Post Masters

Does your company have an address management strategy? Few do, but the reality is that failing to ensure addresses are captured accurately and refreshed regularly could be costing you money. As businesses orientate themselves increasingly around the customer, it is the postcode that is becoming the unique reference point for all individual data. Get it wrong, and you may lose that customer, both metaphorically and literally.

If an enterprise-wide view of the importance of correct addressing has been slow to emerge, it is probably due to one over-riding factor. As Sharon Kupusarevic, sales manager at Hopewiser Address Systems, points out: “The problem is that the Post Office is too good.”

Anecdotes abound about how letters addressed to “The Man in the Hat”, for example, manage to get delivered. In truth, postal workers do go to great lengths to ensure the mail they handle is received by the right person. Come rain or snow or inaccurate postcodes, it seems, the post will get through.

But while the Post Office is proud of its strong delivery culture, this very effectiveness works against its own business objectives. Prime among these is to sort 95 per cent of all mail automatically by next year. To meet that objective, business, bulk and direct mail, which make up 90 per cent of the 76 million items handled daily, need to carry accurate addresses that can be optically read. Anything that gets referred for manual sorting slows down the process and adds cost.

“Royal Mail wastes ten times as much resource in coping with incorrectly-addressed mail as it applies to correctly-addressed items,” says John North, national sales manager at Bell & Howell UK. “That has a very damaging effect on its ability to guarantee service standards in the system.”

The Post Office Users’ National Council (Pounc) recently highlighted the wide variations which exist in the standard of delivery of First Class items by Royal Mail. While failing to meet its objective of 95 per cent delivery by next working day, in some areas the standard was short of the goal by as much as ten per cent. Poor addressing will have been one factor, although local labour disputes are probably more significant.

For those involved commercially in address management, it would be an interesting exercise to compare the poorest postcodes for delivery, as reported by Pounc, with those areas which have undergone changes to their postal address recently. If a correlation did emerge, it would definitively prove the point that poor addressing slows down Royal Mail.

But it is not just the postal service which is losing money because of inaccurate addresses. Any company which regularly uses the post in any volume could be missing out on postage discounts if it cannot meet Royal Mail’s addressing standards.

The service offers a range of rebates against the public tariff – called Mailsort, Walksort and Presstream – for those mailers which pre-sort correctly addressed items, subject to volume and quality thresholds.

Direct mailers have long seized upon these services to cut the costs of their marketing campaigns – volumes up to 250,000 get 25 per cent off, provided 95 per cent of addresses within any postcode are accurate.

“To qualify for the discount, you have to meet their address management standards, which Royal Mail does audit,” says North. In addition to the incentive of discounts, the threat of losing them acts as a stick, although North says Royal Mail prefers to discuss any problems with the client to try to reach a solution.

But many companies, especially small and medium-sized businesses, do not carry out sufficient volumes to qualify. For them, there has been little reason to bother about the quality of the addresses they hold. In response, Royal Mail has recently introduced new discounts, such as Cleansort 120. The minimum threshold for this is only 4,000 items pre-sorted into 120 postcodes.

It is also tackling the issue of how much it costs to mail poor addresses. “For the past couple of years we have been working to understand how mailing costs are affected,” says Keith May, head of sales channels and marketing at Royal Mail Address Management Centre.

The result is a new software model called Mail Max. This offers users a spreadsheet into which companies can enter the cost element of each item in a mailing – envelope, letter, enclosures, and so on – and then the proportion of their database which is inaccurately addressed. (A separate diagnostic software package can return this figure.) The software then calculates exactly how much money is being wasted by sending items to goneaways.

That gives an immediate yardstick of the impact on the bottom line. It also provides a sum against which the cost of address management procedures can be offset. “We didn’t try to look at the cost of lost sales, but that may become an extension in the future,” says May.

If a mailing of 10,000 is being carried out to customers from which a one per cent response is expected, with sales of 500 a customer, ten per cent undeliverable direct mail means lost sales revenue of 5,000, for example.

The Post Office faces two very real barriers to achieving widespread improvements in postcoding in the UK, however. The first is its status as a monopoly and the Royal Charter under which it operates.

The company has to accept any item which is reasonably presented – a definition which does not include the quality of addressing – and attempt to deliver it. Whereas the US Postal Service can refuse badly addressed mail, Royal Mail cannot. It can merely withhold discounts.

Secondly, there is the question of the public’s attitude towards addresses.

In address management, the computing principle of “garbage in, garbage out” also applies. If a customer misquotes the address or postcode, and this is not rectified at the point of data capture, it stores up problems which have to be resolved later. In some arenas, address correction is not always possible.

“Organisations have to take the address they are given, in credit referencing, for example. They can’t change it on the spot,” says Kupusarevic.

The Royal Mail has run long-term campaigns reminding people to use the correct postcode. But it is actually the new teleculture of direct response advertising and customer call centres which has done more to improve this aspect of address use. “Everybody’s getting used to being asked for their postcode and house number or name,” says Jo Buxton, director of Experian Direct Marketing Services.

For callers, the application of quick addressing systems over the phone cuts time spent on spelling out details. There are also important cost savings within call centres of using addressing software in this way. The average UK address requires 48 key strokes to type, but entering the postcode and house number can return an address within seven to ten strokes.

Buxton says effective address management also leads to effective business management. “All direct companies and those running call centres rely so heavily on the postcode, to have a very efficient operating system, they have to be postcode-driven,” says Buxton. “By embedding it into quick addressing systems, they end up being much more profitable, because they have not got operators asking callers to fill in their full address.”

With the new business orthodoxy driving companies towards being customer-focused, the ability to unify all those records held on each individual is paramount. That involves data matching to create a unified data set. In addition, enhancing a customer record by tagging further data, such as lifestyle attributes or a consumer-type classification, can significantly improve the performance of a company’s marketing.

“What is happening is that we are being asked to design databases around customer records. Rather than that information sitting on different databases, they want a single record of all their dealings with individuals. Data is a fundamental business driver, and the data warehouse trend is accelerating that,” says © Ian Saunders, international business development director at The Computing Group.

The postcode operates as a common unifying element in records which allow them to be matched. It also allows external data sets to be overlaid. Saunders points out that with the enhanced postcode now including delivery point, an exact geographical reference for every address can be derived. This allows data to be mapped against Ordnance Survey information, for example.

Data-driven business is not only a more efficient way of working, it is also more profitable. “An accurate database is a significant asset which you can put onto the balance sheet. Keeping it accurate and up-to-date is vital,” says Saunders. This new importance is also pushing address management out of the marketing department and deeper into the enterprise.

“It is not so much about address management now, it is data quality management. It is not just getting the address right, it is part of the company ethos,” he says.

It still remains the case that poorly-addressed items will get delivered. And that consumers will give companies inaccurate addresses. Buxton notes that address management is limited by what the public will tolerate.

He says: “If we change the address on a statement to concur with the Postal Address File, we get complaints.”

Now that the Royal Mail can accept what it calls “customer-preferred address elements”, provided the house number, street, town and postcode are correct, however, this is less of a concern. What really matters is that companies nurture their addresses with the same care as they treat transactional data. “A database about your customers is the lifeblood of the company. Without it, you can never sell products or do business,” says May.

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