For EngageSmart CEO Bob Bennett, it’s all about “getting to nirvana,” which in his universe represents when a company has 100% automated billing as well as 100% auto-payment of bills.
While that lofty target may be more aspirational than attainable in real life, Bennett said the actual tallies of his company’s more than 70,000 customers are getting closer to nirvana all the time.
“[EngageSmart] is almost always replacing something else, but we [are] there because we drive adoption and get our customers to that nirvana state twice as fast as anybody else can,” Bennett told PYMNTS minutes after his company’s shares had just begun trading $10 above their $26 initial public offering (IPO) price. “So, our prospects see this because we have the numbers, and then they say, “OK, if I’m going to make a change, I’m willing to go through some pain’” in order to get to a better place.
On paper, EngageSmart provides customer engagement software and integrated payment solutions tailored to five verticals: health and wellness; government; utilities; financial services; and giving. Each of the verticals is designed to simplify customers’ engagement with their clients by driving digital adoption and self-service.
“Digital payments, of course, has been a tailwind for those of us in the payments business,” Bennett said. “It’s inefficient to write paper checks, it’s inefficient to receive paper bills, it’s more work than it needs to be.”
Within its growing customer base, this now $5 billion Boston-based software company serves more than 68,000 small- to medium-sized business (SMB) customers and more than 3,000 enterprise-size clients.
Driving Digital Adoption
With enterprise solutions, he said, the company is generally replacing a customer’s existing electronic bill presentment and payment solution. But within its SMB solutions client base, such as those in the wellness vertical, Bennett said 60% of those customers are coming from pen, paper and spreadsheets. They have no practice management software, and few of them have electronic payment capability.
“So, there’s a lot of greenfield in that segment,” Bennett said, noting that for a company of any size that sends bills out, it’s much more efficient to move to digital transactions.
Retention Benefits of Digital Billing
Bennett gave the example of an insurance company. To renew policyholders, the company must send out a lot of mail. Customers forget that they must renew each year; in fact, he said that is the No. 1 reason customers don’t pay a bill.
EngageSmart takes away that problem by providing friendly email reminders during the billing cycle and by giving its customers’ clients the ability to enroll themselves in paperless billing and automatic payments.
“If they’re with us, they can sign up for autorenewal and autopay and automatically just reinstate their policies, which then drives the policyholder retention way up,” Bennett said.
“So, the digital payments is an important part of the business model that generates higher retention of consumers, higher customer satisfaction and less delinquencies.”
Shift to Self Service
Similarly, with SimplePractice, the company’s solution for the health and wellness field, consumers make appointments themselves. They go online, find the calendar, make an appointment and get an immediate confirmation with a calendar invite. The patient also gets a reminder the day before.
“What we’re doing is driving digital self-service,” Bennett said.
These solutions also eliminate the phone calls asking where the bill is or if the payment has been received. Customers can see their balance immediately through the customer portal that EngageSmart provides on behalf of its customers.
The company’s InvoiceCloud includes electronic bill presentment and payment solutions for governments. It handles property taxes, motor vehicle taxes, parking violation remittance and parking meters. It also includes a solutions for utilities and insurance companies.
Rising Tide of Electronic Payments
In these fields, paper checks still comprise a significant amount of the remittance bill payment. Cash does, too, so the company also converts cash at major retailers into payments for utility bills, tax bills and insurance policies.
“We’re riding that rising tide of electronic payments, replacing paper checks and walk-in traffic and people paying with cash,” Bennett said. “Again, we’re driving digital efficiencies and providing the gift of time to our customers to focus on their most important initiatives and their community and their people.”
Bennett reported that 60% of the company’s revenue comes from transactions and 40% comes from subscription software.
“I think that digital payments is an incredibly great place to be,” Bennett concluded. “I was told by a fellow that’s in the electronic payment business that if I spent a year in the electronic payment business, I would never want to leave. So far, he’s been right. It’s absolutely been a gift to me, and I am the luckiest man on the planet.”
Shares of EngageSmart ended their inaugural trading session at $34.12 per share, up 31% for the day and tallying more than $1 billion in additional value to the company’s market capitalization.
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