Using Telecom Bills as a Marketing Channel

Today’s telecom bills often include some form of marketing. Using the bill to market to customers is cheaper than most direct mail campaigns because customers tend to give more face time to their bills than they do to the onslaught of junk mail. Also, with the implementation of the FCC-mandated Do-Not-Call registry, the more traditional telemarketing campaigns are becoming obsolete.

Using the bill to market is still a relatively new area for telecommunications providers, but to take advantage of this opportunity, providers must deal with several issues—both cultural and technical.

The Cultural Divide

Because the bill is considered sacrosanct by providers, it cannot be tampered with in any way that could produce a negative impact to the business. For example, statement information relating to due date or amount owed or call detail information cannot be changed or altered. One mistake can be extremely costly. While optimizing the bill to market to customers makes sense, it is no surprise that so many providers are still struggling with the idea.

Group 1 Software’s vice president of marketing, Ann Jurczyk, says that the process by which messages go from marketing to bill production is a problem for most providers today.

Some providers, however, are taking the lead in giving marketing more authority on the bill. Verizon has decided that marketing—not IT—owns the bill. In a sense, this is a revolutionary concept for those who have mainly seen billing and operations as the keeper of the document.

Yet, with providers looking at every aspect of their business to trim costs, curb churn, upsell additional services and drive efficiency, using the bill to market is being given serious consideration.

“[The bill] is now a customer communications tool,” says Rich Langan, DST Output’s marketing manager. And, he says, most providers are slowly but surely working through the cultural aversions to allow marketing to have control over the statement.

Ron Phillips, vice president of billing at Qwest Communications, says, “I think there’s a belief that the bill is a better reach vehicle than direct marketing.” He says that Qwest wants to give the marketing department as much control as possible.

Recent research from Lansdowne Market Research and validated by Nielsen Media Research reveals that a customer spends an average of 15 seconds reading a direct mail piece and 43 seconds reading a bill. This presents an alternative marketing channel with immense opportunity.

“We are seeing a huge growth in [this] area,” says Shelley Sweeney, vice president and general manager at Xerox. She notes that one insurance company used the bill to direct traffic to its Web site. The company had set a goal of driving 5 percent of its customers to the site but actually obtained 30 percent. “The billing and statement industry is going in the direction of making much more effective statements,” she says.

Ron Whaley, vice president of sales and marketing at OSG Billing Services, says that for one wireless customer with 30,000 subscribers, a refer-a-friend marketing message in the bill resulted in signing on 500 new customers. The provider estimates that it typically costs about $200 to obtain a new customer. The referral card cost the company 4 cents per card to produce, and the company spent $3,900 to create the card with OSG—a phenomenal savings.

Marketing: Rare, Medium or Overdone?

At Qwest, there are four different ways to use the bill to market to customers: dropping in universal marketing messages about new features or offers that are distributed to the entire customer base, advertising on additional white space on the bill, using inserts and including one to one messages, or as close to that as possible.

Qwest frequently uses universal messages and bill inserts but is still grappling with white space advertising and highly targeted messaging. Within Qwest, there is a cultural predisposition against placing advertisements on the bill, according to Phillips, because the company wants to guard this communications channel. “We’ve been reticent to do too much of this,” he says. “It [the bill] is a relationship between the company and the customer.” And, like most providers, Qwest is highly sensitive about protecting this relationship. If customers would feel any sense of disruption at having an advertisement directly placed on the bill, telco providers don’t want to go there.

Phillips adds that marketing must be used sparingly so as not to lose its effectiveness. If a provider stuffs as many inserts as possible into a bill and places advertisements on every inch of remaining white space on the invoice—similar to pop up ads on the Internet—the customers do not even see them. Instead they begin to ignore them completely without even a glance. “It’s one [channel] that has to be used effectively.”

The Art of One-to-One Marketing

Effective marketing is a delicate balance of three processes: maintenance, mining and manipulation.

Maintenance requires taking customer data that resides within databases and operational systems and normalizing it in a customer relational database, such as Oracle or even via a created Microsoft Access database. Processes must be in place to ensure the data’s integrity and to also ensure that the data is refreshed often so that marketing has access to the most timely and relevant information.

Mining the data results in understanding the true relationship the provider has with the customer and understanding what is truly pertinent data to direct to the bill.

And manipulation is effectively channeling the correct information to the bill. Powers says that if a marketing message is properly tailored to the right customer, it will have a higher impact. “The real expertise is in the mining….You’ve got to be very careful as you construct your campaign based on the data you extract.”

Langan explains that effective marketing includes not only merging transactional information, or information from billing and usage, but demographic or lifestyle information about a customer.

