Postage: The Biggest Expense
For most providers, the single biggest expense in getting the invoice to the customer is postage. While production costs make up about 40 percent of the total cost to produce the bill, postage can account for up to 60 percent, according to Ron Whaley, vice president of sales and marketing at OSG Billing Systems, which specializes in bill presentment and invoicing.
Print and mailing software should be able to measure the mailing cost based on how many pages are in a bill and how much an insert will weigh. If a provider is including a lot of optional marketing information, it could save on postage by eliminating the information or printing it directly on the bill instead of a separate insert.
OSG goes as far as sending back data to providers if the end customer's account could not be associated with POSTNET barcodes, which qualify providers for reduced postage rates. In such cases, OSG will give the reason why the address file could not be fitted with a barcode. "Some of my customers spend a lot of time going onto the Web site to show them what they need to do to update their master file," Whaley says, so the next time an address came through it would receive a POSTNET barcode. "The savings would probably be somewhere around 7 cents per envelope," he says-an amount that over the long term can add up. One OSG customer, a provider in Maryland, took the time to react to every name and address sent back to make it qualify for a barcode, and now 99.6 percent of the customer files-an unusually high number-receive a barcode.
Distributed Printing
Decreasing the distance an invoice travels in the U.S. postal system can impact optimization as well. UPS Mail Innovations uses a distributed print process that diverts bills electronically from the company's system management facility, where the data has been cleansed and validated, to the one of its six print houses nearest the invoice's final destination. "To put it in telecom parlance," says Tim Dennis, director of strategic accounts, "we use the Postal Service for the last mile. We're the backbone."
He adds, "We're able to deliver mail in 2.54 days from receipt of the data file from the customer to the customer's mailbox, so the value proposition we're carrying in the marketplace and gaining great traction with is delivering an improved cash flow."
The bulk of the company's current clients operate in the IT field, banking and finance, credit cards, credit and collections. Yet, since many of the requirements are similar, it is making an aggressive move into the telecom space.
"If we can deliver a 2- to 3-cent difference on each mailing, that starts to be a significant cost," Dennis notes.
Disparate Systems
Data integration is critical for marrying all the necessary information to print the bill.
"Many of the carriers that I talk to have a very complex process in trying to go from the billing system with the raw data through the document creation and then trying to push it out to [print]," Dennis says. "Some of these carriers are running a couple of different electronic platforms. The process is very cumbersome."
Not to mention, the process is underestimated. "It's a lot harder to do that than most companies or most organizations think," says Davis Marksbury, president and CEO of Exstream Software, which supports telcos like AT&T, Cegetel in France and Rogers Cable in Canada. Providers, he says, "go through the process of trying to integrate their CRM system with some type of messaging system with a statement system, and most of the time that doesn't work or it fails to meet expectations."
One reason is that providers may have information about a customer in several different databases-one for transactions, one for customer information, one to track what services a customer has. With most systems, Marksbury explains, the provider must take the data with varying fields of information out of all the databases and put it into a single file that can be sent to the statements provider. This data preparation process is time-consuming and costly to providers. To reduce costs, vendors should support XML, SGML and HTML along with a host of other formats to feed information into a document formatter.
Annemarie Pucher, co-founder and head of global sales and marketing at ISIS Papyrus, says the company normally pulls data in from five to 10 different applications.
Supporting the different data elements within each database is difficult. OSG's Whaley says the data elements from top billing vendors vary by package. Although most packages generally include the same static information-customer name, account number, bill date, due date and other consistent fields-Whaley says, "Once you get beneath that, it really is unique by platform." Trying to link those elements is challenging. For multiple systems, OSG typically will treat the data as separate cycles or take one data feed from the customer that the customer itself has integrated.
Developing APIs and retrieving accounts receivable (AR) data are also big challenges. They were among AMS' biggest struggles in its latest deployment, says Linn McClelland, senior principal at AMS. Within AMS' Tapestry product, service providers use a simplified graphical user interface tool to change sorting and build messages in the design of the statement. AMS works with third-party vendors for formatting and printing.
"The most important thing the system can do is check and validate dollars," says AMS consultant Jennifer Wells. The system must automatically verify that the charges on the bill match what the AR system sent, so that marketing didn't add something into the rules or forget to add the section for taxes.
Bill Design
Designing the bill may not be an art, but a science. Whaley says it is extremely critical that a printer work with the organization to design the invoice, because every character and line matters when it comes to postage considerations. Rich Hoffman, OSG's vice president of technical operations, says the most important element of designing the bill is increasing readability. This task alone can dramatically cut calls to the call center, especially since most callers are new customers-22 to 35 percent of calls are related to questions about the first bill a person receives, Whaley says. A more readable bill might pay more attention to elements such as the location of particular information on the page, font size or the color of the call center phone number.
