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Innovation Inside - Email on the Edge

Innovation Inside - Email on the Edge

The Technology Lever

Deloitte’s Center for the Edge recently published the 2011 Shift Index, which confirms an unsettling long term downward trend: publicly traded US companies show a 75% decline in Return on Assets (ROA) from 1965 to today. 

 I asked Center for the Edge co-chairman John Hagel how companies can survive, and thrive, in this increasingly challenging environment (and was über-gratified when he took time out of his busy SXSW schedule to share his insights).

 “Every available market advantage commoditizes over time. Ultimately, products and services become less differentiated, against a backdrop of increased customer lifecycle costs and dwindling loyalty. Only growth in another form of ROI - the Return on Information, can reverse this trend.”

 Let’s take the practical example of paperless communication for high volume B2C environments. A successful paperless approach not only dramatically cuts operating costs, but also acts as a lever to reverse the downward ROA tendency by leveraging the power of Big Data to yield better analytics in order to improve customer experience… and increase revenues.

 The Power of Default: Opt-in by Opting OUT

Worldwide, B2C paperless adoption hovers near the abysmally low 10 – 15% mark. It should be a no-brainer (save money and trees), but we have not seen electronic replacement of the vast numbers of paper documents that are sent on a regular basis to service subscribers, whether credit card statements, utility bills, insurance policies, digital TV or phone bills.

 Even when a customer signs on to paperless services, ironically enough, they ‘double dip’ and still receive paper versions sent by post. 

 There are a variety of factors at work here, but the greatest failure occurs in offering a paperless process in which customers must actively choose to participate. The key to success is to provide a default option that migrates the customer automatically.

 Nobel laureate Danny Kahnemann describes the proven effect of an opt-out approach; “You can help people make good decisions without forcing them to make good decisions…the effect of default options is enormous.” 

 The eBilling Example

Now, let’s imagine a world in which organizations understand not only “opt-out” but also the value of what the Earnest about B2B blog calls, “’Interactive One-to-One personalization”.   

 This is how your triple play Broadband, Digital TV & Telco billing experience unfolds:

 After an email from your biller explaining the new paperless process, you now receive your monthly Digital TV eBill by email.

  • It arrives as a securely encrypted attachment, but you can open it “from memory” – NO NEW PASSWORD REQUIRED. Easy!
  • The bill opens up and looks like a mini-website – with tabs for HOME, BILL etc.  You sort and and pull out all your landline calls to Italy to submit to your client as part of your project expenses.
  • You click the PAY NOW button to pay with one click directly from the bill (nothing to remember, no To Do list to update)
  • Just as you hit PAY NOW, you notice a button (use your imagination here, people!) that says, “LET US HELP YOU SAVE - TRY THE SPORTSPACK”. 

“That’s funny,” you think. “I didn’t know there was a SportsPack option or I would have signed up for it as part of my subscription.” Your Digital TV provider just became your trusted advisor. 

Unbeknownst to you, marketers call that little box you clicked “transpromo” – a promotion that uses your customer profile to imbue the expected and trusted digital document (translation: exceptionally high click rate!) with a highly relevant call to action.

Now, back to the real world. Does your DigitalTV bill arrive this way? Water, electricity, mobile? More and more providers are embracing this kind of eBilling approach, so...perhaps it is time to shop around!

Drilling Down:

  • The Shift Index measures the long term forces driving change; the full study is available online and in downloadable PDF format
  • You can catch all of Danny Kahnemann’s recent interview with Charlie Rose here. Time-impaired? The fascinating “power of opt-out” segment (based on organ donation programs) starts at approximately 21:45.
Virtuous Cycle - Save Money, Improve Customer Experience
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Comments: (5)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 27 March, 2012, 14:02Be the first to give this comment the thumbs up 0 likes

Marketers of eBilling companies have done a great job of conveying the value proposition of their solutions to billers, which explains the high implementation rates of such solutions by billers (e.g. I don't know a single biller who doesn't offer eBills).

At the same time, marketers of biller companies haven't done a great job of conveying the value proposition of eBills to consumers (Sorry, 'saving trees' doesn't cut it - not just for me but for a majority of consumers according to a Forrester report), which explains their relatively low adoption rates by consumers (e.g. Even as I prefer to pay bills electronically, I insist on printed bills).

