COVID changed the world forever.
As all of us sat home in our pyjama pants and hoodies, ordering instant gratification from Netflix and Amazon, without us realizing it, every business everywhere (even utilities) was now benchmarked against these super giants and the levels of customer satisfaction they provided day in and day out.
The world had to catch up, and businesses everywhere rushed to deploy services to satisfy the consumer’s needs.
It’s not surprising to say that this rapid change in consumer behaviour also forever changed the world of online payments. Overnight, people were buying everything online, creating a dramatic shift in consumer payment behavior that the world had never seen before.
And because this shift in behavior increased demand for online payments, it also forced merchants to deploy payment functionality without much thought to their customer base. At the time, their only mindset was to satisfy this new consumer demand.
Differentiating Customer Types
All customers are not created equal, particularly in the utility space. Here we have three distinct customer classes, all looking to satisfy their demand to pay their bills electronically. In any utility service area, we could have three different customer types:
- Residential
- Commercial
- Industrial
All look to pay electronically, but with very different circumstances.
The Crucial Role of Customer Segmentation
With an immediate need to deploy online payments and get to market as quickly as possible, merchants homogenized these different customer types, discovered the average ticket amount for the utility bills across all customer types, and set payment fees based on that average ticket amount.
The issue with all of this is that Residential consumers could have an average utility bill of $150 to $200 a month. A typical small business could have an average of three to four times that, and large industrial and commercial organizations could have a utility bill in the thousands. A credit card payment of $2000 for a Commercial customer carries a substantially larger fee than a $200 payment for the average homeowner.
What utilities missed in those post-COVID days was the awareness that they needed to service customer types differently from an online payment perspective.
The homeowner with 2.5 kids, on a budget, looking to pay his bill in a timely, least cost alternative fashion, really shouldn’t be subject to the high payment and convenience fees that a business should have to pay. Conversely, should a local business have very favorable payments fees because their fewer per capita bills (with a much higher average bill amount) have been lumped in with the standard homeowner’s much lower average bill amount?
We see this a little too much these days. The working family pays more while businesses pay less simply because utilities have blended them under a homogenized payment fee.
And this is where we’re starting to see trends that push back.
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The Emerging Benefits of Customer Segmentation Done Right
The original post-COVID payment programs are now coming under review. Residential consumers want a quick, easy, low-cost online payment option and don’t want to subsidize businesses that should be able to pay their own share of the payment fees.
The truth is that all utilities know their customer base. They know who has a residential meter and which meters belong to businesses. When a utility provides their customer segmentation to Doxim, we can route their customers down a payment path specifically designed for their customer class, created with the lowest possible payment fees, and properly reflect their Residential average ticket prices.
With Commercial customers removed from the Residential channel, we can now create a program specifically designed for businesses, with fees appropriately set for Commercial credit card usage that include much higher average ticket amounts.
Being able to segment a utility’s customer base allows them to properly serve these specific customer types with advantageous payment models to drive online payment adoption, drive true paperless billing, reduce calls to the call center, and drive customer satisfaction.
In the end, happy consumers are loyal consumers. Happy consumers drive increased customer satisfaction scores, which then drive higher JD Power and Associate scores for the utility.
It’s a win-win.
Scott Thomson
Scott is Doxim’s Director of Payments Solutions, specializing in enterprise billing and omnichannel payment platforms. For over three decades, he’s navigated the evolving world of billing and payments, managing everything from enterprise billing and omnichannel payment platforms to partner channels. Continually working at the intersection of payments, transactional mail, omnichannel CCM, and client success, Scott has held senior roles across all customer-facing functions and believes that the best solutions come from simplifying the complex, empowering teams, and fostering relationships that withstand change.
