Jan. 29 2007 11:10 AM

For the past two decades, address correction has largely been the concern of corporate mailing centers and professional mailers as a means to obtain postal discounts.


Postal discounts continue to be an important reason for organizations to utilize address correction software; however, enterprise-wide address quality is a priority for database administrators. Address correction isn't just important in the mail center. It is a corporate-defining ingredient in the call center, the shipping center, the marketing department and in accounting.


What Is the "$2 Billion Problem?"

The "$2 Billion Problem" is the rather dubious distinction observers of the Postal Service have given the problem of undeliverable as addressed (UAA) mail. Predictably, the costs associated with forwarding, returning, rerouting and disposing of mail come in at approximately $2 billion.


Postmaster General Jack Potter announced at the National Postal Forum in the spring of 2004, "I want us to cut by 50% the amount of undeliverable as addressed mail." Fixing addresses is a priority for the Postal Service as a way to reduce costs and increase service, mostly simultaneously. While that's fine for the US Postal Service, how does this affect you or your clients?


Bad Data Comes from:

Data Entry No validation at entry for correct address; accounts for 40% of errors


People Move 14%-17% of the population moves annually, and most do not inform organizations they do business with, usually just the post office


Internal Databases Files or systems have limitations, sometimes self-imposed; continuous changes in ZIP Codes and ZIP+4 Codes; streets in the same town with similar names (for example, in Atlanta, there are 40 streets with the name "Peachtree" or "Peach Tree")


Traditional Business Practices Organizations don't have a systematic plan in place to update addresses; organizations shrug their shoulders with: "It's a cost of doing business"


Delivery Statistics:


  • 2.72% of all mail is UAA


  • 23.5% of all mail has address deficiencies


  • 17% of all mail is delayed


  • Over one and half million new addresses are created every year


    Business Impact:

    According to a report published by The Data Warehousing Institute in 2002, "poor quality customer data cost US businesses a staggering $611 billion a year in postage, printing and staff overhead." This amount does not include the costs associated with losing and alienating a customer, which are probably much greater.


    Impact of Bad Addresses:

    It may seem entirely too sweeping and too general to say that correct (or incorrect) postal address files affect nearly every aspect of an organization's communication and fulfillment. Perhaps that's true and perhaps it isn't, but if we look at these examples, the enormity of the impact of incorrect addresses becomes apparent.



    An incorrect address means a shipment or an order is delayed, shipped to the wrong address or returned to the shipper. IMPACT #1: Customer dissatisfaction and possibly customer defection (i.e. "where is my

    package?") IMPACT #2: A returned package costs the shipping organization a return charge of $10 to $30 for most carriers. IMPACT #3: The shipping organization has to re-label, perhaps re-box and add another shipping cost that they are responsible for, not the customer.



    An invoice sent to an inaccurate address is delayed, sent to the wrong address or returned. If the organization's terms were net 30, they are now net 45 or more to these particular addresses, as it was not the fault of the client. IMPACT #1: Cash flow. The onus is on the customer to pay the bill when they get it. The onus of getting the bill to the ·  customer is the sending organization's responsibility. IMPACT #2: Customer dissatisfaction. Many organizations pay bills only on certain days. A bill that arrives and is due "out-of-cycle" may irritate some customers.


    Customer Service:

    The customer service department or call center has to field a call from a customer who didn't receive an expected brochure or package as a result of an inaccurate address. IMPACT #1: It costs the shipping organization approximately $50 to $70 per customer service call. IMPACT #2: Opportunity costs. What else could the call center agent do to add value to the organization rather than straightening out a bad shipping address?


    Marketing Efforts:

    Direct mail marketing continues to be one of the most effective and flexible advertising mediums available. Incorrect or invalid addresses can mean the difference between success and failure in a direct mail campaign. IMPACT #1: Many prospects do not receive the offers and cannot respond. The response rate is artificially reduced. IMPACT #2: Time-sensitive promotions may be rendered ineffective as inaccurately addressed mailers may be delayed. Receiving notice of a great sale after it is over doesn't help much.


    Address Quality at Point Zero:

    As we have noted earlier, 40% of most data errors occur on entry. This is the point where address correction should take place, the point where the data is freshest, the point of entry. An invalid delivery address strongly suggests a data entry problem that in a real-time environment could be corrected on the spot. Correcting the address while the customer is still on the phone is a dramatic step toward corporate address quality. 


    It is important to note that with increased reliance on web-based order forms completed by customers, these customers have effectively become the data entry clerks. Unlike professional data entry personnel who are trained on the importance and meaning of address entry fields, most customers are satisfied to enter the minimum required to complete the form.


    Address correction at the point where addresses are keyed in from written or printed sources is important as well. If an address does not validate when the entry clerk keys in written address information (common for business reply cards or trade show inquiries), bad information is now in the database. "Fix it or forget it" may be the mantra when adding customer address information. If the address cannot be delivered, the question then is, "Why enter it in the first place?"


    Michael Maguire is the Director of Sales and Marketing for Datatech SmartSoft, Inc. and holds an MBA from Michigan State University.



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