Channel accounting

I’d been asked a question off blog about how the various figures apparently showing the incrementally lesser costs of face-to-face, to telephone, to web, that keep cropping up, were calculated.  Since this discussion is becoming more common and seems to rely upon mythology as much as science, I thought I’d try to briefly fill out some of the blanks.

 I did a quick survey of some of the figures being quoted:

  NWEGG Lambeth Socitm (min) Socitm (max)
Face-to-face £7.81 £1.66 £4.83 £9.56
Telephone £4.00 £0.85 £1.28 £5.57
Touchtone   £0.09    
Web £0.17 £0.09 £0.22 £0.56
Payment network   £0.50    
Direct debit   £0.02    

 The methodology used by NWEGG in association with CIPFA was documented and published by the CLG in March 2008 and entitled –

Delivering Efficiency: Understanding the Cost of Local Government Services

 and can be found here:

 http://www.communities.gov.uk/documents/localgovernment/pdf/730431.pdf

 Socitm employ CIPFA Accounting Code for Best Value as the basis for collecting costs, which should mean that the NWEGG and Socitm figures are on a par. CIPFA charge £850 for a copy – http://secure.cipfa.org.uk/cgi-bin/CIPFA.storefront/EN/product/AC073_

– must be a best seller at that price!

 I do have a slide with the Lambeth calculation and I would say that looks like common sense, too.

 So, why the differences? As was discussed at a meeting I attended with Socitm a while ago, an authority who had done their own sums found vast differences between services. This does make sense. Not all services are equal, displaying planning information on the web is easier than displaying benefits information and is likely to be accessed more often, too. So it probably depends which services one chooses to account for.

 My conclusion – get everyone to pay by direct debit wherever possible!

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3 Responses to Channel accounting

  1. Grant says:

    One of the oddities is that many websites still funnel people to call rather than do transactions on the web. My insurance company does this; so I have to repeat name and complex policy numbers over the phone rather than just enter them on an online form.

    I recently had my car stolen; police websites advise people to report it in person to the local station or ring the local station rather than encourage people to use the web or even to call a call-centre. That leads to the cost of a person standing their to write down the details rather than just accept it electronically. I had to define locations in words; but could well have pointed to the location on a google map which would have helped with geo-spatial analysis.

    Even if it is fairly obvious that web is cheaper per transaction than phone which in turn is cheaper than face-to-face, I would still offer one caveat; the simplest less-interactive transactions such as yearly re-registering of my car can and do take place on the web. Its the more difficult edge cases ; (such as my stolen car) or similar that require more interaction and thus take place over the phone or face-to-face. Thus the type of transaction and complexity of the transaction may also impact the cost per transaction over different mediums.

  2. Rich says:

    I’d be interested in any figures on the cost of accepting/handling/processing cheques or cash. We charge our residents £2 for a Blue Badge and I’ve got a pet theory that it costs us more than £2 to accept/handle and process it – I’d love some links to any research which may relate to this.

  3. Interestingly a lot of private sector businesses stopped accepting cheques early in 2008 due to the limited number they claimed they were taking, this included Marks & Spencers and Tescos (less that 2% of their trade).

    Earlier on, in 2007, according to the BBC – http://news.bbc.co.uk/1/hi/business/6429903.stm – BT had started charging £4.50/quarter for bills paid by cheque, which was claimed to be recouping the cost of processing, whilst Virgin were said to charge £5 for the service. Hence I would imagine a cost of £5 might approximate two years on.

    Mick

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