As with all enterprises today, the United States Postal Service (USPS) is being challenged to do more with less. This requires higher levels of automation to keep the standards that we expect for the delivery of our mail, because, in today's world, it is unlikely that the same postal carrier will be on the same route day after day and year after year. Today's or tomorrow's carrier may not know every house or building on the street, but the USPS hopes that its next phase of automation will.  On August 1, 2007, the postal service will begin what it calls CASS Cycle L automation, which requires that mailing lists be run through Delivery Point Validation (DPV) processing in order to continue to qualify for the deepest discounts.

To date, CASS-certification is all that's been necessary for mailers to qualify for maximum automation rate postal discounts. In order to implement the Cycle L phase, the USPS notified mail certification software vendors in February 2006 that they must incorporate DPV processes in CASS-certified applications. In the past, Delivery Point Validation was an available option with some software applications, but starting August 1, 2007 it will be mandatory.  DPV takes the certification process one step further by checking and confirming mailing addresses within a nine-digit Zip+4 Code. While most mailers may believe their lists are good, it will now be the performance of the list against DPV that stands the testand saves the bottom line.

Here is a short example of how it works: a Zip+4 Code might cover an area with addresses from 100 Main Street to 300 Main Street. Typically, addresses would run; 100 Main Street, 102 Main Street, 104 Main Street and so on. However, if 104 Main Street is an empty lot it is not considered a valid delivery point, and DPV would mark it "N" for "invalid." This means a First-Class rate would apply. DPV confirms all primary number addresses, but addresses missing a secondary number (e.g. a suite number or apartment number) will remain acceptable.

For high-volume transactional mailings, USPS internal testing suggests that one can expect DPV to find that up to two percent of existing mailing lists contain non-valid addresses based on these new requirements. And, as of August 1, these will be charged full or five-digit First-Class postal rates. Though the percentage seems small at first glance, in real terms the additional two percent of an industry list that holds one million addresses amounts to 20,000 mailing pieces. The additional charges can add up quickly.

The cost of implementation

In meeting with my business mailer colleagues, topical discussions are taking place regarding the true business cost that will be involved in implementing DPV.  Being fully aware of the fees facing those affected by this change is a critical component to a successful transition. Let's take a look at four costs that will definitely make a difference to a bottom line if not considered:

1)       IT and Business Conversion Costs - Installing the new DPV software will involve a learning curve and labor dedicated to programming. Carefully considering the time and hours needed to complete the installation will eliminate surprises and ensure you have the time allotted, as well as the staff needed, to be ready to comply by the August 1, 2007 date. Additionally, there will be expenditures to the bottom line that include the cost of the software itself, the productivity time spent in meetings as you plan and prepare and the administrative time needed to follow the necessary steps to implementation.

2)       Run Time - This is a key item. Additional CPU time based on testing must be planned for. It's important to understand how the implementation will affect processing speeds, connectivity to other platforms, data streams and operational controls. In a recent communication from the USPS, it was noted that DPV users have reported increases in processing throughput ranging from 0 to 20 percent*. From what we have seen in our own internal testing, that percentage is low. Our research shows a 50 percent and up increase, which will surely mean the addition of new equipment to meet our standard turnaround times.

3)       Postage Costs - Be sure to run preliminary list tests to ascertain the impact DPV will also have on postage discount losses. Again, the USPS warns that if your database cannot be ZIP+4 Coded, and you don't correct this prior to mailing, you may experience at the very least an estimated average two percent decrease in postal discount*.

4)       First Class Postal Delivery Standards - The above two percent will no doubt double the amount of unsorted mail.  This will affect the ability of the post office to maintain the delivery standards we have been used to receiving, and will be felt in the turnaround time of our mail.

The new Cycle L regulation has raised several issues, including the limited time allowed for mailers to update their CASS-certification procedures. I have always been in favor of postal reforms that would empower the postal system to run itself more like a business - with a more efficient management structure. But being given the proper time to prepare is not always top of mind when it comes to USPS-mandated improvements. As it looks today, the USPS is in full swing getting ready for this changeand, therefore, businesses should be too. The time to start preparing, testing and implementing is now.

Harry Stephens is President and CEO of DATAMATX, one of the nation's largest privately-held, full-service providers of electronic and printed billing solutions.  For more information about DATAMATX, visit www.datamatx.com or call 800-943-5240.

*Mailers Companion - News for Mailing Professionals November/December 2006