available are still contingent upon customer adoption. So far, the volume is still far too small to offset increasing mailing costs. Meanwhile, utilities can find advantage and innovation using some of the tried and tested mechanisms developed over time in the printing and mailing industry.
Increase the Value of Paper Statements
Another advantage of paper billings and statements is that printed statements are often one of the main, if not the only, points of contact between a utility and its customers. Utilities that issue thousands of statements per week should view these documents as a source of value and new revenue rather than simply “the cost of doing business.” Statements—unlike other forms of mail—are always opened, most often read, and commonly kept on file. That makes them worth their weight in marketing advantage in terms of cross-selling and up-selling existing customers new and additional services.
Today, with the advent of digital printers and advanced database systems, the promise of one-to-one documents that perform well beyond generic “junk mail” is within reach. With selective data mining and thoughtful document composition it is possible to produce statements and bills that command dramatically improved customer response and are contenders in winning marketing campaigns. Rather than viewing printed statements as an expense to be avoided, utilities should leverage their investment and realize the full promise of document personalization and one-to-one marketing.
Overlooked Expert Resources
Traditionally, utilities have maintained the systems to print and mail their statements internally. But increasingly, businesses today prefer to focus on activities where they create a unique competitive advantage, and then support those areas with strategic relationships. Not every utility can be an expert in postal discounts, mail piece tracking and document composition. Outsourcing is one way to access these expert skills while eliminating the need to maintain a large investment in staff, technology and process development. But whatever approach is taken when it comes to “getting the bills out” utilities should continue to look toward the future promise of e- billing, while maintaining a close watch on the advantages found in the traditional paper billing process.
Harry Stephens, President and CEO, DATAMATX
