What are the advantages and opportunities of digital payments in the utility industry?
It is now a common experience for many people to pay their electricity, gas, water, or phone bills directly from home, with a few clicks from their computer, or with a few taps on their smartphone. Why do many users still prefer physical channels? How can they be enticed to switch over to digital, especially in these times? Digital payments take minutes, and user friendly websites make access to the things customers need faster and more convenient. And that’s not all: you can also keep track of your consumption and all the associated expenses and how they vary from month to month, and for many companies, the website makes it easy to interact directly with your provider for assistance, eliminating outdated procedures in favor of a more “human,” interactive, and personal dialog.
All of this is valid in “normal” times and it becomes even more so in times of emergency, when staying home is a matter of personal and public health and safety.
In short, digital technology today can improve the quality of our lives, but also, literally, can be life saving.
In this post, we will focus on the “state of the art” of digital payments in the Utility industry: where we are, how far we still have to go, and the main obstacles perceived by users. We will then outline the benefits for customers in switching to digital for billing and payments, and we’ll look at the opportunities on the supplier side. Finally, we will identify the most effective strategies to push our customer base towards a more complete and efficient digitalization, through correct information, effective communication, and useful incentives, all in the direction of more personalization.
Where does the Utility Industry stand with online payments?
Compared to many industries, Utilities are in an advanced state, but there is still a long way to go. To examine this more closely, let’s look at some data.
In a survey conducted at the end of 2018 by Consumer Action, the majority of respondents said they still prefer to send bills and payment notices in paper format; in the Utility Industry, this percentage stood at 63%.
However, it is interesting to note that the first “encounter” with the bill, in the vast majority of cases, takes place online, often via email. In this sense, one of a company’s main fears is losing touch with customers inside a crowded inbox. Beware, however, that we are already beginning to see the first data in a countertrend: if 63% of respondents prefer to receive their bill in paper format, 55.5% prefer to pay it online. This percentage is growing from year to year.
This growing preference for online payments is due to its convenience and ease of use; online payments are perceived as increasingly secure. Even older customers are becoming increasingly familiar with online shopping, which, during this current emergency, is almost a necessity. We can be sure that this trend will be constant even during the next “gradual return to normal.” (Get all of the data from this survey here.)
Even more recent data reported at the end of 2019 by ACI Speedpay Pulse found that 57% of users prefer to pay their bills online, and directly from the suppliers’ website. Here too, this percentage is constantly, albeit slowly, growing. And, consider this data: the number of people who pay their bills directly using mobile applications is growing, and almost all Utility companies are using them, in fact, Utilities make up 21.4% of companies using mobile apps. Finally, 21.7% of those who still use physical channels for bill payments say they will go digital in the next 12 months. It’s here, on this trend, that we must target. (See here for all of the data.)
In short, this is the direction in which the American audience (and the Western world) is moving. However, this transition has a rather slow pace.
First and foremost, it’s up to the companies in the sector to accelerate it; we’ll look at some strategies later. Next, let’s look at the customer benefits of digital payments and the opportunities for companies providing electricity, gas, and water services.
Benefits for customers, opportunities for suppliers
On the customer side, the advantages of the transition to digital payments are clear and intuitive; they are: speed, convenience, easy archiving, and immediate and effective support. However as we’ve seen, there is still a large part of the public that is not comfortable with this mode. Why?
The study by ACI Speedpay Pulse identifies the reasons why customers still prefer to make payments in person:
- For 48.5% it is mainly a matter of “habit“
- 41.6% prefer to immediately receive a paper receipt
- For 38.6%, it is a perception of greater security
- 29.4% consider in-person payment to be more convenient
- 26.7% consider it more efficient
- 34.4% prefer to pay in cash
- 17.8% say they need to pay in cash
In short, these are the points where companies can intervene. As we can see, they are almost all related to “habits,” for almost emotional, rather than logical, motivations.
So how can the suppliers of light, gas, and water change these perceptions? With incentives, of course; but also by trying to become “closer” to users, with strategies that are more “tailor-made,” more “personal.”
Educating, incentivizing, personalizing
We have seen how switching to digital payments is undoubtedly beneficial for both users and suppliers. So, how can companies overcome this resistance? In this field, forcing doesn’t work; on the contrary, it can be very counterproductive. Any strategy must be gradual and start with information in order to educate your customers.
Providers must be able to communicate the advantages of this step, in a transparent and clear way, using traditional marketing campaigns and web marketing, but also with other more targeted tools, such as mobile apps (which, as we have seen, are increasingly used as a payment channel).
Industry players also need to revise their dialog with users. By using a personal approach, you can direct their choices in a natural way. By increasing their engagement, this gives you the chance to build and grow their loyalty, which in turn, reduces the abandonment rate, or the “churn rate,” which is one of the industry’s biggest challenges. (Learn more about how to reduce the customer churn rate in this post.)
Learn about your customers
This is where personalization comes into play. This translates into the possibility of identifying the characteristics and needs of each individual person, of identifying each customer journey and acting accordingly; finally, build a data-driven communication strategy that is as one-to-one as possible.
For example, Doxee created intelligent, interactive, and multi-channel bills for Fastweb (just to give an examples).
So this touchpoint—traditionally annoying for the customer and slippery for the company—takes the form of a fluid and contemporary communication, an opportunity for information and possible persuasion towards digital payment practices. Moreover, the “old bill” can be transformed into a concrete opportunity to create added value (also through the inclusion of specific calls to action, cross-selling and upselling strategies).
The path, for Utility companies, starts from the one-to-one relationship with its users. There are no shortcuts. And the vision must be long-term: it’s not enough to only focus on the transition to digital payments but, at the same time, put on track a better Customer Experience.
These are priorities that can no longer be postponed; and acting now will bear fruit not only in the present, but also in the near future.
Download now this whitepaper to learn more about Digital Customer Journey in the utility industry