A pervasive myth in direct marketing is that there is little return in screening mail lists for deliverability, taking print and mail decisions to one of two extremes:
Mail to all addresses, both good and bad. Rationale: the bad addresses may get delivered anyway, and someone may respond. Besides, response rates are so low that a few misdirected mailpieces will get delivered to someone and still have advertising value - right?
Suppress any address that doesn't pass standard address hygiene products like CASS (Coding Accuracy Support System). Rationale: since the address doesn't qualify for postal discounts, there's not much else we can do.
But consider these two points. The quality of your addresses measurably impacts the total responses to your campaign, and the value of the responses you miss is much greater than the cost of correcting unproductive mailpieces.
Let's debunk the myths behind the big myth that there is no return on investment (ROI) in screening mailing lists.
Myth #1: Mail to all addresses - we may get a response.
Mail to all addresses, both good and bad. Rationale: the bad addresses may get delivered anyway, and someone may respond. Besides, response rates are so low that a few misdirected mailpieces will get delivered to someone and still have advertising value - right?
Suppress any address that doesn't pass standard address hygiene products like CASS (Coding Accuracy Support System). Rationale: since the address doesn't qualify for postal discounts, there's not much else we can do.
But consider these two points. The quality of your addresses measurably impacts the total responses to your campaign, and the value of the responses you miss is much greater than the cost of correcting unproductive mailpieces.
Let's debunk the myths behind the big myth that there is no return on investment (ROI) in screening mailing lists.
Myth #1: Mail to all addresses - we may get a response.
Realities:
· The United States Postal Service (USPS) does not forward Standard Mail (advertising mail), nor will it generally deliver mail to incomplete or defective addresses. Those mailpieces are destroyed by the Mail Acceptance Unit. According to current USPS statistics, 6.4% of all Standard Mail is destroyed as undeliverable. If you send out 10 million mailpieces, that means 640,000 never make it beyond that initial USPS drop.
· As the USPS cuts costs, the use of automated systems for efficiency increases, relying less on manual efforts to get mail delivered. If you can't get the address right, don't expect a machine to correct it.
· A recent Pitney Bowes direct marketing study found that response rates drop 65% when mailing to an address with deficiencies. If the overall response rate is one percent, the response rate to questionable addresses will be 0.35 percent.
· You may feel the "or current resident" endorsement adds value, but how do you know the unintended recipients are appropriate for your offer? You've targeted your prospects and content, so "current residents" can send your marginal response rate plummeting.
Myth #2: Suppress anything that doesn't get a ZIP+4.
Realities:
· The cost of undelivered mail isn't just printing, materials and postage. There's the cost of "lost opportunity" - and it's much higher. The value of each respondent that's protected through additional list hygiene must be considered in calculating ROI. This can be computed on a single year basis or, more appropriately, assessed as "lifetime value" - the current value of the median or average consumer over the life of the customer relationship. Consider the prior example. You have 10 million addresses, and 640,000 are undeliverable. If 50% can be caught, you get 320,000 more touch points whose value could easily surpass the cost of correcting them!
· Cleansing addresses using standard move-update and CASS products can leave many addresses still undeliverable. For example:
o Your company uses CASS with Delivery Point Validation (DPV). You match 98% of your addresses to a delivery point, but 10% are to high-rise buildings without correct apartment numbers. That 10% may end up on the lobby floor and not reach a physical person (unless you count the person who throws out the trash).
o If your list has lots of business addresses, remember that most companies don't deliver marketing mail via their internal distribution network. Just because mail gets to a company doesn't mean it gets to your audience.
In light of these realities, it makes sense to take a comprehensive approach to address quality:
Hire a mailstream expert who can design the right process to maximize the address correction rate for your situation. Addressing issues can be as unique as marketing campaigns; that is why you need the right address correction process for your needs to deliver maximum ROI. To calculate, multiply the response rate by the number of corrected addresses, then multiply that by the value of a response. Using our earlier example, if you correct 320,000 addresses and have a one percent response rate, that's 3,200 additional sales. Assuming each sale has a $100 annual value, you've just earned an additional $320,000.
Once you've corrected all the addresses you can, suppress the rest. Addresses you can't correct probably won't be delivered. The few that do reach someone will have a lower response rate. Assume the minimum 65% drop in response rate for questionable addresses. When you perform a break-even analysis of mailing to these addresses, you'll find the cost per response will be higher than the value per response!
Bottom line: the idea that there is no ROI in screening mail lists for deliverability is truly a myth! Different assumptions from those in our example will impact the break-even point - lower average order value and lifetime value shift the threshold. However, address correction should truly be considered for all mailings. Even if rental list agreements preclude additional screenings, it certainly is a topic to take up with list providers.
