Address Management for Mail-Order and Retail

February 11, 2004

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My last article discussed the benefits of a comprehensive address management plan for insurance companies. This month, we will take a look at how, specifically, mail-order companies can use address management to increase profits.

Mail-Order Has a Lot to Lose
Few industries have as much to lose due to address errors than mail-order. When you ship large packages that are expensive to ship and contain expensive products, they had better not get lost in the mail. If a package is misrouted and has to be re-sent, you may not reach the customer in time for the special event, such as a birthday or holiday, which may anger customers.

Catalog mailings are often the backbone of a mail-order company's revenue-gathering activities. Because they are so often sent standard pre-sort, undeliverable-as-addressed catalogs are simply destroyed by the post office, without notification. Mail-order companies could be losing thousands of dollars on each catalog mailing, for years, without even realizing it. Managers at Brigade Quartermasters, a leading mail-order military gear supplier, were recently shocked to discover that they had lost $27,000 on one catalog mailing alone, due to bad addresses.

Problems with delivery service surcharges could also lurk for years. Companies like Fed-EX and UPS charge up to $10 per piece of inaccurately addressed mail, even if they are able to deliver it. It may be difficult to tell from your monthly invoice exactly how much money you are losing to inaccurate addresses.

As of 2002, catalog and online shopping were outperforming traditional brick-and-mortar purchasing by 36%*. This trend toward buying-through-the-mail only emphasize the importance of accurate addresses in the company database.

The Size of the Problem
As important as accurate addresses are, American business is facing $6 billion crisis: the cost of inaccurate addresses, according to a 2002 USPS and PricewaterhouseCoopers report. In the United States, 17% of people move every year, 23.6% of all mail sent is incorrectly addressed, and 2.7% of all mail never reaches its destination#.

How is it possible that nearly a quarter of all mail in the sent inaccurately? It's simple. Call center representatives may make typos, or misunderstand foreign accents or street names. Customers themselves may enter incomplete address information over the Web, leaving out critical details such as apartment numbers or directionals (NW, East). Some customers may not be sure of their exact ZIP codes.

Getting addresses right the first time
The traditional method of trying to solve address problems is to use a data cleansing software to run through the database and highlight problems. Address validation software exists today that provide a point-of-entry solution, which automatically fills in a complete, valid address from just a few keystrokes.Products such as these can save as many as 20 seconds per call, giving operators more time to cross-sell.

It is a necessary part of the workflow to stop bad data before it gets into a database.Address validation software verifies addresses against the U.S.Postal Service database as they're being entered into a database, which helps solve problems downstream.

Mail-order companies may have more to gain from address management software than those in any other industry.With a possible loss of thousands of dollars per mailing, as Bridage Quartermasters found out, the potential for better cost containment is obvious.

* According to a January, 2003 interview with National Retail Federation Spokeswoman Ellen Tolley
# According to the United States Postal Service, (


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