Langan says that often groups of people in the same neighborhood will have similar buying habits. The demographic groupings, once analyzed, are called cluster codes. However, most providers are not targeting by cluster code yet.

While most providers would like one-to-one communication with a customer, most are not at that level for several reasons. First, customer data exists in multiple systems, each with part ownership of the total picture of a subscriber. Order management, billing and CRM must be tightly integrated to be able to target effectively. Information about services acquired, usage patterns, preferred channel of communication and customer history are just some of the data points providers may use to profile customers; however, getting this data in one place is not easy, and ensuring data integrity is a monumental challenge.

Many experts within the industry suggest that while telco providers have a great deal of information about their individual subscribers today, they often actually do very little with this data.

While some providers take the data warehouse approach, others choose to make billing or CRM, for example, the system of record.

In addition, some companies in various industries will purchase information about people from third-party companies. Phillips says Qwest does not currently buy external third-party information. “We have enough knowledge from the interaction with our customer,” he says.

But, Bernie Gracey, Pitney Bowes’ vice president and general manager, suggests that large data repositories are not mandatory. Siebel System’s Daniel Lackner, vice president of analytics and marketing products explains a possible scenario. A database administrator could harmonize data that exists across various systems. Then, marketing would employ a segmentation interface to slice and dice the data and run data mining models against the information to determine what is driving customer behavior.

For most of OSG’s customers, marketing is dependant on the billing systems. “The reality is it’s all based on the capabilities of the billing or rating engine they [the customers] are running,” Whaley says. If the customer is able to flag the necessary data, he says, they are able to personalize it. If not, they are severely limited in what they can do.

One-to-One Marketing: System Overload

One-to-one marketing efforts can have a negative impact on bill production. For example, Qwest may target customers in segments today—via ZIP code or geographic location—but Phillips says the indexing to send messages out to specific customers in this manner is completely different than sending out more highly personalized messages to individual customers. For a company with 14 million bills, dropping a distinct and different message on each person’s bill requires a great deal of storage space. The issue boils down to how many messages a provider can realistically keep and store. Phillips explains it is one thing to apply one message to 10 million invoices; it is a completely different situation to apply 20,000 custom messages to different bills. “There’s a limit on it from what [technology] we’ve got implemented,” Phillips says. “It does slow billing down a bit.”

At Qwest, a marketing segmentation model is overlaid on and run against a data warehouse containing customer information. Feeds from the billing system are matched with information from the data warehouse to delineate who receives the marketing messages. Processing speed is an issue because the systems have to analyze data about every customer and match that profile data up with the associated billing records to personalize each bill with a specific message.

While processing speed is an issue, Bill Powers, director of marketing at Relizon’s billing systems group, says that there are different ways to go about it. The marketing department, for example, could pass along the messages within the customer data so that this information does not have to be synthesized at the time of bill production. This may slow down the transfer of the marketing data, but eliminates the need to synchronize that data at a later stage. In addition, the provider could choose to implement a code associated with customers in a database. Then, when producing the bills, the provider could simply go to a table that includes these coded records and pull the tagged records to match with the associated invoice information.

“The more granularity you [use to] fine tune your message to the recipient, it’s going to slow your processing down, but it’s not going to be a show stopper,” Powers explains.

One of the most critical elements of the bill production process is designing the bill template. This is where the layout of the bill and the related marketing message fields are set in stone. Powers says that typically a provider will stay with one template for 2 to 4 years until they decide to do a major bill overhaul.

Companies want to standardize their bills and lock into one format says Pitney’s Gracey. They want a standardized envelope size and paper stock as well as a consistent look and feel of the bill, he says.

The Business Rules

The business rules by which bill marketing messages are applied are extremely important. Rules must be applied at several points during the process to impact not only who receives the message, but the production of the statement as well.

On the marketing end, the systems queried must understand the metrics by which customers will be selected for targeting. And, the targeted customers must be matched with the relevant offers that they have been selected to receive, which can get very complicated.

On the production side, business rules help control the layout of the bill that pertains to the messages. For example, rules may outline the space that marketing can use. They may also delineate which fonts can be used or the type size or graphics that can be placed on the bill. OSG, for example, offers a graphics library of 500 images from which providers can choose. In addition, OSG customers can download graphics into their own personalized graphics library.

Business rules can also stipulate message priority—regulatory messages have priority over marketing, or messages for the more profitable products may be given higher priority, for example. In addition, messages can be allowed to flow onto a second page or may be limited in size.

The production process typically includes running test bills, but when marketing has more control over what ends up on the bill, testing takes on an even greater importance.