ISIS Papyrus recently worked with Thai Fuji Xerox on a production process for a company in the Philippines. The bills for this company were reduced from six pages to two, producing some interesting results. During the project, the company realized that simple design improvements could boost cash flow. "They said if they print the amount of the bill in a larger font, they have noticed that on average the payment will be much faster," Pucher at ISIS Papyrus says.
Even putting a summary on the back of the bill about how to read the bill helps to answer customer questions before they become call center calls.
OSG worked with RSL Com USA to decrease the number of frivolous reports on its bill. This cut the page count and resulted in a cost savings (see "RSL Com USA: A Print Savings Success Story").
Increased Opportunities
According to Whaley, "99.9 percent of the invoices we mail are opened and read," whereas in the industry customers typically open only 42 percent of direct mailings.
Printing individualized bills that include targeted marketing messages is what most providers envision, yet many know that being able to capture relevant data and flagging that data to market to customers on the bill is not a simple task. Many carriers face challenges in marketing on the bill because they are dealing with high data volume in many disparate systems. In the past "there was a very limited number of tools that they could use to actually create the marketing materials," Marksbury at Exstream says. Many of these tools required technology that marketing people didn't understand, or didn't want to understand.
"It was a significant effort to actually make those changes," he says, "so the effort to actually make a change to add a happy birthday message was huge, and a lot of people didn't do it because by the time they made that the message was obsolete."
Many print software products now allow marketing departments to easily create and store marketing pitches, campaigns or messages that can be fed into the print cycle at the appropriate designated time without manual intervention.
Exstream's software keeps track of every marketing piece that has been sent to each person and can track what the person does or doesn't respond to. Capturing this information might involve putting bar codes on a coupon to be scanned in, or identification or promotional codes to be referenced when calling a call center. Typically, this involves integration into some response capture system.
The ISIS Papyrus Capture system also tracks inbound marketing information by scanning incoming mail and storing it in a database or third-party CRM system. The product uses artificial intelligence to handle roughly 85 percent of all incoming mail and email automatically.
One OSG customer has begun using the back of the bill not only to cut costs on print production, but to make it more of a profit center. The provider began selling advertising space on the back of its bill-one month, an ad might appear for security alarms and the next month for satellite dishes. This is done as a revenue-sharing program with the advertisers. The ad helps offset the printing and postage costs, and the provider receives a percentage of the revenue that the advertisement drives.
But, as Dennis points out, not all providers may be willing to sell off this valuable invoice real estate. "I'm not sure that companies are ready to expose their customers in the telecommunications space to outside marketing pitches like they do on credit card bills or airline miles statements," he says.
Personalization
Placing messages on the bill is not the only marketing tool providers can leverage on the invoice. "We can actually reduce the size of the statement based on the customer profile," says Marksbury about Exstream's Dialogue product. "If you are not a high-value customer, you only get a one-page statement. You don't get a list of all your transactions. If you are a very valuable customer, you get everything plus marketing, and if you are somewhere in between, you get something in between."
Providers can even personalize down to who gets a bill with color. They "can actually design the statement in full color, and based on whether or not we think it's worth sending a color statement to the customer, we can change that from color to black and white where the costs are less and where we might include less marketing information," Marksbury explains. Business management teams can make the decision to personalize and include marketing information for the top 25 percent of customers only.
In its work with financial institutions, ISIS Papyrus already has seen numerous applications where priority customers receive full color statements and bills, while regular customers receive them in black and white. "That is easily done by flagging the data," Pucher says. This data would likely come from a marriage between the bill and CRM information, yet providers must have the necessary systems and data fields in place to track this data first. Pucher says telecom providers are not quite as advanced as the financial institutions when it comes to treating customers differently based on their value to the company.
Quality Assurance
Perhaps one of the best things any provider could instill in its production process is quality assurance. "The whole process from transmission through mailing is an automated process, with quality control steps throughout the whole process," OSG's Hoffman explains. "We're going to look at what you told us you were sending us and what you did send us. We're going to count statements. We're going to validate the inserts."
When OSG is finished processing the data, it knows the weight, the thickness and everything else there is to know about every single image and every single piece of mail it will send out.
OSG checks each invoice run to see if it is the same size file received from that customer in the last 30 days. If it matches, there's an automatic email that alerts OSG's client relations that puts a job on hold and calls the customer to validate the job.
