Address Updating Whitepaper
Address Updating Whitepaper
ADDRESS UPDATING
Key to Reducing Undeliverable-as-Addressed Mail
              Introduction 2
                 The USPS and Mailers Get Serious about Deliverability 2
              The Challenge 3
                 44 million+ Address Changes Every Year 3
                 Expanding and Enforcing the Rules 3
              Tools and Technologies 4
                 Reviewing the Arsenal of Move Update Methods 4
                 NCOALink System 4
                 ANKLink—An Add-on to NCOALink 4
                 FASTforward 4
                 ACS 5
                 Ancillary Service Endorsements 5
                 Alternative Move Update Methods 6
              The Approach 6
                 A Blend of Pre- and Post-Mailing Updates 6
                 Pre-mailing Update—Highest ROI 6
                 Post-mailing Update—Safety Net 7
                 Recommended NCOALink Address Update Strategy 7
                 Pre-mailing Tactics 7
                 Post-mailing Tactics 8
                 Processing in-house, externally, or both 8
              Summary 10
              Resources 10
              About the Authors 11
              About Lorton Data 11
              About Business Objects 11
                                                                                1
INTRODUCTION
  THE USPS AND MAILERS GET SERIOUS ABOUT DELIVERABILITY
  The United States Postal Service® (USPS®) is taking the issue of undeliverable-as-addressed
  (UAA) mail very seriously. And well it should, since UAA mail costs the agency nearly $2 billion
  annually. It’s such a major drain on USPS resources, in fact, that Postmaster General Jack Potter
  made a bold call to action: a 50% reduction in UAA mail by 2010.
  UAA is very costly to businesses, too. The discussion of mailing economics often centers on
  postage and the potential loss of Postal Service™ automation discounts when addresses are
  inaccurate, incomplete, or not current. However, according to the Direct Marketing Association,
  postage accounts for only 24% of the overall costs related to a mail piece. When an address is
  undeliverable, for whatever reason, the entire mail piece is lost—therefore, business mailers must
  consider the total cost of producing and mailing the piece.
  Not so immediately obvious is the cost of missed opportunities—particularly if your business relies
  on advertising mail to sustain and grow the enterprise. Each undelivered mail piece represents the
  potential loss of a sale, revenues, profits—and a customer.
  On average, according to the USPS, 6.4% of the pieces in every direct-mail campaign are UAA and
  may never reach their intended destination. What if mailers could somehow prevent this previously
  undeliverable mail from reaching the waste bin and redirect it to their customers and prospects?
  Even a percentage point or two of increased response could drive significantly stronger results at
  the bottom line.
  This white paper focuses on the single largest contributor to UAA mail—the estimated 44 million-
  plus Americans (17% of the population) who file changes of address with the USPS every year. In
  addition, 2.3 million U.S. businesses file changes of address annually.
  The fundamental question to be answered: How can businesses—both mailers and their mail
  service providers—keep their mailing lists in sync with a highly mobile society? Today, more than
  ever, the answer is change-of-address processing. Increasingly, the USPS requires it, offering
  incentives to mailers who keep their mailing lists current—and disincentives to those who don’t.
  Equally important, if not more so, sound business practices dictate change-of-address processing.
  Fortunately, mailers enjoy access to a growing arsenal of tools and services that support address
  update best practices.
  Besides discussing the various tools and services available today, this paper presents
  recommendations for deploying an effective address update strategy—one that yields optimal
  results and a strong return on investment (ROI).
                                                                                                2
THE CHALLENGE
  44 MILLION+ ADDRESS CHANGES EVERY YEAR
  The extent of the challenge is nothing short of astonishing. More than 44 million people file change-
  of-address notifications with the USPS every year. During peak periods, this translates to 1 million
  or more address changes per week.
  Extrapolating the numbers further, 400 to 500 individuals in a database of 1 million names can be
  expected to file changes of address every day. In light of these statistics, it’s easy to understand
  why the typical mailing list deteriorates by 1% per month.
  The negative impact on business may be measured from a few different perspectives, starting with
  the direct cost of wasted mail. If each mail piece costs $1.10 to create, print, and mail, and
  assuming 7,500 pieces from a list of 100,000 are not delivered due to address errors, the resulting
  waste constitutes a loss of $8,250.
  If the mailing promotes a product or service, the stakes are dramatically higher. From a mailing list
  of 100,000, the 7,500 pieces that never see the inside of a mailbox could easily represent a
  $15,000 sacrifice in revenue, based on a 1% sales rate and an average of $200 per order.
  Multiplied over several mailings during the course of a year, as well as over the lifetime of each
  new customer, the cost of taking no corrective action reaches staggering proportions.