Recently Pitney Bowes and Siebel Systems hosted a Webinar during which they discussed their recent partnership aimed at empowering the marketing professional to implement messages on the bill.

The partnership is aimed at yielding more agility for marketing to implement messages without having to get caught up in production. “You’re staging this marketing messaging asynchronous to the bill production,” says Pitney Bowes’ Gracey. “We’ve essentially added a parallel process; it’s not in the critical path of production.” The marketing messages are prepared and staged in advance, and targeted customers are identified so they do not run in real time during production of the bill.

The partnership centralizes a lot of marketing requirements in a multi-channel environment so that the marketing department could compose a message in one area without having to learn a different process for multiple interfaces. Marketing needs to know what fields on the bill they can create messages and if there are any restrictions. At Siebel, marketing can go in and see a bill format. The available message areas are clearly delineated so that marketing can create its messages and input graphics and text. Then, this information can be checked and screened based on the provider’s workflow and finally, the bill would be tested and sent to print.

DST Output’s Langan suggests including someone in the audit stage who understands print technology and the impact it would have on the final bill production. For example, the bill may be a different color when printed than it appears on screen, or the font may change when it is sent to print. Langan says a provider cannot just rely on the marketing department and automation to produce the bill.

Common errors include a gap or white space in the message block, message overrun or a mismatch between the selection criteria for targeted customers and the actual message. While the technology exists to automate many processes, and some tools are moving to give marketing even more say during this process, “with flexibility comes complexity,” Langan warns. “A chainsaw is an extremely powerful too, but it can also do a lot of damage in the wrong hands.”

Marketing is a delicate balance, and companies have to be careful that messages do not frighten people.

“Translating that [marketing] into a campaign that is effective, not offensive,” says Relizon’s Powers, is what one-to-one marketing must be careful to do. “The Big Brother thing makes [customers] nervous.”

Gracey says when marketing reaches too far into a customer’s life, it is sometimes referred to as “the mistress effect.” This heralds from the banking industry and customers who may keep private accounts about which they do not want their spouse to know. Lackner says that in one instance a resort that used highly targeted marketing sent a letter to a customer thanking him and his wife for visiting their establishment. The letter was sent to the man’s house, but the woman with whom he visited the resort was in fact not his wife. Clearly, the results of some marketing messages can do more harm than good, so managing not to cross that line is critical.

The Electronic Bill

Unlike the paper bill, the electronic bill is not a finite piece of real estate. It can expand and contract and contain many layers. Because its delivery is essentially free, there is no concern about marketing messages fattening an envelope and thus increasing postage costs.

DST Output’s current e-bill version is a replica of the printed bill; however, the roadmap for the company’s campaign manager product includes separating the print and electronic bill such that the marketing messages on the electronic bill can become more timely and dynamic and will also support banner advertisements. Links from these real-time offers would be able to provide more information about additional promotions or products and services.

Phillips says sending marketing or regulatory messages via pop-up boxes associated with the electronic bill would be easier. At Qwest, there was an effort to make the e-bill match the printed bill so that the printed statement would become the bill of record. One of the company’s goals in the future, however, is to allow the customer to view the electronic bill in whatever way suits his or her needs. This would include dynamic design capabilities with which the customer could highlight areas on the bill that he or she considers most important. The customer could also personalize the statement or establish thresholds that would alert the customer for certain metrics of usage or spending, for example. “I think that’s where the real promise is in electronic delivery,” Phillips says.

While print mail is bound by cycle billing that allows providers to split up bill production via geographic location, e-billing is not bound by these restrictions and could potentially allow a customer to pick their own e-bill cycle. “You get more degrees of freedom in the portal,” Phillips says. But despite this freedom, e-billing adoption rates prevent it from being the sole channel for communication with a customer base.

The Future

There many wrinkles to iron out, but providers have taken note of the opportunities that exist and are exploring ways to make marketing a part of their bill production strategy.

“There’s tons of potential. I don’t think they’ve scratched the surface,” says DST’s Langan.

“[Service providers] have such great ideas… and a lot of them are just so limited by the functionality of where they are today,” OSG’s Whaley says. “Some of them take advantage of [marketing on the bill], and those are the ones that will be around a long time.”

“There’s no reason [providers] shouldn’t be doing customized bills,” Xerox’s Sweeney says. She predicts that in the next two years, each mail piece sent out will be more personalized and hence more effective.

Pitney Bowes’ Gracey says the underlying assumption is that the bills must go out on time. “Nothing should impact that.” Managing the sensitivity that IT has about production and cycle times against the needs of marketing is key.