By Barb Pellow, InfoTrends

Just about every realtor has heard the expression, “The three most important things about real estate are location, location, and location.” Although location is certainly a big deal in the real estate sector, it is equally important for direct marketers. Those that want to achieve effective target marketing must get the location right.

There are two critical aspects to location data. Although it may seem mundane, the first is actually getting your direct mail delivered to the recipient through a high- quality, up-to-date customer database. The second is leveraging location information to drive customers in geographic proximity to your location and transact business.

This column will focus on the importance of the right address. In my next Pellow Talk piece, I will share an example about how Kentucky Fried Chicken in Canada used location intelligence to grow its business.

The Address Challenge
Whether it is across town or across the globe, the simple fact is that people move. The simple act of moving can potentially wreak havoc with marketers that want to stay in contact with customers and prospects. In the U.S. alone, statistics indicate that approximately 14% of Americans and 19% of businesses change their addresses each year. Some of these individuals and businesses will file a change of address notice with the USPS, but others will not. According to estimates, corporate databases deteriorate at a rate of 15% annually because of moves associated with families, individuals, and businesses.

The Business Impact
For the USPS, this means an enormous volume of undeliverable as addressed (UAA) mail. The associated expenses of this undeliverable mail are in excess of $1.8 billion. In 2008, the USPS embarked on a strategy to reduce the UAA mail by 50% by the end of 2010. The intention was to use new technologies, education, penalties, and incentives to get companies to clean up corporate mailing lists through the development of a New Move Update standard.

On January 4, 2010, the USPS started assessing additional postage at the time of acceptance for mailings that did not comply with the New Move Update standard. Under these new rules, all commercial (discounted) First-Class and Standard Mail mailings must be processed through an approved Move Update method at least 95 days prior to a mail date to take advantage of presort discounts.

Today, samplings of mailings are verified by the MERLIN system, which confirms compliance to the Move Update regulation. The MERLIN system compares names and addresses in the mailing to known change-of-addresses (COA) and will calculate the compliance score as a tolerance percentage. A mailing with a score below 70% and a minimum of 5 missed COA updates will fail the verification. Failure results in a seven-cent per piece penalty applied to the portion of the mailing that reflects the failure amount over 30%. For example, a 100,000 piece mailing with a failure rate of 40% will have a $.07 per-piece penalty applied to 10% of the pieces in the mailing. The 10% is the difference between the not-updated percentage (40%) and the tolerance (30%). For this mailing of 100,000 pieces, 10,000 of the pieces would be charged $0.07 per piece, adding $700 to the mailing costs.

While the $.07 charge has gotten people’s attention, there are far greater costs associated with postage, printing, staffing, operations, and losing and/or alienating customers. The quality of an address affects nearly every aspect of an organization’s communication and fulfillment. If we consider the examples below, the enormity of the impact of incorrect addresses becomes apparent.

Accounting
An invoice that is sent to an inaccurate address will likely be 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. This has an impact on cash flow. In addition, if the piece was a B2B invoice, the bill could potentially arrive “out of cycle” and this is an irritant to the customer.

Customer Service
The customer service department or call center will need to field a call from a customer who didn’t receive an expected brochure or package as a result of an inaccurate address. Each call to the service center can cost in excess of $50.

Shipping
An incorrect address can result in a delay in shipment, shipment to the wrong address, or the package being returned to the shipper. This results in customer dissatisfaction and incurs additional costs for the return shipment, re-labeling, re-boxing, and re-shipping.

Marketing Efforts
The inability to connect with a customer is another major consideration. 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. If a customer doesn’t receive the direct mailer, response rates are inconsistent with the targeted ROI. If the campaign deals with a time-sensitive promotion, timely delivery is a must. In addition to being ineffective, receiving notification of a great sale after the sale has ended can irritate the consumer. Every bad address on a direct mailer can represent a lost revenue opportunity and a lost customer.

There Are Tools Available!
The USPS provides tools to support Move Update Compliance so you can ensure that your communications get delivered. There are four USPS approved ways to meet the Move Compliance requirements:

·         NCOA^Link makes change-of-address information available to mailers to help reduce undeliverable mail pieces before mail enters the mainstream.

·         ACS is a post mailing service that allows mailers to receive change-of-address (COA) and other reasons for non-delivery electronically. The information is captured in the Computerized Forwarding System (CFS) units and is sent to mailers on electronic media to eliminate manual processing of change information. The cost is less than manual notices.

·         OneCode ACS- Intelligent Mail Barcode is a height-modulated barcode designed for use in high speed, automated, mail sorting machines that allow both PLANET and POSTNET barcode information to be combined into a single barcode to track mailings, request address-quality services (including updated address-change information), and return-mail service.

·         FASTforward contains more than 40 million permanent change-of-address (COA) records filed with the U.S. Postal Service by relocating customers who want their mail forwarded to their new address. These COA records reflect an eighteen-month period relative to the move-effective date the customer provided. FASTforward COA data is updated weekly.

The Bottom Line
Reducing undeliverable mail can be easy and cost effective with the proper address management practices. These methods include validating customer address information at the point of entry via real time Web services/APIs and utilizing move update/premail processing solutions. Implementing a good addressing quality strategy incorporating address validation and change of address processing delivers bottom line cost savings. Even more importantly it ensures that your message is getting through to customers so you can build your brand and also cultivate relationships.