Also, there is a "green" benefit of reducing unproductive mail. A campaign of a million mailpieces averaging a six percent undeliverable rate results in 60,000 promotional packages sent to a landfill or recycling process (which still consumes energy). If those 60,000 letters weigh an ounce each, that's nearly two tons of waste! In addition, consider the energy costs of producing, transporting and sorting those mailpieces.
Finally, beyond the opportunity cost of not reaching new responders, consider the existing customers you lose due to address corruption or undetected moves. You pay a lot to develop a relationship; losing existing customers who end up as undeliverable mail is a true loss. With customer lists, the address correction process is even more valuable. Today more than ever, every customer is gold.
Jeff Stangle is director of solutions development, Mailstream Consulting, Pitney Bowes Management Services. Visit www.pb.com for more information.
· The United States Postal Service (USPS) does not forward Standard Mail (advertising mail), nor will it generally deliver mail to incomplete or defective addresses. Those mailpieces are destroyed by the Mail Acceptance Unit. According to current USPS statistics, 6.4% of all Standard Mail is destroyed as undeliverable. If you send out 10 million mailpieces, that means 640,000 never make it beyond that initial USPS drop.
· As the USPS cuts costs, the use of automated systems for efficiency increases, relying less on manual efforts to get mail delivered. If you can't get the address right, don't expect a machine to correct it.
· A recent Pitney Bowes direct marketing study found that response rates drop 65% when mailing to an address with deficiencies. If the overall response rate is one percent, the response rate to questionable addresses will be 0.35 percent.
· You may feel the "or current resident" endorsement adds value, but how do you know the unintended recipients are appropriate for your offer? You've targeted your prospects and content, so "current residents" can send your marginal response rate plummeting.
Myth #2: Suppress anything that doesn't get a ZIP+4.
Realities:
· The cost of undelivered mail isn't just printing, materials and postage. There's the cost of "lost opportunity" - and it's much higher. The value of each respondent that's protected through additional list hygiene must be considered in calculating ROI. This can be computed on a single year basis or, more appropriately, assessed as "lifetime value" - the current value of the median or average consumer over the life of the customer relationship. Consider the prior example. You have 10 million addresses, and 640,000 are undeliverable. If 50% can be caught, you get 320,000 more touch points whose value could easily surpass the cost of correcting them!
· Cleansing addresses using standard move-update and CASS products can leave many addresses still undeliverable. For example:
o Your company uses CASS with Delivery Point Validation (DPV). You match 98% of your addresses to a delivery point, but 10% are to high-rise buildings without correct apartment numbers. That 10% may end up on the lobby floor and not reach a physical person (unless you count the person who throws out the trash).
o If your list has lots of business addresses, remember that most companies don't deliver marketing mail via their internal distribution network. Just because mail gets to a company doesn't mean it gets to your audience.
In light of these realities, it makes sense to take a comprehensive approach to address quality:
Hire a mailstream expert who can design the right process to maximize the address correction rate for your situation. Addressing issues can be as unique as marketing campaigns; that is why you need the right address correction process for your needs to deliver maximum ROI. To calculate, multiply the response rate by the number of corrected addresses, then multiply that by the value of a response. Using our earlier example, if you correct 320,000 addresses and have a one percent response rate, that's 3,200 additional sales. Assuming each sale has a $100 annual value, you've just earned an additional $320,000.
Once you've corrected all the addresses you can, suppress the rest. Addresses you can't correct probably won't be delivered. The few that do reach someone will have a lower response rate. Assume the minimum 65% drop in response rate for questionable addresses. When you perform a break-even analysis of mailing to these addresses, you'll find the cost per response will be higher than the value per response!
Bottom line: the idea that there is no ROI in screening mail lists for deliverability is truly a myth! Different assumptions from those in our example will impact the break-even point - lower average order value and lifetime value shift the threshold. However, address correction should truly be considered for all mailings. Even if rental list agreements preclude additional screenings, it certainly is a topic to take up with list providers.
Also, there is a "green" benefit of reducing unproductive mail. A campaign of a million mailpieces averaging a six percent undeliverable rate results in 60,000 promotional packages sent to a landfill or recycling process (which still consumes energy). If those 60,000 letters weigh an ounce each, that's nearly two tons of waste! In addition, consider the energy costs of producing, transporting and sorting those mailpieces.
Finally, beyond the opportunity cost of not reaching new responders, consider the existing customers you lose due to address corruption or undetected moves. You pay a lot to develop a relationship; losing existing customers who end up as undeliverable mail is a true loss. With customer lists, the address correction process is even more valuable. Today more than ever, every customer is gold.
Jeff Stangle is director of solutions development, Mailstream Consulting, Pitney Bowes Management Services. Visit www.pb.com for more information.
