What do David Dickinson, Lotus Sports cars, Captain Cuddlepuss, Bath Rugby Club, lemon squeezing contests and penguins have in common? Believe it or not, they’ve all been used in council campaigns to promote take-up of direct debit payment for council tax. According to the Audit Commission, direct debit is the most efficient way to collect council tax and I don’t think you’ll find a council in the UK who would disagree. But if it’s so great why doesn’t everyone pay by direct debit? There are barriers for both councils and residents. From the council’s perspective, the only real barrier is the attitude of some groups of citizens. This can be overcome with careful planned and targeted marketing and promotion. Most councils are already geared up to take payments electronically through the internet and over the phone so technology is no longer a barrier. Accessibility is key. For the rest, introducing direct debit payment systems can involve more IT and financial integration work so the challenge for them is allocating budget and resources. From the residents’ perspective, direct debit payment can expose them both financially and in terms of security. For some people, the idea that money will go out of their account every month without them actively moving it is uncomfortable, particularly if they have an irregular or very low income. For others, giving out bank details to the council is seen as a security risk. It’s not necessarily a distrust of the council’s ability to handle the data safely and responsibly, but quite often a general aversion to the concept of direct debits. There are also plenty of residents who think that moving to direct debit payment would make life much easier, but don’t do it because it’s another administration job on their list and one that has a very low priority. Councils are so keen to overcome these barriers and increase direct debit payments percentages that, over the last few years, there has been a spate of local authority direct debit campaigns. Driven in part by efficiency targets, this spate has been further encouraged by Bacs Payment Schemes Limited, which has its own awards scheme to drive the uptake of direct debit. In fact councils have invested in increasingly high-tech and creative campaigns to achieve their ends. These campaigns are often supported by the adoption of new software applications, such as Capita’s Direct Debit over the Web. So how can councils and citizens benefit? The primary and most compelling reason for maximising direct debit payments is the cost per transaction. For example, one of Capita’s customers, Colchester Borough Council, calculates that processing a payment made by post costs them £1.40 compared to about 8p for a direct debit payment. Colchester takes over 72,000 payments each month so it’s easy to see the enormous savings that can be made. Additional benefits are the reduced burden on staff and a reduction in costs relating to debt recovery and reminders. So the key selling point of a direct debit campaign is that when residents sign up to direct debit payment it generates huge savings for the council, which are passed on to the citizens whether for keeping council tax bills down or offering extra services to the community. Other messages used to promote take-up are that direct debit payment is secure, saves time, removes the need to queue up at a bank or council office and it’s one less thing to remember every month. So what’s involved in a direct debit campaign? Some councils deck out buses with their key messages, fill them with literature and tour around target communities often addressing a number of issues with the citizens they meet as well as direct debit payment. Telephone campaigns are also popular as they are relatively easy to set up. For some councils a leaflet accompanying the council tax bill suggesting signing up to direct debit works quite well. This is something Colchester used until it realised that people were keeping the bill and binning any other information in the envelope without registering what it actually says. The move to sending direct debit forms out in separate envelopes produced a better result. An additional incentive of entry into a prize draw for a cash prize for new direct debit customers is another approach that has been adopted by councils. One council has such a winning formula that it is partnering with scores of councils to roll out its poster campaign in their areas and providing strategic advice throughout the process. The increasing sophistication of direct debit take-up campaigns is brilliantly demonstrated by Colchester Borough Council. Colchester was having a respectable level of success with its leaflet-based approach but took things to a whole new level when it decided to use a data mining solution. The solution it selected uses over 340 attributes to describe the demographic, socio-economic and lifestyle characteristics of all adults and households in the UK. The result is a shortlist of households that are likely to sign up to direct debit payment. The council thought it was close to saturation point when it started the data mining project and was astonished to discover that 40% of its non-direct debit payers were in a group considered to have scope for converting to direct debit. The data mining solution goes further than just identifying targets. It also helps group those targets and then identifies what messages will work best with which groups so that the campaign can be fine tuned to maximise effectiveness. In 2008, by pursuing this approach, Colchester Borough Council halved the amount of residents it would normally target, which provided great cost savings in production and distribution of campaign materials. More importantly, it increased the percentage of households paying by direct debit by nearly 2 per cent in just a few months. The proliferation and repetition of take-up campaigns over the last few years means that they do work and they are value for money for councils. The drive towards provision of 24/7 self-service access to council services means that for many councils the technology to automate council tax payments and direct debit take-up already exists without need for further investment in IT and security. In fact, a large number of Capita customers are using our straightforward ‘out of the box’ Direct Debit on the Web software. Newer technology such as voice recognition is important to ensure citizens without access to the internet enjoy the same level of accessibility to council services. Capita offers a solution that enables citizens to sign up for direct debit over the phone using voice recognition. We can expect to see voice recognition-based services as standard in councils in the near future.
LA direct debit campaigns – who really benefits?
By Martyn Read, product launch manager at Capita Software Services
Every council adopts its own approach and tailors campaigns to meet the needs of its particular communities.
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