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Pay by Text

SMS offers an alternative to paper billing. Smart Meters Driving Adoption Customer Engagement Supporting the Payment Process Learning from Europe

Fortnightly Magazine - February 2011

provide these reminders and payment alternatives, utility companies can save huge amounts of money—the average cost of a mailing is $2 including postage, handling and customer service, whereas text messages cost much less than a dollar, thereby immediately cutting costs by more than half.

Other industries have also shown that through the use of these new technologies, their days sales outstanding (DSO) have been significantly reduced. Where the average DSO for a customer receiving a paper bill is approximately 45 days, e-billing and payment solutions can reduce this timeframe by up to 70 percent.

Who pays for the text messages? In the United States there are currently more than 300 million mobile devices, most of which are on unlimited texting packages, and probably those opting to utilize an SMS based payment and notification service would be on unlimited plans. This presents a win-win situation for both parties: utility companies reduce outbound costs by reducing postage costs, and customers enjoy a customer service experience that is entirely geared toward their preferences.

So by pro-actively contacting customers, energy and water service providers could reduce costly inbound calls and collection costs, while simultaneously enhancing the customer experience.

The use of SMS is a new innovation that’s taking shape right now. Yet SMS could soon become vital to utility companies’ customer service operations. With the possibility of the U.S. postal service ending Saturday mail deliveries in a bid to solve their financial problems, such a decision would mean substantial changes to how companies send and receive mail; the proposed abolition of Saturday mail will reduce the billing cycle for paper-based bill presentation and payment by 52 collection days per year. The future of customer service lies in new and more direct contact channels, such as SMS.

The use of SMS has already been shown to be extremely effective in utility companies across Europe, with many already using SMS to their advantage. Companies including E.On, the world’s largest investor-owned power and gas company; United Utilities, the U.K.’s largest listed water company; and Vattenfall, one of Europe’s leading energy companies, have already adopted automated SMS notifications in order to effectively communicate meaningful information with their end customers.

Judging by Europe’s success in the use of SMS, this new channel has huge potential to be a similar success in the United States as more utility companies embrace it.