With the economy mired in a slump, postage costs about to increase and consumers and employees skittish about the safety of the mail, there has never been a better time to attack the intertwined problems of address quality and returned mail.

The time is especially ripe because businesses urgently need to boost sales, reduce unnecessary costs and demonstrate to both customers and employees that mail, the primary hardcopy means of customer communications for businesses today, is still a useful, safe and welcome form of messaging.

But very few managers are taking advantage of easy-to-implement technologies, which can help achieve those essential objectives. Instead, most are still operating under a "business as usual" approach that ignores the need to update customer addresses as well as the opportunity to reduce dramatically the instances of returned mail, also known as undeliverable as addressed (UAA) mail.

The Dilemma

The lack of progress in reducing UAA seems to hinge on a general belief that the problem of returned mail cannot be solved. Or if it can be solved, that the cost of the cure is greater than the cost of the problem. Nothing could be further from the truth. UAA mail is a problem for most businesses today because managers deal with its symptoms rather than its cause, and they focus on a manual rather than automated solution. As a result, they achieve little progress.

When handled manually, which is the way most businesses approach the problem, returned mail is costly, cumbersome and time consuming to process and correct. Also, responsibility for dealing with UAA often spans more than one department, which makes accountability and progress difficult. And since returned mail grows steadily as an organization prospers and attracts more customers, the cost of a manual fix grows steadily as well.

Given these obstacles, the vast majority of high-volume mailers choose to ignore the problem of UAA mail. But the cost of returned mail is far greater than many managers imagine. Those costs involve "hard" dollars such as the costs for postage, processing, paper and labor. They also include "soft" dollar costs such as the cost of lost or unrealized sales.

And in today's uncertain safety environment, they also involve a cost to both customer relations and employee relations. Because until the U.S.Postal Service can totally ensure the safety of the mail, customers will be skeptical of any piece of mail that is not instantly recognizable with an address that is completely accurate. Employees are very likely to be reluctant to handle mail that has been delayed unnecessarily in processing and delivery and comes back from the USPS with the possible risk of contamination.

In fact, the cost of correcting bad addresses manually is significant and can reach as high as three dollars to $11 per mailpiece. Since returned mail comprises one to two percent of all outgoing mail for most organizations, the potential cost of dealing with UAA on a manual basis is nothing short of astronomical.

But now, thanks to a new set of software tools just one of which, when used on a monthly basis, has been shown to reduce returned mail by nearly 50% managers have the ability to plug one of the most persistent drains on profits today and help allay the fears of both customers and employees.

The Hard Costs

Just how costly is UAA mail? First, consider the entire cost of the original mailpiece. Since the returned mailpiece has not yet been delivered as intended, the entire cost of processing and mailing is lost.

Next, consider the cost of any return service provided by the U.S. Postal Service. If the mailpiece has been returned by the USPS, the mailer has now paid twice to have it delivered and returned, and it is still an undelivered mailpiece. The entire mailing process must begin again.

Now, look at the rework involved in reprocessing the returned mail. There is the cost of labor for manually handling the returned mail, sorting it for eventual reprocessing and updating the master file.

Next comes the cost of printing, paper and envelopes to regenerate and assemble a duplicate message. If a new message is not generated, add in the cost of labor for manually retrieving the original statement and inserting it into a newly addressed envelope.

Postage is the last major hard cost. If the regenerated mailpiece can be commingled with the regular mail stream, a presort discount may be available. Otherwise, the volume and density of regenerated mail might be inadequate, and the mailpiece would require the full cost of postage.

The Soft Costs

UAA mail also comes with "soft" costs, which can be even more significant, especially for the enterprise as a whole. The most tangible involves the delay in the receipt of revenue. If the original mailpiece contained a statement or an invoice that requires payment, then the enterprise is not receiving prompt payment, and cash flow may be impacted.

The delay in receipt of a bill may also trigger a customer service cost. Why is that? Because the customer, who did not receive the statement as expected, may call to inquire or complain about the delay.

There is also the cost of lost sales. For example, customers who do not receive statements also do not receive inserts, catalogs or promotional and marketing-related mailings, which means additional or incremental sales can be lost.

Five-Step Solution

The best way to assure prompt and accurate delivery of mail is to eliminate address errors before the mailpiece is printed or mailed. This also eliminates the cost and time involved in handling, reprocessing and correcting the returned mailpieces and customer address files. The solution is a five-step process to ensure existing customer address data is correct and that new data is accurately entered.

1. It's important to eliminate all new data entry errors. From 10 to 40% of all name and address errors occur at the time of the initial data entry. Since new customers are being added all the time, all new address data should be filtered to ensure  all the information is accurate, and it is up to date. A number of CASS-certified tools help by enabling companies to compare all new customer address information with existing postal databases to ensure that all address components match.

2. Make sure that every existing address is a deliverable address. The same cleansing of data via CASS-certified tools should also be performed on all existing customer records, at least monthly or before every mailing cycle.  This process standardizes all addresses to USPS regulations, verifies the street actually exists, corrects ZIP Codes and adds Delivery Point Barcodes to speed delivery and gain automation postal discounts.

3. Ensure that every message is a deliverable message. The CASS-certified cleansing is neither perfect nor all-inclusive. It will result in files that are called "failures to match." A percentage of these can be corrected by matching against the data contained in third-party databases. These consumer-oriented databases are compiled from many sources and are useful because they contain name as well as address information. The data can be used to correct many more errors, such as missing or incorrect house numbers, directionals or misspelled names and streets.

4. Keep up with customers as they move. The best way to keep up with Americans who move is to utilize the USPS move update service called FASTforward Mailing List Correction. This service enables mailers to update customer address information quickly and electronically by matching the data against the USPS move update database, which contains 13 months of new address information.

The service is particularly cost-effective because it enables companies to update their address information before a mailpiece is printed and mailed. In those instances where legal or regulatory requirements prevent the updating of address records without specific authorization from customers, mailers can request verification of an address change via the use of a simple and inexpensive message distributed prior to the mailing of an important document. This saves time and money, and it helps improve customer satisfaction.

5. Reconnect with "long-lost" customers. Mailers can also supplement the USPS move update service by utilizing the resources of a third-party database, particularly when mail has been returned because the move data is out-of-date. These databases, referred to in step three above, often contain more than five years of move data gleaned from many sources other than the USPS.

Organizations will achieve varying degrees of success when implementing these steps. Mailers who follow this five-step process can expect to reduce instances of UAA mail by as much as 50% in just three to six months, depending on the frequency of mailings. It may not be possible to eliminate returned mail, given the dynamic lifestyles of customers. But a reduction of 50%, in just a few months, goes a long way toward reducing costs, boosting sales and improving relations with both customers and employees.

Paul Greene is executive director of Industry Relations for Pitney Bowes docSense. For more information, contact www.docSense.com or www.pb.com.