About two years into our business, we were meeting with a central station ally. We were struggling with positioning our company with the dealer market. One of their senior sales reps said, with absolute certainty: “The only thing that matters is showing the dealer how your services will save them money!”
Looking back, 20 years later, I can say with certainty: that sales rep was wrong.
Unfortunately, at the time, we took the advice to heart. We constructed elaborate and complicated spreadsheets that focused on the 37 steps involved in billing and processing payments. We showed all the cost-benefit analyses. I wish now we hadn’t wasted all that time.
Big Benefits—Beyond Price
Yes, we need to show that our services are affordable, and that can be a challenge. Rarely do our prospects have a list of all the expenses related to their billing and payment processes. It’s nearly impossible for them to say “it costs us $X to process an invoice”. If we charge $1.04 to generate, print and mail a paper invoice, the price-driven dealer will usually conclude: “I think I can do it for less.”
We nearly always find that price-driven buyers find a reason to say no – not because it’s too expensive, but because they are afraid it might cost them more. These dealers also rarely give any weight to the most important parts of what we do—the qualitative stuff. This post is about the other 2 big benefits to outsourcing billing services:
- maximizing cash flow, and
- improving the customer experience
Maximizing Cash Flow: In Many Ways
When dealers tell us they’re not convinced about the value of outsourcing billing, we send them a one-pager that outlines elements of our billing services that they do not or perhaps cannot offer. Several of these elements involve enhancing cash flow—see below:
Running pre-billing audits EVERY month for our dealers often finds errors. Fixing those errors means we bill 100% of what should be billed. That doesn’t save money, but it does find money. Likewise, never billing late means the bills always go out on time…increasing the odds that money comes in on time. In other words, generating more consistent cash flow.
Show 100% of What’s Owed
Unlike traditional invoices, our invoices double as statements—because they show the subscriber on the first line any prior, unpaid invoices. That means the subscriber knows 100% of what they owe, and will likely pay that rather than just the current invoice amount. Result: better cash flow. We also have consistent follow up processes for autopays that don’t clear, and we give autopay subscribers up to 4 payment date options. That increases the likelihood that autopay will be palatable, and so increases the percentage of subs that opt in for autopay. More autopay means steadier cash flow.
Better Customer Experience = More Customer Loyalty
Invoicing can be a somewhat negative thing, since you’re asking for payment. Many of the things built into our services are geared toward improving the subscribers’ experience with the billing process:
At Cornerstone, we strongly believe that our customers need to use the invoice for more than saying “You owe use $X.” So we’ve built in messaging options. On the front side of the invoice there are a couple of areas where our dealers can deliver messages like “Test Your System Every Month” or “Refer a Friend, and Get a $50 Credit!”.
Every Month, A New Message
The ENTIRE backside of the invoice is available to deliver information or to promote something. If our dealer wants to push interactive services like Alarm.com, we have an invoice back they can use. If they want to solicit updates to the subscriber’s call list, we have a back for that. We’ve had dealers use the invoice back to deliver a short newsletter informing their customers about things like Halloween safety. It’s more expensive for us to allow our dealers to do this customized message—but it tells their customers that they care. That increases loyalty, and the average life of a subscriber.
Online Payment: Customers Demand It
We make sure our paper invoice does the basics: make it easy to tear off a stub and send a check, ensure that all key information—charge details, invoice due date, etc.—are included and easily visible. If a subscriber wants an email copy of their upcoming autopay invoice, and wants it sent to two different emails—no problem. Multi-site commercial accounts often need a single invoice that includes dozens or hundreds of line items for each of the locations.
But one thing is absolutely essential these days: an online payment option. Most people are on computers several hours daily, and they expect to be able to pay online. Our www.Alarmpayments.com site offers that, and it’s linked directly to the invoice table. When a subscriber logs in, they’ll see their dealer’s name, along with their open invoice(s), descriptions of the services, and other details. Most small and mid-sized dealers just can’t justify the expense of a payment site this robust and linked to invoice details. This is a critical qualitative reason our new customers sign on with Cornerstone, and a big reason they stay with us for a long time.
YES…We Also Save You Money!
The core billing processes, with 100% comprehensive POSTING of those payments, is obviously the biggest time saver. But in terms money-saving work we do that prospective customers may not be doing, see below:
Posting payments submitted through Alarmpayments makes it way simpler for our dealers, and it’s self-serve for their subscribers. Posting checks same day is often not easy in-house during busy days. Likewise for always sending statements to past-due accounts – our dealers often don’t have enough time. Our merchant processing costs are usually lower that what our dealers can negotiate, because our volumes are much larger.
There are many other elements to our services that save money and time, and are difficult to consistently handle with in-house billing.
But again, just focusing on saving money is short-sighted. Building customer loyalty through customized messages every month is very valuable. Offering easy online payment is critical. Crystal clear, complete invoices means the subscribers won’t need to call the dealer with questions. The qualitative elements of a great billing service are more important to the health of our dealers than just the fees involved.