When pondering the costs of poor address quality, conventional wisdom steers us first towards wasted money spent on production and postage. However, a myriad of hidden costs and operational pitfalls lurk beneath the seemingly innocuous mistake of sending mail with incomplete or inaccurate postal addresses.

Modern commerce, particularly e-commerce, is built upon the precise execution of a multitude of interconnected tasks. An error in one link of this colossal chain, such as failing to capture and verify the customer's address data, can send shockwaves through the entire operation. The true cost of poor address quality extends far beyond the boundaries of print and mail expenses.

Let’s start with the obvious. Undelivered mail means the money spent on paper, envelopes, printing, processing, and postage is gone. You can't recoup it. Once you print a bad address on a mail piece and hand it over to the US Postal Service, you won’t be getting any of that money back.

Returned mail can also result in lost revenue and increased costs associated with trying to collect that revenue. If the USPS does not deliver bills or invoices, for example, the risk of non-payment increases substantially. This affects the accounts receivable operation, throws off cash flow projections, and requires time and added production costs to re-create and remail the piece. If mailed checks do not arrive at their intended destinations, there’s the added expenses of canceling and re-issuing the check.

Marketers face challenges too. When marketing messages aren’t delivered where and when they’re supposed to, it can severely disrupt synchronized multi-channel promotional campaigns that depend on time-sensitive calls to action included on the printed piece. Undelivered or returned mail also makes it difficult to measure the response rate for a direct mail campaign. Poor statistics can influence the effectiveness of future direct mail efforts, or even cause an organization to abandon mail as a marketing channel in which they want to invest.

Any company subject to compliance regulations can run into trouble for unwittingly failing to meet its obligations. Fines can amplify any cost or loss. The current challenge with the Medicaid unwinding project is a good example. Analysts estimate that 30% of the mail asking Medicaid recipients to submit information necessary to reapply is returned. The government requires state health departments to research each undelivered piece and document their efforts to locate and communicate with the beneficiaries of the Medicaid program.

Fraud is another potential pitfall. Say you send a piece of mail to the right address, but the mail is received by the wrong person. Personal identity information and account numbers might fall into the wrong hands. A company may pay a fraudulent account or enable further identity fraud for some time before discovering the error.

But perhaps one of the biggest risks of returned mail is loss of opportunity. When mail isn’t delivered, or when it reaches the wrong person, it will not generate a response. The fraction of a mailing campaign that is undelivered can cause a lot of lost revenue.

All these scenarios can lead to poor customer experiences and unhappy clients. Try getting money from clients who haven’t received a bill. Or explaining why they couldn’t take advantage of a special offer. Or discussing late fees that clients consider unfair. These mishaps complicate the client relationships, spark expensive conversations with customer service, and batter a carefully cultivated brand.

When added up, small costs incurred by various departments can cause a much greater impact than simply foregoing the costs of paper and mailing. All companies should know of the hidden snowball effect and put steps in place to reduce the risk of returned mail before they send it.

Pay attention, keep learning, educate others, understand the underlying issues, and continuously work towards improvements. Address management isn’t an exciting and glamorous task, but left unattended, these minor details can be a drag on your organization’s operations.

Mailing professionals should do everything they can to verify the quality of data before printing addresses on mailpieces. Mailing without good data is simply too risky.

Mike Porter at Print/Mail Consultants creates content that helps attract and retain customers for companies in the document industry and assists companies as they integrate new technology. Learn more about his services at www.pmccontentservices.com. Follow @PMCmike on Twitter, or send him a connection request on LinkedIn.