How to Make a Billion: The Costs of 'Undeliverable as Addressed'

According to the USPS, “Total UAA volume dropped from 9.3 billion pieces (4.71 percent of total mail volume) in FY 1998 to 6.9 billion pieces (4.11 percent of total mail volume) in FY 2010. (This reduction, while significant, falls far short of previous Postmaster General Jack Potter’s goal of reducing UAA mail by 50 percent by 2010.) Historically, UAA mail runs in the range of 4 percent to 5 percent of total mail volume, and the percentages of total volume vary by class of mail. Periodicals mail, for example, has a UAA percentage of about 1.5 percent, while Standard Mail usually runs about 6.75 percent. Interestingly, the volumes of UAA mail that the USPS forwards or treats as waste both experienced declines, but the volume of UAA mail that the USPS returns to sender actually increased.”

All this UAA is money down the drain to the mailers—who designed, produced and labeled it and applied its postage—and to the Postal Service that has to deal with its final disposition.

That tab was $1.3 billion in 2010, and that was just the cost to the Postal Service, which has to incorporate these costs into its rate-setting. Add to this bill the cost of 7 billion pieces that went nowhere near the intended recipient—and that’s a fortune off the bottom line. Some of this is inefficiency. Marketers in particular—primarily who use the Standard Mail category—must do a better job in data hygiene and the use of postal addressing and preparation tools.

It may be helpful, and profitable, for mailers to make sure they are undertaking every feasible effort to keep their mailing lists clean—and to avoid this hefty bill. The Direct Marketing Association has an online tool to help marketers make sure their list hygiene and data management efforts are up to par.

It’s called the Environmental Planner & Optional Policy Generator, and it’s based in part on the DMA’s “Green 15” Environmental Principles. But the green focus is dual in nature. Avoiding mail waste through proper data management also applies green—as in money—back to the bottom line! Consider these suggested activities from this planner to get back some of this billion-plus that are lost to UAA:

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I. LIST HYGIENE AND DATA MANAGEMENT

Our company continually endeavors to manage data and lists in an environmentally responsible manner with a focus on reducing the amount of duplicate, unwanted and undeliverable mail [to both consumers and businesses]. To achieve our goals in this area [If applicable to the goals and/or nature of your organization, please select one or more of the following options.]:

A. We Maintain Suppression Lists

• We maintain in-house do-not-market lists for prospects and customers who do not wish to receive future solicitations from us (as required by DMA’s Commitment to Consumer Choice).
• We maintain a more detailed suppression file that enables customers and prospects to opt off our organization’s marketing lists on a selective basis, such as by frequency or by category.

B. We Offer Notice & Choice

• We provide existing and prospective customers with notice of an opportunity to modify or eliminate future marketing contacts from our organization in every commercial solicitation (as required by DMA’s Commitment to Consumer Choice).
• We provide periodic notices and opportunities for prospects to opt in or opt out of receiving future marketing contacts from our organization.
• We provide customers incentives (such as the offer of a discount on their next purchase) for notifying us of duplicate mailings and incorrect addresses.
• We offer customers a choice to receive communications from our organization electronically.

C. We Clean Our Lists Prior to Mailing

• We use the Direct Marketing Association (U.S.) Mail Preference Service (MPS) monthly on all applicable consumer prospecting lists. In addition to use of MPS, we maintain clean, deliverable files by using (Please check all that apply):
  • ZIP Code correction
  • Address standardization
  • USPS National Change of Address (NCOA)
  • Other USPS products such as
    • Address Element Correction (AEC)
    • Delivery Sequence File (DSF)
    • Address Correction Requested (ACR)
  • Predictive models and RFM segmentation
  • Other: (Please specify.)
• We use the DMA “Deceased Do Not Contact” list to eliminate names of deceased persons from mailings.
• We use the Foreign Mail Preference Service on applicable mailings to the United Kingdom, Belgium or Germany.
• We use the mail preference services of other foreign national direct marketing associations, where applicable.
• We [ encourage/ require] our client mailers to use MPS.
• We [ encourage/ require] companies and organizations that rent our list of customers to screen consumer names through MPS, and to maintain their own do-not-rent and do-not-mail in-house name suppression lists.

D. We Merge/Purge Our Data

• We match outside lists against each other to prevent duplicates.
• We use match definitions in merge/purge that minimize duplicates.
• We match outside lists against other commercially available suppression files where appropriate.

E. We Test Market Offers

• We test a sample of a list before mailing or marketing to the entire list.
• We test different versions of advertising and marketing offers, in mail and other media, to select those offers and media combinations that receive the best response.

For more information, see DMA Environmental Resource Guide, “Mailing List Management: A Key to Waste Reduction,” pages 63-70.

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Now the entirety of the UAA issue is not attributable solely to less than adequate data management, but it is likely a good portion of it is. We know the DMA Board of Directors—in adopting its first environmental public goal which in part commits to reduce UAA by 25 percent from 2009 to 2013—very much intends for marketers to avoid losing these billions down the line.

The Postal Service is working closely with mailers and, vice versa, to tackle other ways to manage UAA and to reduce its volume. Certainly, Intelligent Mail barcodes will help, with the ability to track mail whereabouts in real time as it moves through the USPS’s processing and handling. “Return to Sender” UAA is the most costly for the Postal Service to handle, because of the return handling costs—that, too, needs attention.

In the very least, marketers also should work with their mail service providers most closely to design mail pieces for postal automation compatibility, to apply proper data management practices (as indicated by DMA, for example), and—as the USPS embarks on its network consolidation effort—to track their mail most precisely through the mail stream. A billion dollars and more are in the balance.

Helpful Links:
DMA First Public Green Goal, concerning List Hygiene
DMA Environmental Planner & Optional Policy Generator