Postal : Coming Clean

How to get the most impact from list hygiene

August 2008 By Jennifer Williams & Bill Singleton

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As a direct marketer, you now that the list, creative, product, offer and mailer all play significant roles in motivating your customers to buy from you. The list-your file of customers-is often cited as the single most important factor in your marketing. We suggest that the delivery process is the second most important factor because the most beautiful package featuring a compelling offer of a marvelous product is wasted if it does not get into the hands of a potential buyer.

The single biggest difference you can make to the delivery process is having a clean, deliverable file of names and addresses. How you handle your list-all of the data hygiene steps that you take-will help to ensure that your mailing will reach the people you want it to reach.

Data Hygiene Steps
Each list hygiene procedure has a different contribution to make to improve the deliverability of your file and, therefore, reduce the amount of mail pieces you would otherwise waste. You need to apply at least address standardization and NCOA and sort your file to get discounts on your postage. Starting Nov. 23, you will have to update the change-of-address information on your file within 95 days of your actual mailing date to get the maximum postal discounts from the U.S. Postal Service.

• Address standardization. This process is fully compliant with the USPS standards and is required to apply the other steps. This routine moves name and address elements into the correct fields, formats the addresses and adds the ZIP+4 to the ZIP code. For example, "12 Main St. E Anytown Penn" will change to "12 E. Main St., Anytown, PA." This process also will confirm if the address is in a valid address range for U.S. delivery.
• Delivery point validation. This file determines if an address can be confirmed as a valid delivery point by the USPS. After the address standardization process confirms that an address is in a valid delivery range, the DPV process confirms if the address is occupied and actually able to receive mail.
• Apartment append. This step fills in missing address elements. Apartment append is often used to add apartment numbers to a consumer record. However, this service can fill in more missing address elements by comparing the addresses in your file to a national database of addresses prepared by private firms. The pre-directionals, street suffixes, post-directionals, apartment numbers, route numbers and route box numbers are filled in through a name and address match. The typical match and correction rate for a consumer file is 2 percent.
• National Change of Address. This is the best-known hygiene process. The USPS issues monthly updates to its file of approximately 160 million change-of-address records. The database contains names and addresses for individuals, families and businesses. The average rate of updating records to current deliverable addresses is 3 percent.
• Change of address plus. The address changes that NCOA does not catch can be checked with COA+, which is a service offered in addition to the USPS NCOALink product. COA+ is offered by individual companies that compile data about individuals who have changed their addresses, such as magazine subscription records. This step typically provides a 3 percent improvement over and above the NCOA lift.
• Delivery Sequence File. DSF is a database managed by the USPS which contains information on all addresses known to the USPS. DSF can identify residential and business addresses and seasonal addresses. The DSF results are not used on a per-match or uplift basis, but as a tool for more targeted mailing. A consumer marketer might use the output of this process to drop any small office/home office businesses from a promotional mailing.
• DMA Mail Preference Service. The Direct Marketing Association's do-not-mail list provides millions of addresses of people who chose not to receive advertising mail. This list will drop about 1 percent of a consumer file. Each direct marketer usually has its own file of customers who do not want to be mailed. After several years, this internally maintained company do-not-mail list can be as much as 3 percent of a firm's customer database. Both files keep you from wasting mail pieces on households that have taken the time to express their preferences.
• Deceased file. This information is provided by database firms and the DMA and is used to suppress records that are identified as deceased individuals, according to the Social Security Administration. A consumer file will generally see about a 2 percent match and suppression rate.
• Prison file. This file is also derived from database companies. It suppresses records that fall within a prison ZIP+4 code. There is usually a 1 percent or less match rate.
• Profanity suppress. This service suppresses records that match to a list of profane/unwanted words. A typical match rate is 1 percent or less.

The Impact of Dirty and Clean Files
The hygiene chart (shown above) shows the services just discussed and their expected rates of corrections applied to a national file of consumer households. Applying all of the services to 1 million records will cost about $5,900 and could fix a maximum of 16 percent. However, because some records will overlap between hygiene services, let's use 14 percent to see what impact this processing can have on using your most important marketing asset.

If you mail your 1 million mail pieces every month at a cost of $0.75 each and never apply these services to your file, you would waste many mail pieces. The waste would be the 14 percent of hygiene processing matches, or 140,000 mail pieces each mailing, and an additional 1.17 percent (14 percent divided by 12 months) each month as your file becomes less deliverable through unapplied hygiene factors. In a year, you would waste 2.6 million mail pieces and $1.9 million, a full 22 percent of your circulation and budget.

What if you applied the full range of services once at the start of the year and let your file age for the rest of the year? In this case, you still would be wasting 128,000 mail pieces and $577,000. Even with throwing away that many mail pieces, the improvement in your situation compared to doing nothing would be dramatic. By fixing accumulated address changes; do-not-mail requests; missing address elements; and deceased, prison and profanity suppressions, you would reduce your annual waste by $1.4 million for a cost of less than $6,000.

You would do better still to process your file with all the hygiene steps more often. If you scrub your file every six months, you would cut your waste from $1.9 million down to $262,000 for a processing cost of $12,000. This return on your processing investment looks wonderful until you recognize that having 117,000 mail pieces not reach the right people is still a situation calling for more attention. This analysis does not consider the extra responses and orders you could get by reaching more of your customers, which would only make the need to process more frequently even more compelling.

The outlook for your file's deliverability and potential to keep your customers happy improves as you increase your processing to four and then six times a year. You cut mail piece delivery losses from the original $1.9 million down to losses of only $105,000 and $52,000, respectively. Certainly, the savings of more than $1 million a year is desirable, but even these scenarios include nondelivery of your mail piece, and consequently your total sales will be less than optimal.

If you increase your processing to seven times a year, you near breakeven. At that point you are spending $40,000 on processing and losing just less than $44,000 in undelivered mail pieces. However, that still means that 58,000 customers are not getting your offers and will not order directly from your firm or be motivated to go to your Web site.

The only schedule that yields the maximum benefit to your mail deliverability is monthly processing. Remember, we saw that there were no savings in a completely unprocessed file. If you go to processing as frequently as the USPS can provide you with updates to the NCOA file and the third-party suppliers can give you updates on their apartment appends, COA+ and suppression files, you will incur no losses at all. You will have cut circulation waste from $1.9 million to zero at a cost of $70,000 in data hygiene.

A significant consequence of improving the cleanliness of your file is its preparation for further processing. The merge/purge matching logic will not work nearly as well as it can otherwise. If you compare your customer file to rented lists, you will not drop a rented prospect name in favor of mailing a customer name if you feed an out-of-date customer address to match a current prospect address. The benefits of a hygienic file clearly will include improved matching and savings on your list rental costs as well as the savings on wasted customer mailings alone.

Cleanliness Is Next to Deliverability
By focusing your attention and a small part of your marketing budget on the cleanliness and deliverability of your customer file, you will demonstrate how important your file is to your marketing efforts. And all of your efforts will be amply repaid by your customers when they see the results of your creative and data processing work. 

Jennifer Williams is a service manager of strategic accounts, and Bill Singleton is a manager in the analytical services group, both at The Allant Group in Naperville, Ill. Jennifer can be reached at (630) 579-2978 or jwilliams@allantgroup.com. Bill can be reached at (630) 579-3448 or bsingleton@allantgroup.com.

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