Marketers from both camps have chosen to ignore the reality of the world in which consumers live - a world in which they must often produce printed bills for KYC because the regulator insists upon it, will suffer stoppage of service because the email delivering their eBill bounced and the biller never bothered to resend it, need to encounter the friction of remembering yet another password or shared secret to open the eBill, and so on. Which explains both low adoption rate and high double dipping rate.

IMO, automatic enrolment into eBilling is a bad idea. Thankfully, not a single one of my billers has attempted it - in trying to achieve paper turnoff, I'm sure they don't want to risk consumers turning the service provider itself off! To me, the solution is straight-forward: Think of the consumers' everyday pain areas, package eBilling in such a way that it alleviates these pain areas, thereby providing a compelling reason for them to adopt it. While saving trees definitely has a place somewhere at the middle or top of Maslow's pyramid of hierarchical needs and wants, IMHO it doesn't qualify as a pain area for the average consumer.

A Finextra member
A Finextra member 29 March, 2012, 17:47Be the first to give this comment the thumbs up 0 likes

Hi Ketharaman,

Thanks for taking the time to provide insight. In terms of customer preferences, there will always be folks who want their paper, for varying reasons.

The challenge is designing consent strategies that leverage what behavorial economist – and Nobel laureate – Danny Kahnemann calls, “the nudge effect” in the already cited Charlie Rose interview.

In a nutshell: if you do not make the default option include the attribute “stop receiving paper”, the vast majority of people will not proactively request for it to be “turned off.”

Happy paperless customers want to receive their documents electronically; it is in alignment with the way they think, live, store and manipulate information. They think interactive graphs are cool, and are pleased to download their data and sort out their business expenses for a quick cut and paste into an expense report. Some, like me, are genuinely happy to reduce our personal carbon impact, and do not begrudge our supplier for pocketing the savings. Because it is better for the environment, full stop.

As the Gen Y and Digital Natives represent more of the demographic pie, paperless acceptance and appreciation will grow.

 For more on the power of default, see this highly entertaining and illuminating TedTalk where noted behavioral economist Dan Ariely provides a detailed explanation of the organ donation study referenced by Kahnemann: “Are we in control of our own decisions?

It is very important to obtain customer approval (ideally through an easy, 1-click process that aligns with well-known aspects of behavioral psychology a la an opt-out approach...

So, nothing against the Paper People. The real opportunity lies in making it easy for the Virtual People to opt in - by opting out. And then delivering an exceptional, improved customer experience, from day 1, adding more value over time with personalized communication that is highly relevant and appreciated. The opportunties for mututal value-add (supplier/subscriber) are immense; consistently relevant personalized communication offers the supplier the chance to grow into a "trusted advisor" role.

Michael Wright
Michael Wright - Striata | Secure Document Delivery - London 07 April, 2012, 15:15Be the first to give this comment the thumbs up 0 likes

There will always be 3 'P's: Paper, Pull and Push

What most billers are missing today is the Push.

Paper has been the default for many years. Changing this default to Pull (come back to my website and fetch) is jut not a viable option.

However Striata customers are having great success in changing the default to Push - so that all new customers are email customers automatically and they have to specifically ask for paper if needed.

Over time this seems to be the most effective adoption strategy there is.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 07 April, 2012, 19:43Be the first to give this comment the thumbs up 0 likes

When a certain biller followed exactly this practice with me to boost its eBill adoption, I was too lazy to ask it for a printed bill. This is probably what the biller expected when it implemented this practice. Since I need the bill in paper form for my downstream processes, I take a print out myself. I got ticked off with this biller for taking my preference for granted. Whenever I've needed a similar product in future, I've ensured to buy it only from this biller's competitors (none of whom forces eBills). Whenever anyone has asked me for a recommendation for a vendor for this product category, I've never recommended this biller. My behavior may not be representative but, at least with me, the biller lost the war for revenues and customer advocacy even as it might have won the battle for eBill adoption. It's the biller's choice how it wants to run its business but it's burying its head in the sands if it doesn't recognize that its actions can have unintended consequences.

A Finextra member
A Finextra member 29 May, 2012, 06:25Be the first to give this comment the thumbs up 0 likes

I agree, K - if you need the paper in your downstream process, you probably would not opt-in to a paperless process.

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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.


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