Maintaining effective communication with customers is crucial for any organization's success. Return mail can inhibit this process and be a significant and costly challenge. Though the issue appears in all industries, it is particularly concentrated among high-volume First-Class mailers in five business sectors: Finance, Insurance, Healthcare, Utilities (Energy, Telco and wireless providers) and Government. These companies use the United States Postal Services (USPS) First-Class Mail to send business-critical communications - billing and other transactional statements, explanation of benefits (EOBs) and legal and regulatory notifications - to intended recipients. While return mail is an increasing problem (see the below chart), each organization has its own unique issues that contribute to this waste of resources and lost business opportunities.

Source: USPS


The challenge for the mailing industry is that approximately 3.69% of all First-Class Mail does not get delivered. While that number doesn't seem significant, it actually amounts to approximately 1.45 billion pieces of mail. According to Novitex data, return mail costs an average of $3 per piece in operational costs alone, including postage and printing, handling, research, re-mailing and related processes. That equates to $4.3 billion in operational costs that the mailing industry absorbs each year for First-Class mail alone.


However, the true total cost of all return mail is staggering. Below the surface, the total financial impact can exceed $50 per mail piece, which means an estimated $72 billion is absorbed or unrealized by businesses each year. Included in this stat is the lost value of returned communications: delayed and missed payments, excess call center activity and overall customer service costs. Excessive undelivered mail can have a disastrous impact on cash flow, labor expenses and customer retention.


A Centralized Solution


Mail is not the true issue; it is rectifying end-users' incorrect addresses and accounts. To efficiently and effectively do this while reducing operating costs and fines associated with First-Class return mail, organizations must implement a centralized, automated managed service. This approach integrates multiple technologies to convert physical mail into usable data and performs a variety of pre- and post-processing functions to ultimately update addresses and accounts. The ideal approach goes beyond products and analyzes the root causes of the return mail problem and works to eliminate it.


The goal is to establish a timely, efficient and consistent set of procedures that can be managed with the centralized reporting that is necessary for a USPS compliance audit. A managed return mail service should: automate integrated technologies, incorporate postal hygiene addressing tools and third-party data, provide real-time reporting and auditing and significantly reduce the volume and cost of undelivered mail.


Below are four key steps businesses should keep in mind when creating and operating a centralized, automated return mail service:


  1. Document capture and conversion. Most companies lack the security, procedures and workflow required to efficiently handle and track physical mail internally. The first step in the return mail process is to capture physical documents and convert them to an electronic format. This can be done through scanning or bar code capturing either onsite or offsite using internal company personnel or an outside service. Once completed, the original hard-copy pieces can be securely destroyed or staged for repurposing which includes re-mail, reprocessing and address validation with customer follow-up if required. The captured data should be promptly uploaded to a host platform for updating and storing.

  2. Address management, standardization, and search.  After an organization has converted physical return mail to digital files, the company's address database must be updated and validated using the above-mentioned resources (USPS-certified and third-party). A best practice is to accompany these tools with an integrated data platform to combine intelligent program logic with multiple data compilers and thousands of active postal-certified and third-party databases. Coupled with mail and undeliverable mail data, secondary repurposing of customer communications can provide valuable output data and solutions. The goal is to provide companies with the ability to conduct a truly comprehensive search of consumer and business records, including landline and cell phone data, voter registrations and magazine and newspaper subscriptions. These advanced search activities can significantly improve the likelihood of finding the last-known or updated address, which is far beyond using commodity solutions.

  3. Secondary processing and document repurposing. Implementing back-end business processes and data-driven events ease the process of resending mail to updated addresses and allows the subsequent automated reprocessing of any addresses with ongoing issues. It is critical for organizations to keep a historical record of the exact number of pieces of undeliverable mail that originated from a single record, as it will help to identify potential problems before they arise. Companies often suppress bad addresses, but many find that this process was established based upon old logic that was not initiated by a postal expert. As a result, organizations suppress customers who have updated addresses. Additionally, rebound processing can be used to immediately access any document that has been mailed and returned again as undeliverable. This method can be used to feed call centers or trigger alternative methods of communication.

  4. Reporting, auditing, and metrics. An effective return mail management service must include core reporting, metrics and audit processes that produces usable and reliable key data to update the host platform and provide management statistics. Tracking, analysis and documentation should also be established to validate the quality and metrics of the process. All images should be indexed and archived, and electronic files should be stored to meet user requirements.


Return mail will continue causing workflow conflicts unless organizations proactively address it by using a centralized, automated return mail service. By implementing this type of solution, businesses can significantly reduce their operational costs, collect outstanding monies owed and recuperate undelivered communications' lost value, positively impacting the bottom line.

Christine J. Erna, Six Sigma Green Belt, AQS, MDP, is Senior Postal Solutions Architect, Novitex. Contact her at