Postal costs rise – eBilling costs fall

The Royal Mail has implemented another increase in postal costs in the UK. Increases between 10% and 13% were applied from 4 April 2011. I say “another” because the costs of postage seem to rise every year, generally far in excess of inflation. It stands to reason that the use of eBilling as an alternative to paper is on the rise and as more and more billers and customers move to eBilling, these costs are dropping.

Both models are volume dependent and include both fixed and variable costs. As the volumes increase or decrease, the average costs adjust. The good news for eBilling is that the volumes are going up (and consequently costs down), but the bad news for postage is that the postal infrastructure costs are being spread over fewer statements and bills and hence costs have to rise.

eBilling – the Tipping Point

There has been talk of a “tipping point” for eBilling where there is a significant increase in adoption rates. The tipping point should not be confused with the milestone of the majority of bills being delivered electronically (i.e. > 50%). The tipping point may be reached before or after this event, but it all depends on the eBilling model adopted.

In 2009 we said that billers following the portal (pull) model could expect roughly 5% growth per year, whilst email (push) billers could expect growth rates of 10% - 15%. These stats have proven accurate each year.

We have also said that portals and email complement one another – in fact we believe that there will always be 3 ways to deliver bills: Print, Pull and Push.

It’s a matter of choice and customer convenience

Some customers will never change – and you will need to print their bills until they are no longer customers.

Some customers like the idea of being pulled back to a portal where they can fetch their bills as and when they want to.

But most customers just need to see the amount due and when they have to pay by; and pushing an email bill to them is perfect solution.

We are seeing a significant rise in the number of calls from billers that implemented a portal and are now looking to add Push email billing to the delivery mix to enhance their paperless adoption rates.

Email is also a very simple way of making bills accessible on a mobile device, without the additional costs of redeveloping a portal to render correctly on different mobile phones (not to mention iPads and tablets).

Do any of these statements apply to you?

• We can’t afford a 10% increase in our statement costs.
• I’m worried about achieving our paperless adoption targets this year.
• We offer paperless billing but our customers aren’t signing up.
• We’re having to increase our marketing spend to get customers to move off paper.
• I’m not sure how we are going to meet our cost reduction budgets next year.

Give us a call and ask us to assist you with saving costs, reducing paper and migrating customers to paperless billing and make sure that the only one to feel the effects of the postal increase is the Post Office!

Michael Wright
striata.com