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UTILITY CUSTOMER BILL PRINT/MAIL PROCESSING UPDATE
(2009-11-16)
It seems that almost weekly there are articles in e-newsletter publications and trade magazines that discuss the growth of outsourcing. Since my consulting practice focuses on helping utility companies make informed decisions in their customer bill delivery projects, I decided to concentrate this update on the use of outsourcing for customer bill print/mail processing by the Investor Owned Utilities (IOUs).
Typically, utility companies have tended to review their bill print/mail processing when there is some event driving the evaluation, for example, equipment life cycle issues or changes in billing volume based on acquisitions or mergers.
Time and time again, one of the first questions I receive when a utility company considers evaluating its bill print/mail processing is: "What are other utility companies doing?"
In order to respond to this question and provide industry comparison information for utility companies to use in their evaluations, I examined the information I have collected from nearly 20 years of working with utility companies on customer bill delivery projects. Next, to ensure I had the most current data, I contacted each of the seventy plus IOUs to obtain information on their current bill print/mail processing strategy.
The information I collected on the IOUs' handling of their bill print/mail processing was categorized based on the number of customers each utility listed on their company website:
| Number of Customers |
Bill Print/Mail Handled In-House |
Bill Print/Mail Outsourced |
| 250,000 to 499,999 |
3 |
8 |
| 500,000 to 999,999 |
9 |
7 |
| 1,000,000 to 1,499,999 |
4 |
6 |
| 1,500,000 to 1,999,999 |
5 |
2 |
| 2,000,000 to 2,999,999 |
1 |
6 |
| 3,000,000 to 3,999,999 |
5 |
2 |
| 4,000,000 to 4,999,999 |
5 |
3 |
| Over 5,000,000 |
5 |
1 |
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| Totals |
37 Utilities |
35 Utilities |
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| Percentages |
51.4% |
48.6% |
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Going into this process, I expected nearly a 50/50 split in the number of utility companies that handle their bill print/mail processing in-house compared to outsourcing this processing and the information I collected bears that out. Interestingly, utility companies with larger customer bases tend to process in-house, as only one utility company with over 4,400,000 customers outsources its bill print/mail processing at this time.
My direction is that there is no quick or simple answer as to whether a utility should outsource its bill print/mail processing. There are many factors to evaluate; and the effect of each of these factors will vary from company to company. Therefore, an evaluation of this type needs to be done carefully in order to fully understand the factors to evaluate. In addition, understanding the future strategy for your customer bill documents is critical, since this will most likely impact the volume of printed bills mailed to your customers. Later in this article, I provide some topics to consider as your company looks at its future customer bill delivery strategy.
What is the Trend?
At this point, you may ask yourself the same question that I did -- What is the trend?
I contacted UtiliPoint International, Inc. for trend data that they have collected over the years in their annual UtiliPoint International's Analysis of the North American Utility Customer Service Market.
The UtiliPoint Analysis asked a similar question: 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 to this question was 22% in the 2002 survey; in the 2005 survey it more than doubled to 53%; and this year it increased to even more, to 60%.
While question brings the additional element of "planning" into the response, it still provides a good benchmark indicating that the outsourcing of bill print/mail processing has continued to gain interest throughout the decade.
Looking Forward
The rest of this article provides information that I believe a utility company should evaluate as part of any assessment of its future customer bill print/mail processing and document composition strategy.
A utility company's monthly customer bill is the most important means of communicating with its customers; therefore it makes good business sense to evaluate its bill print/mail processing strategy every couple of years. In doing so, what questions need to be considered?
First, is the process now being used the most cost effective processing option available? If not, would significant savings be realized by changing to another process?
Second, it has been demonstrated that a bill design which is easy to read and understand equates to increased customer satisfaction and reduces the number of calls to the customer call center. Does the bill format now being used 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 bill print/mail processing strategy should include an estimate as to how this adoption growth will impact the volume of printed bills that will be 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 no doubt there will be increasing emphasis in the future on "paper reduction".
- Smart Metering
Smart Metering is gaining in interest. I see this movement having a significant impact on the customer bill. However, it is vital that the tsunami of information generated by Smart Metering be used both efficiently and effectively in the customer bill delivery process.
To gain more insight into this topic, I again contacted UtiliPoint International, Inc. UtiliPoint confirmed my thoughts on the need for the utility companies to develop a strategy on how they will display this additional information. UtiliPoint suggested that utilities should look at ways to summarize the billing data and then provide additional ways for their customers to use online account access at its website to review more details regarding their billing transactions, such as detailed meter readings and related calculations. In addition, they felt that utilities should focus on information that is of most value to customers, which is when was the energy used, how much did it cost information and environmental information. UtiliPoint suggested that utilities look for ways to provide their customers with peer group information to give the customer a reference point to their cost effective use of energy.
I am only touching the tip of the iceberg when it comes to the impact of Smart Metering when implemented, on the customer billing document. The message is that utility companies need to take the time to plan how they will use their customer bill to provide the level of information that allows their customers to gain a benefit from following a Smart Metering strategy.
- TransPromo
As you evaluate your customer bill print/mail processing, I expect 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 highlight color text within the document.
My experience is that most utility companies have personalized their messaging based on information they have available in their Customer Information Systems (CIS). TransPromo takes targeted messaging to another level and may use data from other sources in addition to the information that is available in the utility company's CIS. Other industries, such as, financial services and credit card processing companies are already making use of TransPromo.
Here again, I am only touching the tip of the iceberg when it comes to TransPromo. My suggestion is that utility companies need to have a well thought out strategy if they plan to use TransPromo.
Summary
The old tradition of keeping the same bill print/mail processing and bill document format for many years without change is over. Changes in the utility industry that impact both the number of bill printed and the amount of information on the bill document is evolving rapidly.
Utility companies need to take the time to properly evaluate their customer bill delivery strategy. Using information learned from both other utility companies and other industries will help establish the most effective long term strategy that will pay dividends over time.
While the information provided in this article is just a starting point, I hope it helps your utility company build a better strategy for both bill print/mail processing and for the look and feel of your billing documents.
About the Author
Jim Jossie is owner and principal of James J. Jossie Consulting LLC. To learn more about the services Jim provides, please visit: www.jossieconsulting.com or contact Jim at 262-242-3190.
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