Mail or Mulch

Apr 01, 2008 9:30 PM  By

Postmaster General John Potter has challenged customers to reduce undeliverable-as-addressed mail by 50% by 2010. Are you up to the test?

True, your peers are more diligent about running names through NCOA. They’re matching their undeliverable addresses against the co-op databases.

And they’re using delivery point validation, running their data against the U.S. Postal Service database to make sure an address actually exists.

But too few are doing real-time address verification. This, in brief, is a system for catching bad addresses, or UAAs, on the spot.

It starts when the keyboarder enters the data — any address that is not DPV-compliant is flagged for correction. And it can be fixed immediately. Another benefit is that you get the customer name right the first time, as opposed to having several versions in the database.

But don’t do this only because Jack Potter wants it. Another reason is that the USPS dumps more than 6 billion pieces of poorly addressed mail per year. And until it released that number, most mailers didn’t have a clue about it.

“Marketers weren’t seeing the true cost,” says Greg Brown, marketing director for software vendor Melissa Data. “They weren’t getting the bad mailings back, those were just getting shoved in a landfill.”

But some merchants did manage to get a handle on it — and on the impact on ROI. Casual Male Group, the men’s apparel merchant, found that 8% to 9% of the addresses it captured were undeliverable, resulting in dupes and an incomplete view of customers.

The problem originated in the stores. For starters, cashiers had varying data-entry skills — some data couldn’t be corrected even after reverse telephone appends. And some customers provided incomplete data because they were in a hurry. Finally, shoppers were concerned about how their data would be used.

The solution?

In 2006, the firm added QuickAddress Pro, an address verification tool from QAS, to its POS system. It works like this: First, it provides prompts and lists of options for store associates to use during data entry. And it validates the address against the USPS database.

The investment has paid for itself several times over. For one thing, the system enabled the retailer to cut its undeliverable addresses to .4%. Second, it made it easier to identify dupes.

And there was a third benefit, although Casual Male didn’t anticipate one: The prompts reduce the number of keystrokes and speed up the checkout process.

That wasn’t all. Based on figures it released during a January Webinar with QAS, Casual Male reduced its invalid addresses from 21,500 in 2006 to roughly 1,900 the following year.

The company saved at lease $114,600 on mailing costs last year, according to Geoff McGehee, Casual Male’s director of database marketing. Based on a cost per piece of 50 cents each and 12 drops a year, the company wasted $11,400 on bad mailings in 2007, vs. $129,000 during the prior year.

And the latter figure would have been higher had Casual Male not deployed real-time verification at mid-year.

“Real-time address verification has enabled us to reach our customers better,” he says. “In these times, you’re looking for every kind of cost savings you can find. And here’s an honest way to go about increasing marketing efficiency.”

What’s next?

The firm will roll out the system this year in its call center, on its Website and on in-store kiosks.

“Once all our channels are on real time, we’re going to see a huge overall impact,” McGehee says.

Victorian Trading Co. found that real-time verification didn’t work for its call center, where 90% to 95% of the entered names were correct, according to owner Randy Rolston. Customers became frustrated when the operator said they were giving an invalid address.

“If we were getting a lot of unknown people calling us, real-time address verification could work well in the contact center,” Rolston says. “Our customer file goes through NCOA, so we know the exact address already. Our rule of thumb is that if the catalog got there okay, chances are the address was valid.”

Instant verification also led to checkout problems on the firm’s Website. For example, if the buyer was entering his or her address and it wasn’t matching up as perfect, it created an endless loop of error messages that forced shopping cart abandonment to soar.

“Now we’ll give the customer only two tries, and check the address against the records when we ship,” Rolston says. “It’s a case where an order with a bad address is better than not getting the order at all.”

But the company realized at least one benefit: more accurate shipping, Rolston adds. If a package shipped by UPS is not to a valid delivery point, it can cost up to $6.

Are mailers warming up to this?

Yes, says Melissa Data’s Brown. The software vendor has seen an uptick in more requests for its Data Quality Suite address verification program.

Like many such products, it can be ordered as software as a service (SaaS). “A lot more venders are selling real-time verification to merchants as SaaS because they don’t have to implement code and add databases; merchants can just tap into their servers and get the information,” Brown says. “This can save the merchant from potential database crashes.”

Why are firms interested?

“Potter’s initiative to cut down on UAAs is going to extend all the way down to standard mail,” Brown says. “Back even a few years ago it was not as big a deal, but now you really do see companies adopting it. It’s providing an immediate ROI because it helps reduce costs other that mailing, like modeling and printing.

But Brown warns that catching bad data at the outset is not the cure-all. Why? Because 43 million Americans move each year — and that’s the main reason for all these UAAs.

So you still need NCOA and merge/purge to make sure that you’re not mailing to a bad address, or sending the same person multiple pieces (for example, if they turn up as “Liz” on one list and as “Elizabeth” on another).

Forrester Consulting maintains that real-time address verification should be used as a front-end complement to list hygiene, and not as a replacement.

“There are cases like faxes, business reply cards, and flat files from partners that do not allow for real-time verification,” says the firm’s principal analyst Rob Karel. “Plus, the batch cleansing can be valuable when high volumes of address capture are collected. And also when address sources from multiple systems are coming in to the database and you need to standardize them.”

Victorian Trading uses NCOA before each mailing, but may cut that down to six times a year.

“Our customer is probably not as transient as your average consumer,” Rolston says. “We’re at the point where we may actually be running NCOA too often, and we’ll evaluate that as a cost-savings objective.”

But NextAction, too, is receiving more customer queries for hygiene services. And it’s as much for finding the right person as the correct address.

“When we do modeling, we want to know if it’s the same person vs. the correct address,” says Eric Roza, NextAction’s COO. “So if it’s a prospect name, we’ll give the merchant the current address. But in doing that, based on the catalogs the customer purchased from, there may be eight addresses in our database. We don’t clean the file unless they want our hygiene product.”

But that may change. Roza hinted that NextAction is working with a third-party software provider to come up with a new list hygiene product.