Nuts & Bolts - Case Study: Bills, (Paper) Bills, Go Away
Objective: Increase efficiency and reduce costs by influencing customers to switch billing channels, from direct mail to Web.
Solution: Perform analytics to determine which customers might switch, target them via direct mail, provide some incentive to switch and e-mail a note of appreciation to those who sign up.
Results: The 4.9 percent e-bill adoption rate for the targeted consumers represented a 206 percent increase over sign-up rates from previous months; market intelligence resulting from the analytics optimized consumer incentive offerings and promised reduced acquisition costs for future campaigns.
In a way, Progress Energy’s recent push to turn its energy customers on to electronic billing affirmed the power company’s message that its product—electricity—can be environmentally friendly and economical to use.
The Raleigh, N.C.-based energy company that serves 3.4 million customers in the Carolinas and Florida used a test campaign to determine how to get its customers to turn on e-billing and turn off their direct mail transactions. The answer came to Progress Energy in the form of a proposal from Brookfield, Wis.-based Fiserv, which provides information management and e-commerce systems for financial services.
Fiserv noticed many of Progress Energy’s customers paid their bills online through the banks Fiserv serves and thought the energy company might be interested in making the beginning of the transaction, the bill, an online experience, too. So the companies worked together to gather information about those Web bill-paying energy consumers.
“The profile that we had for e-bill up to this point was the customer who used the biller-direct model, coming straight to Progress Energy’s site rather than [viewing the bill through his or her own] bank site,” says Joyce Strand, a marketing analyst in the customer and market services department at Progress Energy. “So we had our market research folks build a model of what a consolidator customer looked like, [and it’s] someone who goes to the bank site.”
Strand estimates that 11 percent of Progress Energy’s power consumers receive electronic bills, with the majority of customers still getting direct mail.
Progress Energy wants to increase that e-bill percentage. So the company chose to figure out how to do it in June 2008 by mailing 10,000 customers information about the e-bill option. At random, 33 percent of those recipients simply learned about its convenience and Progress Energy’s belief that using electricity instead of paper to view the bill would be better for the environment. Another third of the recipients had the bonus of knowing that if they signed up by July 19, 2008, Progress Energy would donate $1 to a renewable energy nonprofit group in their areas. The final third learned they could donate $5 to the charity through signing up by July 19.
Strand says 490 of the 10,000 recipients, or 4.9 percent, turned on
e-billing. So the test proved Progress Energy was on to something. To reinforce the message to its new e-bill users, Progress Energy sent a one-time “thank-you” e-mail to its customers through the financial institutions. (The e-mails were facilitated by the banks, which didn’t release their depositors’ e-mail addresses to Progress Energy.)
“Those are very good results, by any standard,” she says, adding that the company has used the analytics a couple times since the 2008 test. “We actually are not pursuing the direct mail option as much as using e-mail.”
Direct mail is too costly for e-bill campaigns, Strand says.
Progress Energy used the benefits message in an e-bill push the company e-mailed to 500,000 customers in early spring 2009. (The company removed the donation incentive, as the higher conversion rates still didn’t justify the increased costs.) Strand says about 4 percent or 5 percent of recipients opted in to e-billing, so she’s planned another e-mail campaign to take place during the summer.
“We definitely have used the message, ‘We know you’re already paying electronically, why not take the next step?’”