Wednesday, September 7, 2011

The Cost of Undeliverable Mail

Tags:  undeliverable mail, international addresses, postal service, data quality, data hygiene

In the U.K., 5.8 million items a year are misaddressed.  A badly addressed e-commerce package costs a merchant over ₤25 (US$40) in refunds, redelivery, and replacement, as well as the possibility of losing the customer.  Royal Mail destroys on average 25 million letters, packets and parcels every year and destroyed 152 million undeliverable pieces of mail over the last six years, with business mail accounting for a majority of pieces.

One Austrian delivery company reports that 5 - 10% of all parcels are incorrectly addressed, requiring return or redelivery attempts.

 Re-attempts at delivery can cost a large European operator as much as €100 million per year (US$140 million) with about 10% of those attributed to misrouting and an unknown percentage attributable to incorrect addressing. 

In the U.S., undeliverable as addressed mail costs the U.S. Postal Service almost US$1.4 billion per year.  Undeliverable mail totaled 6.9 billion pieces (4.11% of total mail volume) in FY 2010.  Estimates put the cost to mailers at over US$6 billion per year. 

None of this takes into account the costs of alienating or losing a customer or the environmental costs from wasted paper, printing and transit.  Factor in the increased expense for international mailings and the cost to the mailer increases substantially for each piece.  And the mailer may never know the piece did not arrive unless the intended recipient complains.

The addressing problems include missing postal codes, incorrect street names, unidentifiable towns, mistaken building numbers, and inaccurate suite and apartment identifiers.  Some of these problems come from an error when a customer fills in a form or a service representative takes an address but there are other causes that should be addressed. 

A customer database should allow for international address formats which differ from domestic address formats.  No matter what country you call home, foreign addresses will have more lines or more characters per line or both.  They may also require additional elements, such as a district, a town, and a province or a town, a region, and a province.  Postal codes (ZIP codes, PIN codes, PLZ, CEP, etc.) can be all numbers or both numbers and letters and may contain required spaces or dashes.  Knowing the correct formats for each country, creating databases that can store it, and printing acceptable addresses correctly helps limit costly undeliverable mail. 

But that is only the start of keeping addresses accurate.  Addresses change.  The U.K. makes up to 1 million changes to its Postal Address File (PAF) database each year.  The USPS adds approximately 2 million new addresses each year and an estimated 16.7% of American families and 19% of American business change address every year.  A regular program of address data hygiene can update addresses or at least limit the number of undeliverable address.

The costs of undeliverable mail are clear and the business consequences can be substantial.  While it may not be eliminated by good data qualtiy practices, the cost and quantity of undeliverable mail will certainly be reduced.  Happily, the expense of good address data quality practices are often offset by these expenses.

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