"We just saved somebody the cost associated with producing 60,000 invoices, or $20,000 in postage," Whaley at OSG explains. On top of the embarrassment and the cost to print new invoices, a provider would also need to add an insert to apologize for the new invoice. "Can you imagine all the calls that come in to customer service? They would be swamped," Whaley says.
In addition, OSG verifies that the customer has selected the appropriate insert and uses an automated issue tracking system to notify client relations of any problems in the process. "As well, when we're inserting, we take the first 15 pieces of any job, open them up, validate that we have the right insert and the right collation and everything looks good, and a supervisor signs off on it," Whaley says.
OSG also enables the customer to view the bills prior to production of the actual invoice in a lot sampling process. A customer might send over a file of 50 to 100 invoices that would be automatically processed. OSG then checks to make sure the data is good, that the dates on the data are good and that there is no overprinting. The company ensures that the messages are reading well and that the windows are lying well to the envelopes.
"When we are printing it," Whaley explains, "we actually scan every page as the operators are flipping through the output looking for print quality. As part of our automated document factory, we have scanners that run to scan what's being printed at all times so we know if we printed the job more than once."
OSG then either sends those invoices back to the customer via FTP, or the customer downloads them from the OSG Web site. "IT gives them a mirror image view of what the customer would see if I were to mail those invoices that day," Whaley says.
Supporting EBPP
Although everyone is excited about the cost savings from EBPP, no one believes the printed bill is going away, says UPS' Dennis. Yet there is "a marriage between what is printed and what is seen electronically," he says. "What people are starting to look at is how can we leverage the printed output with or corresponding to our output electronically."
Exstream's Marksbury cites statistics indicating that an average EBPP statement may cost about 20 cents to create. The reason for this cost, he says, is that a lot of companies have implemented EBPP systems that must take the output from a print statement application, mine the data out of that, and put it into a database so it can be presented online.
EBPP was first heralded as a major cost cutting process, but adoption rates were slim. Providers today are trying to use EBPP for marketing purposes and to augment what is printed, which they are hoping will cut the number of pages in the printed statement.
The Goal
Although the print process offers tremendous opportunities for cost savings, providers are continually trying to fine-tune the production of their bills to maximize readability while lowering the printing price tag. Increasing postage costs-a major portion of what it costs to present a bill-is challenging providers to look for efficiencies. While the cost of print production might only be pennies per invoice, it adds up to great amounts over time, especially if mistakes are made. Increasingly, providers are seeking ways to optimize this process to cut costs at every angle.
| RSL Com USA: A Print Savings Success Story RSL Com USA is not unlike other providers, in that the company deals with more than one billing system. This can cause a variety of headaches when it comes to printing the invoices each month. Of the company’s two billing systems, one is a vendor-developed system that is fairly easy to print from, and the other is a homegrown system that has always caused nightmares for the provider when it came time to send the bills to the printer. “No [print] applications exist to support the homegrown system,” says Duane McDonald, RSL Com director of credit, collections and billing, and the print code on the homegrown system was difficult at best to work with. A printer interfacing with the system, for example, faced inherent inflexibilities such as not being able to place text on both sides of a bill. RSL Com had to have two separate print runs, one for each billing system, and the bills from the two runs had a different look and feel. This difference was costly, because the provider had to train CSRs to handle questions about two separate and distinct invoice types. The company decided to shop around for a better print process. RSL Com worked with OSG Systems to convert information from its systems into test files for its customers. The vendor-driven system took three weeks to accommodate, while the homegrown system took about 60 days. The goal was to put all this information on one bill so that if a customer looked at the bill, it would appear as one. Although the information in the billing systems was not integrated itself, the provider wanted to integrate that information during the print process so that its customers were not receiving multiple bills related to each service for which they had contracted. Since working with OSG, McDonald says, printing costs have decreased by more than 40 percent. RSL Com attributes some of this cost savings to using OSG’s standard format for the remittance form on the invoice. In addition, McDonald says having OSG deposit the bills at a post office in OSG’s building saves a great deal of lag time in getting the bills out to the customer. This often translates to a quicker remittance time. Other printers that RSL Com worked with had sent the mail out to a clearinghouse to be presorted before being placed in the mail (presorting by bundling like-destined mail together is performed to trim postage costs). However, by routing the mail from OSG directly to the Postal Service, the time frame for a bill to hit the streets decreased from one week to two days. And the effect was positive, notes McDonald: “It brought the cash back quicker.” |
