Addressing Data Errors: Getting Mail Headed in the Right Direction

By Cecilia Hellman

Upper management may not always know what is going on in the mail room and how it affects profits, but taking a closer look yields startling facts. In the multi-cultural United States, where 17%# of people move every year, 23.6% of all mail sent in the U.S. is incorrectly addressed*, and 2.7% of all mail never reaches its destination. The costs of re-sending, re-printing, and re-producing returned packages can significantly affect profits. Add to this the fact that delivery services like UPS and Fed-Ex charge $5 to $12 per piece of incorrectly addressed mail, even if they're able to deliver it, and it becomes clear that address data management can offer great potential for increasing profits. This is especially true in the business climate we're facing, where companies need to stop "profit eaters" before they affect the bottom line.>

Address management problems can even affect revenues. Consider a year's worth of marketing campaigns, in which a million pieces of direct mail are sent. Assuming a modest 1% conversion rate, and a 10% rate of mail that reaches its destination either too late or not at all, due to address errors, how much business could be lost? Let's take a look:

1,000,000 items
10% non-delivery
1% conversion rate = 1000 lost customers

Assuming a $100 value per customer, the potential savings is $100,000. Not only is there a calculable dollar cost for every piece of lost mail, but prospects who weren't reached by your mail may end up buying similar products from your competitor.

Many companies attempt to save money by sending much of their mail via third-class. That may seem a cost-effective solution, but incorrectly addressed third-class mail is simply destroyed by the post office, rather than being returned. This can end up costing more money, as management may never become aware of address management problems, since they never see the returned mail.

Solving Data Problems Before They Even Occur
The traditional method of trying to solve address problems is to use a data cleaning software to run through the addresses and highlight problem addresses.A better solution is to stop bad data before it gets into the database and to validate the address by matching it against the U.S.Postal Service database as the data are entered.

Here are some typical scenarios where users can stop bad addresses before they can damage a company's bottom line:

  • If a call center operator misspells a street name when entering it into a database, the operator should be notified that an error is being made and show her the correct spelling.
  • When a customer forgets to include an apartment number when filling out an order over the web they should be prompted to provide it.
  • A new employee wants to order office supplies, but doesn't know his employer's ZIP code.This should be done automatically.
  • Your database formats irregular addresses, such as those in Puerto Rico, PO boxes, or international addresses, slightly incorrectly, resulting in undelivered mail. Address validation solutions exist that automatically formats these addresses according to the Postal Service's strict Coding Accuracy Support System (CASS) regulations, ensuring on-time, cost-effective delivery.
  • A customer's address is 123 Main Street NE, but he forgets to mention the "NE" while talking on the phone with a mail-order firm.An automatic prompt to the call center operator should ask him for a directional.
Many companies have already implemented solutions that provide business benefits.Lexicon Marketing has increased profits significantly by ensuring that its 50-lb packages of educational materials reached the right destination, the first time around. The Massachusetts Society For The Prevention of Cruelty To Animals (MSPCA) increased donations by allowing call center operators to enter correct addresses more quickly, giving them more time to focus on solicitations during each call. Nissan has even used the system to devise a better auto financing system: with accurate addresses ensured, they experienced fewer cases of mistaken identity and fraud. This led to a more accurate car loan approval process, and happier customers.

Conclusion
Address management problems are the profit-eaters you may not even know you have. In the past, losing money through returned or undelivered mail was simply considered the cost of doing business by mail. In 2003, this is no longer necessary. Knowing the mail statistics, and recognizing how those statistics can affect your bottom line, is the first step. With cutting-edge solutions available at off-the-shelf prices, there is no excuse for losing money through poor data address data management.

# According to the United States Postal Service, (http://www.usps.com/communications/organization/postalfacts.htm)
* According to a 2002 United States Postal Service report


Published Wednesday, February 12th, 2003

Written by Cecilia Hellman



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