Online businesses have employed cookies and other tracking technologies to follow consumers as they click their way into, through, and out of a Web site. This charting of navigational choices and purchases can be used to create a nominally useful profile over time. There are weaknesses, however. Such profiles are typically limited to actions at a single site and, given the current privacy protection climate, no one is sharing a lot of information right now. They are also based largely, at least to begin with, on inference. One can, for example, infer preferences based on navigation, but really cannot confirm them until multiple purchases have been made. Finally, unless the consumer has a good reason to "opt in" with demographic information, the profile remains fairly shallow.
In contrast, consider the ammunition that a major biller such as a credit card issuer, telecommunications provider, insurance company, or public utility brings to the table. To begin with, a biller is no way limited to information gathered at a single or even numerous Web sites. Instead, banks or telcos have detailed transaction records, often going back years, from which to create meaningful anonymous profiles.
Nor - and this is very important from a marketing perspective - is this information inferential. It is gleaned from the biller's operational systems; it is based on after-the-fact information. A biller knows that a sale was made, knows how often a service is utilized, knows that an average of 10 calls a month are made to Boston, knows that the new SUV and boat trailer were just insured, and so on.
Finally, should the biller be in a position to possess demographic information (for example, a credit card issuer holding financial data or an insurer with data on the number of drivers in a family and their ages), it could construct anonymous profiles with significant depth.
In short, a biller has transaction histories, after-the-sale facts based on real actions, and often, detailed supporting information with which to work. Furthermore, these data are in a format that enables rapid and easy analysis and modeling. All that is left to do with billing information is to protect and leverage it.
Just as the billing statement provides a platform for gathering information and creating fact-based, in-depth profiles, Internet billing empowers billers to deliver relevant messages to countless receptive audiences of one - namely, their existing customers - without asking questions or violating privacy.
The first thing to remember is that the bill is a compelling and persistent "hook" to bring consumers to a Web site. Bills need to be paid, otherwise, the water doesn't flow, the new SUV is repossessed, and the lights go out. This reality is what draws Internet billing-enabled consumers to a Web site regularly - they need to view their statements and meet their obligations. Once at the site, profiled consumers can be sent personalized messages, upsold and cross-sold, and so on. In other words, data once presented in a static printed bill are now enable vibrant, personal, one-to-one exchanges between billers and their customers.
Billers willing to mine their Internet billing statements and create and package strictly anonymous consumer profiles also have phenomenal new revenue opportunities outside their core businesses. These opportunities can be realized when companies engaged in Internet billing and statement mining sell their anonymous consumer profiles to merchants. Suddenly, billers can provide other online businesses with a way to speak to the interests of shoppers whom they've never met.
A telco, for example, can use its billing information to create a blind profile (using random user numbers, not personal names) consisting of customers who have placed calls from San Francisco to Atlanta, five times or more a month, with each call lasting more than 10 minutes. As this would suggest either business or family ties, such a profile would be of great interest to airlines, car rental agencies, hotels, and other travel-related companies. This is solid after-the-fact information with roots in the non-Internet world. It's also the type of data that a dot-com company tracking clicks at its Web site cannot hope to collect any time soon. This profile can be further enriched with the addition of information gathered at the biller's Web site. For example, a subprofile might include all of the above parameters but with the refinement of including only those customers who have previously responded to travel-related ads placed on the biller's site.
A biller can also provide the Internet's most compelling delivery mechanism, or hook: the recurring statement. When a biller does Internet billing at its own Web site, it can sell advertising space right on the statement. Since this is the consumer's destination point, placement here virtually guarantees that the target consumer will see the ad that has been crafted expressly for him or her based on their blind profile. This makes the electronic billing statement prime real estate for one-to-one marketing.
Just as real estate agents sell "location, location, location," a biller can offer advertisers targeted spots on the online bill that are closely tied to each consumer's profile. For example, if a credit card bill contains three line items for a particular online bookstore, a publisher can place a personalized ad or promotional offer adjacent to one or any of the three line items. Similarly, if a monthly telephone bill has three lengthy long-distance calls to Boston, an airline might place a special offer next to one or more of them. Bills typically have several line items, so there is ample space for ads.
If this sounds like an updated version of paper statement stuffing, it's because it is. But now, because of new media, anonymous profiling, and Internet billing, billers finally have a mechanism for precisely and affordably targeting statement-based ads - right down to the individual - on a mass scale.
Richard K. Crone is chief executive officer of Crone $ Co., a consulting firm in San Carlos, Calif., specializing in Internet banking, bill presentment and payments.
