Rising interest rates, the credit squeeze and general price increases stemming from expensive fuel are forcing most businesses to trim their operational costs. One way of achieving this is to make use of electronic communications solutions instead of costly print and post.
"Many companies are putting projects on the back burner unless they will show cost benefits in the short to medium term," says Alison Treadaway, MD of electronic billing and marketing specialist Striata. "Even in buoyant economies cost reduction is the biggest drawcard for any organisation looking at implementing electronic billing."
Solutions that reveal real cost savings in the short term are highly likely to avoid getting the "chop" in an environment like the current South African economy where the Johannesburg Security Exchange has been experiencing falling share prices.
"There are widespread expenditure reviews, with projects that were firmly in the pipeline now on hold until the economy recovers," says Treadaway. "Interest rates, which have been raised 10 times since June 2006, are expected to remain high with government warning that economic growth measured by GDP will be 3% this year, marginally higher next year and less than 5% until 2011, accompanied by moderate government spending increases."
Businesses that need to cut operational costs due to tough trading conditions could find electronic billing and marketing an efficient way of achieving lower costs. Treadaway adds that Striata's solutions essentially replace costly print and postal communications with more cost effective digital communications.
"In the current economic climate, companies cannot afford to stop marketing altogether so the option of low cost communication methods is very appealing."
With eMarketing, the cost saving is achieved through turning off high cost, glossy, posted brochures, and turning on low cost digital marketing which presents an immediate call to action.
With eBilling costs are saved by turning off the high cost, multiple page bills that are printed and posted, and replacing the paper system with a low-cost email bill.
Treadaway says that as companies convert customers to receiving digital communication, there are cost savings to be accrued on every marketing campaign or eBilling run. "The business case for this is very solid and in our experience the investment required to set up this process is very often recovered within the first few months."
Once a customer has accepted electronic communication from a supplier, it becomes easier and easier for the supplier to provide other types of communication via the electronic channel, adding to the cost saving with each conversion from paper. This applies to documentation, marketing messages, operational messages, customer service ratings, reminders, notifications and any communication that is systematically generated or triggered.
Treadaway adds that the conversion to electronics applies not only to outbound communications from the business to customer, but also to inbound communications from the customer to the business.
"Customers who are comfortable using email and SMS to communicate with the business are ready for self-service options that will enable them to get the information they need through lower cost channels.
"Providing alternative channels to answer frequently asked questions can reduce the overall cost to service the customer. Account balances, payment due amounts, or requests for more information can be inexpensively serviced through SMS, where the customer merely SMSes a key word to a short code and receives an automatic response from the system."
Industry experience in the replacement of paper billing with eBilling has demonstrated that hard-cost savings range from 60% to more than 90% and are derived largely from the suppression of paper through the removal of printing, stationery, insertion and postage costs.
"Other savings can accrue from more efficient use of manpower and general business process improvements. The business case, however, is compelling and more often than not it becomes unnecessary to measure or include these 'soft savings' in return on investment calculations."
Fully automated processes for delivering bills electronically result in completed delivery within one to three hours of finishing the billing run. This almost instant delivery ensures that customers receive their bill four to five working days ahead of a conventional paper/ post exercise. Treadaway says evaluations of actual customer experience reveal that about 75% of eBill recipients open and read their eBill within 48 hours of delivery, a factor that translates into a much faster and more efficient process.
"It follows that the response times from customers are much quicker and bills are settled more promptly, with the benefit of significantly reducing debtors' days and improving cash flows," he adds.