|September 19, 2009|
What if People Don't Take the Bait to Go Paperless?
|IN August, T-Mobile got serious about paperless billing. It started charging a $1.50 monthly fee on all accounts that continued to receive a paper bill. |
Large companies would love to use paperless billing rather than the mail: it reduces their costs and at the same time allows chest thumping about being green. But offering their customers positive sweeteners hasn't been very effective. T-Mobile tried another tack: a stick instead of a carrot. What woe it brought upon itself, however, when it told customers it was time to switch or pay up.
Before this, T-Mobile promoted "Green Accounts" and "Green Perks" and offered to plant a tree for every customer who signed up for paperless billing, producing only modest results. Customers --- including millions who had signed up for electronic bill payment --- continued to receive a paper bill.
T-Mobile had already begun last year to levy a $1.99 fee for a detailed printed version of the monthly bill (existing customers could choose to be grandfathered in without having to pay). Verizon Wireless has charged a similar fee, beginning with new customers in 2002 and expanding to existing customers two years later.
But T-Mobile's new $1.50 fee was a separate, additional charge, applied to all paper bills, short and long, and it didn't provide an escape clause for existing customers.
The new fee immediately produced an explosive increase in the rate at which customers converted to paperless billing. Before the August bills were mailed out, T-Mobile had an average of a little more than 1,000 customers sign up for paperless billing each day.
When the $1.50 fee was added to the bills that went out in August, the number jumped to 33,000 a day, according to a spokesman. This was even before the charge really bit: for August, T-Mobile also added a matching $1.50 credit to every bill for the initial month, to give customers more time to decide whether to opt for paperless.
The company sends out 16.5 million invoices each month, but the accelerated rate of signups in August made it possible to imagine converting the entire customer base to paperless in only 15 months --- and fully realize the potential annual savings of 10.8 million pounds of paper, equivalent to 13,500 trees (T-Mobile will talk only of trees to be saved, not dollars).
Companies can talk up the environmental aspects of paperless billing until they're green in the face, but to little avail. Verizon Communications, which says it could save "millions of dollars annually" if it could switch entirely to paperless billing, is promoting its "Get Your Green On" sweepstakes, offering a Toyota Prius Hybrid as the grand prize. Customers who switch to paperless billing are entered in the contest.
Angeline Depauw, the company's director of remittance processing, said about 6,100 customers weekly were signing up for paperless billing before the contest began in early August. Now the rate is 17,000 weekly. This is an exceedingly modest gain, considering that Verizon still sends out 20.5 million paper bills a month.
T-Mobile had concluded that the "voluntary approach" was "not something that would get the majority of our customers to paperless," said Glenn A. Zaccara, a T-Mobile spokesman. I spoke with Mr. Zaccara and David Beigie, the company's vice president for corporate communications, on Sept. 1, when enough time had elapsed for the company to see that the paper bill fee was having the desired effect of "putting a spotlight on the costs of preparing paper bills."
In defense of the customers who are reluctant to switch, many balk at absorbing the hidden cost of lost time: it's a lot easier to rip open an envelope and glance at a bill than to log on to a company Web site and navigate to it. One can also be skittish about missing e-mail and text messages about a new bill that is available online; these are easily pushed out of sight by the deluge of daily messages.
When I asked if they had received negative reactions from customers, Mr. Beigie said, "We heard a full gamut of reactions, but we've had many who say, 'It's about time we have a company moving in this direction.'"
The voices of those customers who praised T-Mobile's policy seem to have been drowned out by others. Dennis McKinney and Mallory LaBoube stand out from the rest: they are the named plaintiffs in a class-action lawsuit filed on Sept. 5 against T-Mobile in the United States District Court for the Eastern District of Missouri. The suit alleges that adding a fee in 2008 for the detailed paper bill and in August for all paper bills constituted "material modifications to the contracts by T-Mobile."
Ten days after my conversation with the T-Mobile executives, and six days after the lawsuit was filed, I received an e-mail message from Mr. Beigie that announced an abrupt end to the paper bill fee. In a phone call, he said, "At the end of the day, we hope to continue our drive to paperless billing, but be thoughtful about all of the different opinions out there."
To completely eliminate paper bills, T-Mobile now needs to summon considerable patience. If signups return to their earlier level, before T-Mobile's little experiment in behavioral economics began and ended, the conversion will take a little more than 41 years.
Randall Stross is an author based in Silicon Valley and a professor of business at San Jose State University. E-mail: email@example.com.
By RANDALL STROSS