Reduce delinquency rates in five easy steps.
Posted December 19, 2012 by Erik Amelink
Google “utility delinquencies” and you’ll find that it is a widespread problem that continues to grow in a sluggish economy. With organizations under more pressure to reduce costs and increase revenues, it is imperative that they get a handle on reducing delinquencies.
So how can utilities address delinquencies, while cutting expenses and boosting profits? These five surefire ways will accomplish all three:
1) Utilize an outbound notification system – Proactively sending call-out messages to customers with overdue balances or those scheduled for shut off is an effective, affordable method, especially compared to manual alternatives (late notice mailings, door hangers, phone calls). Decrease delinquencies further by combining outbound calls with an inbound IVR solution; customers can then pay immediately during the reminder call.
Notifications can reduce non-payment service shut-offs by more than 50%! Immediately upon implementing past-due automated reminder calls, one customer had the smallest number of shutoffs (a 75% reduction) in more than three years. Another customer saw non-payment utility shut-offs decrease by 31% over the course of one year after initiating a reminder call program to their overdue accounts.
Finally, customers actually appreciate reminders. According to a 2011 Billing Household Survey from Fiserv, 52% of consumers want to receive bill reminders and missed payment alerts from their utility.
2) Work from real-time data – Using a single, real-time data source of customer information keeps everyone on the same page and facilitates the seamless posting of payments and balances to the customer information system (CIS), regardless of the customer’s payment choice (web, mobile, IVR, in-person). Payment and customer account information should be consistent and current whether it is accessed through the utility’s website or a customer service representative. Should you utilize batch processing (in which payments are posted in batches at specific times; thereby creating a payment posting delay), it can place the customer’s account in delinquency or worse, result in service shut-off, if their payment is past the day’s batch processing deadline; a consideration not only for a notification system but also real-time data.
3) Offer different payment options – Delinquencies will decrease when you provide various payment options. One in five households changes the way they pay their bills each month, with 30% of consumers doing so to avoid making a late payment, according to the aforementioned Fiserv study. Unfortunately circumstances change, including the availability of funds, billing due dates, travel, and personal crises, but customers truly want to avoid late payments. Therefore, it is crucial to offer different payment options to customers to help ensure you get paid and that your customers are able to make timely payments in a method that works for their current situation. Real-time, expedited payment options by credit/debit cards and eChecks through IVR, web, and mobile enable customers to pay quickly (even last-minute) without having to deal with the inconvenience of paying in person or having to risk mailing a payment that could be delayed.
4) Encourage recurring payments – Make bill payment easy for customers by offering recurring payments (also known as ‘auto bill pay’ or ‘automatic payments’). Not only is it secure and convenient for customers but ensures that utilities collect payments on time. Auto-pay withdraws funds from customers’ accounts automatically on a monthly basis. Automatically withdrawing funds to meet customers’ monthly payments reduces processing. It also eliminates mail delivery reliance, remembering to pay their bill, or the host of other factors that are the cause for missed payments. A study from Mastercard found that once customers realize the benefits of paying their bills automatically, the provider gained increased loyalty and retention, guaranteed payments, and improved cash flow.
The challenge is getting your customers to sign up for auto-pay. Marketing should emphasize convenience features – knowing your bill is paid on time, without the hassle and cost involved with writing and mailing checks or paying in person. If customers are happy with recurring payments, they may be less likely to use more traditional payment methods that could lead to delinquent payments.
5) Incentivize the move to paperless adoption – It has been found that those who receive electronic bills tend to be more satisfied, loyal, and reliable customers. By driving paperless adoption, you are in turn creating a more satisfied customer base that is likely to be receptive to other advanced features of account management and self-service – including the enrollment in recurring auto-pay features. Knowing this, it makes sense to implement promotional campaigns that increase enrollments in paperless billing and work to move customers towards electronic and automated means for self-service.
While each method can work independently to reduce delinquencies, using them collectively is the best way to truly combat delinquencies. What proactive measures are you taking to reduce delinquencies?
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