There's one type of communication with customers that rarely gets overlooked--the invoice.
While being asked to pay an outstanding bill probably doesn't rank among a customer's favorite interactions with a company, smart marketers are increasingly taking advantage of this touchpoint as a vehicle for customer relationship management. And why not? As marketers search out all the possible avenues to communicate with customers, many are realizing that they already have regular communication going out to them through bills and statements. They just need to use it more effectively.
This clever marketing vehicle probably has a greater impact within B2C relationships because the recipient is typically the decision-maker. In B2B relationships, however, it's common practice at many companies for invoices to be handled by an accounting department that is typically isolated from the decision-makers--the real targets. But when those decision-makers can be reached, it's an opportunity to leverage this form of communication for product announcements, cross-sell and upsell opportunities, direct marketing and other strategic corporate messages.
"We use our bill to communicate important progressive political information to our customers every month, says Ted Volchok, vice president, billing and development for Working Assets, a long distance, credit card, online services and broadcasting company with a progressive social mission. The company also recently expanded to an online electronic bill payment system. "It's a win-win-win: Working Assets can optimize communication with its customers, it's convenient for our customers and our online bill helps save natural resources," he says (see sidebar).
Pay Up...Valued Customer
To recognize billing as a touchpoint, you only need to note how your own credit card bills come packed with offers for magazines, travel clocks and cruises. That's just the start of it. Billing is becoming increasingly sophisticated and many companies are creating more of a CRM role for the process. The customer segmentation, targeting and personalization that are applied in other customer-facing products can be used in billing effectively so that just the right inserts and other messages are communicated.
The point is to leverage the investment that is already being made in sending out bills for better marketing. So whether the bill presentment is accomplished through traditional ground delivery, faxing, e-mailing or the Web, the opportunity to maximize the customer interaction shouldn't be missed. With ground, for example, companies can include targeted ads in the statement mailer, filling the envelope appropriately and making the best use of the postal dollars. A company can also personalize the statement or billing documents with custom messages and otherwise tailor the communication to appeal specifically to each recipient.
This type of one-to-one communication can be built on the total picture a company has of the customer from all of its various sources or perhaps from just a few specific items on a bill. For instance, an office supply retailer might print a message on the statement that reads "You just purchased this name brand tape, but if you had bought our brand, you would have saved 49 cents. Why not try our brand next time?" The offer might also include a coupon.
The highest priority for bills and statements, however, remains ensuring that the amounts due are presented to customers correctly and that they are collected promptly. Internal billing departments are typically, but perhaps too strictly, a part of the IT, accounting or finance sections. "Those departments don't necessarily look at the bill from a marketing perspective, and they don't typically involve the marketing department in the design or copy," explains stacey Friedman, director of marketing communications at Output Technology Solutions (OTS) in Eldorado Hills, Calif., a provider of printed statements. OTS processes more than 150 million bills and statements every month, presenting customer communications to more than 50 percent of all U.S. households.
"It's difficult for a company to manage its billing processes from a marketing perspective or a customer relationship management perspective when it is doing it in-house, because at that point, those involved are worrying about getting the data correct and getting it out the door on time," says Friedman. As a result, she says, many companies are failing to leverage the invoice effectively. "What we see a lot of people do is send out their statements with a lot of room still left before they bump into that next postal category. They are just not maximizing their space."
When it comes to maximizing space and using the statement as a marketing tool, Friedman argues that success is a factor of whether or not companies outsource these functions to companies such as hers that have advanced bill production technology and sophisticated marketing capabilities. Hers is not an altogether biased view. Because of their focus and economy of scale, many providers of outsourced billing services are in a good position to offer higher levels of functionality. It could be an advanced printing technique such as highlighting the amount owed in color or special inserting technology or messaging functions that an internal IT department may lack.
Even statement design expertise is something that outsourcers can offer. "We have people here at OTS who have won awards for their statement design in the financial and mutual fund industry. It's kind of surprising, but it's a highly specialized and unique talent," says Friedman.
From Ground to EBPP...And Back Again
Most of the attention in billing lately goes to electronic bill payment and presentation (EBPP) systems. From the customer perspective, EBPP provides another level of convenience by offering an online payment option. From the company perspective, such an option speeds the process of distribution and reduces costs since there is no printing requirement or ground mail delivery charges.
Like many other customer-facing Web applications, however, part of the excitement over EBPP is that it can be leveraged as a powerful vehicle for marketing as well. Unburdened by the costs and lead times associated with ground billing, EBPP allows marketers to launch campaigns quickly and change course just as fast if needed.
"You can test a number of marketing promotions at the same time, and because of the speed, you can find out which ones are going to perform the best for you and then immediately change course," says Barry Weinstein, vice president of sales, Internet services for West Bury, New York-based North Shore Agency (NSA). NSA has a 30-year history of billing services expertise and is incorporating proven techniques in offline products to the online world. "What we have done is test the different response rates to the look of a bill, a document, and we take that same knowledge and testing methods and bring that over to the Web," says Weinstein.
Perhaps more interesting than this progression to the Web is the reverse. In particular, CRM techniques such as customization and personalization that first expanded in the virtual world are now finding application in letter shops for bill printing. For example, Acxiom of Little Rock, Ark., is a data management company that in 1999 acquired Access Communication Systems, a full-service, letter shop fulfillment company. Now, it provides print and electronic distribution to about 100 businesses including Reader's Digest and BP Amoco.
"We did a matrix retrieval system where, if they purchased one book, we printed them ads for four similar books," says Tom Gurry, business unit leader at Acxiom. "If it was a Western book, we showed them four Western books from a series of tables that drove what items to show. We kept that history the following month so that if they bought one of the four that we showed them as a promotion, we wouldn't show them the same book again; we would show them a new set of books until we ran out of the list of elements to promote. Then there are sub-categories we could go to from there. And that company received a 9 percent return on its investment.
"We have the ability to build what I like to call virtual documents," explains Gurry, "The best way to describe that is we can make every character on every page variable from page to page within the data stream." All relevant data is in a table somewhere; it could be a price table, a discount table or a message table, for example. By programming the page composition from those tables, rather than using printers to do that, Acxiom is able to build those full-featured documents on the fly.
Such "virtual documents" give marketers great flexibility in terms of the data elements to be included on a bill. "I can give customers access to tables, and they can change them on the fly," says Gurry. It also allows Acxiom to segment customers based on any data element in those tables. A very simple example is this: Any customer who purchased something for one hundred dollars or less would receive Message A printed on their statement, while those who spent more would receive Message B. The formula can be much more complex involving cross-sell opportunities similar to the book example above.
"We don't consider ourselves a letter shop, which is what a traditional mailer is called. We position ourselves as a data processor that has at its disposal the ability to distribute information in any of the mediums that are available--and by the way, these can be promotional in nature, too. That's one of the reasons Acxiom bought us, because of our distribution methods and our ability. Our software has the ability to make a bill a one-to-one marketing document," says Gurry.
So while EBPP struggles along mired in security and privacy issues, the ground mail billing side is moving ahead on its' own to deliver increasingly sophisticated CRM capabilities.
"Truthfully, EBPP is growing, but not as originally predicted," says Friedman. "We are a 30-year-old company, and we have this electronic arm, too, because we know that that is the future," says Friedman. "But, there was all of this fear that paper was going to go away, but what we're finding is that paper is not going away any time soon."
Instead, while companies might prefer to migrate customers to an online billing arrangement, they do continue to rely on the traditional ground forms that many customers are most comfortable with. Nonetheless, if they are going to have this billing cost, they will have to maximize its value to the company--not only for collections, but for improving customer communication, as well.