by Jim Jossie, James J. Jossie Consulting LLC
Almost weekly, e-newsletters and trade magazines discuss the growth of outsourcing.
Because my consulting practice focuses on helping utility companies make informed decisions in their customer bill-delivery projects, this update concentrates investor-owned utilities’ (IOUs) use of outsourcing for customer bill print and mail processing.
Utility companies tend to review their bill print and mail processing when some event drives the evaluation, for example, equipment life cycle issues or changes in billing volume based on acquisitions or mergers.
One of the first questions I receive when a utility company considers evaluating its bill print and mail processing is, “What are other utility companies doing?”
To respond and provide industry comparison information for utility companies to use in their evaluations, I examined the information I have collected during nearly 20 years of working with utility companies on customer bill-delivery projects.
To ensure I had the most current data, I contacted each of the 70-plus IOUs to obtain information on their current bill-print and mail-processing strategies.
The information was categorized based on the number of customers each utility listed on its company Web site.
I expected nearly a 50-50 split in the number of utility companies that handle their bill print and mail processing in-house compared with those that outsource, and the information I collected bears that out. Utility companies with larger customer bases tend to process in-house. Only one utility company with more than 4.4 million customers outsources its bill print and mail processing.
There is no quick or simple answer to whether a utility should outsource its bill print and mail processing. There are many factors to evaluate, and the effect of each varies by company. An evaluation of this type must be done carefully to understand the factors. Understanding the future strategy for your customer bill documents is critical because it will impact the volume of printed bills mailed to your customers.
What is the Trend?
I contacted UtiliPoint International Inc. for trend data collected in its annual “UtiliPoint International’s Analysis of the North American Utility Customer Service Market.”
The analysis asked, “Does your utility company outsource or plan to outsource bill print during the next two years?” That will provide a reasonable look at the trend. The answer was 22 percent in the 2002 survey. In 2005, it more than doubled to 53 percent. And this year, it increased to even more: 60 percent.
While the question brings the additional element of planning into the response, it provides a good benchmark indicating that outsourcing bill print and mail processing has continued to gain interest throughout the decade.
A utility company’s monthly customer bill is the most important way to communicate with customers. It makes good business sense to evaluate its bill-print and mail-processing strategy every couple of years. In doing so, what questions must be considered?
First, is the current process the most cost-effective option? If not, would significant savings be realized by changing to another process?
Second, an easy to read and understand bill design equates to increased customer satisfaction and reduces customer calls to call centers. Does the bill format need to be refreshed?
Third, what are the impacts of technological innovations, such as:
- e-Billing. I expect most utility companies have experienced growth in the adoption of e-billing by its customers. Any evaluation of a bill-print and mail-processing strategy should include an estimate of how this adoption growth will impact the volume of printed bills mailed in the future. The objective of reducing the cost of delivering billing information to customers will always be important. In addition, reducing the number of printed documents is getting favorable attention in the green movement and environmentally conscious projects, and there will be increasing emphasis on paper reduction.
- Smart Metering. Smart metering is gaining in interest. I see this movement having a significant impact on customer bills, however, it is vital that the tsunami of information generated by smart metering is used efficiently and effectively in customer bill delivery.
UtiliPoint confirmed that utility companies must develop a strategy to display this additional information. UtiliPoint suggested utilities look at ways to summarize billing data and provide additional ways for customers to use online account access to review more details regarding their billing transactions, such as detailed meter readings and related calculations. In addition, utilities should focus on information with the most value to customers: When was the energy used? How much did it cost? What is the environmental information?
UtiliPoint suggested that utilities look for ways to provide customers with peer group information to give customers a reference point to their cost-effective use of energy. Utility companies must plan how to use their customer bills to provide information that allows customers the benefits from smart metering.
- Transpromo. As you evaluate your customer bill print and mail processing, you will hear the term “transpromo communications.” Transpromo can be defined as a transactional document (i.e., bill, invoice, statement) that contains one or more promotional messages. These documents incorporate the important billing transaction information along with promotional messages. White space in the document is efficiently used to deliver targeted marketing messages and may incorporate highlighted or colored text within the document.
Most utility companies in my experience have personalized their messaging based on information in their customer information systems (CIS). Transpromo is elevated targeted messaging and may use data from other sources in addition to information in a utility company’s CIS. Financial services and credit card processing companies already use transpromo. Utility companies need a well-thought-out strategy to use transpromo.
The tradition of keeping the same bill print and mail processing and bill document format for many years without change is over. Changes in the utility industry that impact the number of bills printed and the amount of information on bill documents is evolving rapidly.
Utility companies must properly evaluate their customer bill-delivery strategies. Using information learned from other utility companies and other industries will help establish the most effective, long-term strategy that will pay dividends over time.
Jim Jossie is owner and principal of James J. Jossie Consulting LLC. To learn more about the services, visit http://jossieconsulting.com or call 262-242-3190.