Electronic bill presentment and payment is one way to drive down costs, increase profits, and retain customers.
The retail winners in the 90s managed to maintain margins in an era of price competition by rationalizing distribution and using advanced technologies. Enter e-commerce. Now, retailers are escalating the hunt for competitive advantages to drive down costs, increase profits, and retain customers. Electronic bill presentment and payment (EBPP) delivers the results some companies are seeking. EBPP is the practice of presenting bills (or invoices) to customers, collecting payment and remittance information, and posting that information to accounts receivable, all electronically.
The case for EBPP on a cost basis is simple. Cost reductions realized from removing high-cost paper processing in favor of electronic processing can be garnered throughout the billing cycle, from creating the bill, to collecting payment, to the cash application function. Industry analysts feel these generally average between 55% and 70%. However, the real payback for looking closely at EBPP is not about costs. It's about customers.
EBPP opens a new channel for retailers to market and cross sell products and improve customer care. With EBPP, customers can send billing inquiries electronically, 24/7. Customers can see historical bill information that contains more than their current paper bill provides. Many EBPP systems let the biller's call center "mimic" the bill exactly as the customer is viewing it online. This allows the customer care representative to respond more quickly to customer questions, thus shortening call times. For the biller, EBPP can lower call center traffic and associated costs, and provides an opportunity to electronically communicate in a detailed, thorough manner.
With EBPP, billers can strategically place banner advertising messages on the electronic bill that are more compelling than paper inserts crammed in an envelope with a paper bill. The system also makes it possible and cost-effective to achieve one-on-one marketing. Billers can easily place ads to specific customer segments based on profile information collected during enrollment. More importantly, the bill is "sitting" on the retailer's Web site, which if done right, is populated with a host of alluring marketing themes, and perhaps even an electronic catalog for the consumer to browse through. Delivering the bill is the one time every month when the biller can communicate with its customers.
The direct billing model of EBPP is the model by which a retailer touches the customer in the customer's electronic mailbox, provides the most control for the retailer, and offers opportunities for a customer-centric retailer, such as:
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The power of the Web coupled with EBPP creates a marketer's dream. It is very clear that the next wave of investment in this new channel will be around the development of customer relationship management (CRM) applications. As consumer behavior moves toward multi-channel buying habits (mail, phone, store visits, and e-transactions), using EBPP as the relationship cement will become as commonplace as gift registries. EBPP will likely engender major investment in supporting technologies, with a payback model based upon the direct marketing metrics of recency, frequency, and monetary value (RFM), as well as lifetime value (LTV) of customers.
Winning retailers will find a way to optimize each customer moment, capture them, analyze them, and learn from them, whether they are store visits, purchase transactions, merchandise returns, phone calls, Web site visits, or billing. As the penetration of home PCs continues to rise along with the willingness of consumers to transact business over the Internet, EBPP will become the accepted back end of in-house credit operations. It will offer retailers not only cost efficiency, but also relationship building. The time for EBPP is now.