  Currently, the Postal Service requires mailers who receive First-Class Mail® presort and automation
  rates to update their addresses within 185 days prior to a mailing. By early 2009, this window is
  expected to shrink to 95 days, and the Move Update requirement will extend to Standard Mail®,
  which is currently the largest class of mail in terms of volume, and which consists primarily of
  advertising mail.
  Noncompliant mailers* face the very real prospect of losing their postage discounts, which range
  from $50 to $95 per thousand (for First-Class Mail). They also may be hit with back charges and
  penalties—additional costs for failing to adequately engage in an address update strategy.
  For all types of businesses, the motivation to effectively and consistently apply address updates to
  mailing lists has never been greater. The next section of this paper outlines the change-of-address
  tools and technologies that can support timely and predictable mail delivery, while helping to
  ensure compliance with USPS requirements for postage automation discounts.
  *
    The USPS enforces Move Update rules through the Postal Automated Redirection System
  (PARS). This system enables the Postal Service to monitor each mailing right down to the
  individual pieces. Scanning address fields and comparing them with postage indicia, PARS flags
  any First-Class Mail piece for which a presort or automation discount is claimed but that doesn’t
  meet Move Update requirements.
                                                                                                  3
TOOLS AND TECHNOLOGIES
  REVIEWING THE ARSENAL OF MOVE UPDATE METHODS
  As pointed out previously, the single largest factor in UAA mail is the failure to keep addresses
  current with Postal Service change-of-address filings.
  Because address updating poses such a major challenge to so many mailers, this section limits its
  focus to change-of-address tools and technologies. However, before any address may be
  considered for move update processing, it should be complete (i.e., ZIP + 4® code, street name,
  city, state, and directional information) and correct (accurate address, fixed misspellings, and
  approved abbreviations).
  Currently, the USPS allows mailers to use four “approved” and two “alternative” Move Update
  methods.
  Approved Methods
           Link
   NCOA          ™ System
                     ®
   FASTforward (for multiline optical character readers only)
 ACS™
  Alternative Methods
   Legal restraint
 99% accurate
  NCOALINK SYSTEM
  Most organizations generating a substantial level of advertising mail will make NCOALink the
  backbone of their address update initiatives. At any given time, NCOALink contains more than 160
  million address changes.
  In a nutshell, mailing lists processed through NCOALink are updated prior to the mailing, using
  change-of-address information filed with the Postal Service. The USPS offers three levels of
  NCOALink licensing:
  1.   Full Service License—Access to the USPS change-of-address database for the preceding 48
       months; includes weekly updates.
  2.   Limited Service License—Access to the 18-month change-of-address database; includes
       weekly updates.
  3.   End User License—Access to the 18-month change-of-address database; includes monthly
       updates.
  FASTFORWARD
  FASTforward is similar to NCOALink in that it applies address updates from the USPS permanent
  change-of-address database prior to the mailing. However, FASTforward requires the use of a
                                                                                                    4
multiline optical character reader (MLOCR), and it contains updates from the previous 13 months
(vs. 18 or 48 months for NCOALink). As mail pieces pass through the MLOCR equipment, names
and addresses are checked against the Postal Service database. When a change of address is
warranted, the correct address and barcode are sprayed on the mail piece.
ACS
Although the ultimate result may be the same, ACS differs from NCOALink and FASTforward in one
fundamental aspect: Address changes are identified and communicated to the mailer after the mail
pieces enter the mail stream.
Provided by the USPS® National Customer Support Center (NCSC), ACS delivers change-of-
address information to mailers electronically (via secure web site or CD-ROM) or manually (paper).
ACS participants may choose to receive address correction notifications daily, weekly, biweekly,
monthly, or bimonthly. Costs apply to ACS services, ranging from 6 cents per corrected address for
First-Class Mail® and electronic notification to 50 cents per corrected address for all other classes
using paper notification.
With implementation of the new Intelligent Mail® barcode, the USPS has improved ACS by creating
the new OneCodeACS™ solution. OneCodeACS is available for First-Class and Standard letter-
shaped mail, providing a very cost-effective method for obtaining change-of-address information.
OneCodeACS for First-Class™ letters is free for the first two notifications and costs 5 cents
thereafter for each notification of an address change. Standard Mail pricing is 2 cents for the first
two notifications and 15 cents for each subsequent notification of an address change.
It’s important to note that ancillary service endorsements may involve substantial USPS charges,
intended to cover additional handling costs incurred in the forwarding processes. The Postal
Service bases its fees on mailer weight and the appropriate single-piece First-Class Mail rate, plus
a non-machinable surcharge, if applicable. The sum from this formula is multiplied by 2.472 and
rounded up to the next whole cent.
The USPS collects any fees for ancillary service endorsements after the mailing has occurred. This
may pose logistical difficulties for lettershops or mail service providers as they attempt to collect
additional postage from their customers.
                                                                                               5
  ALTERNATIVE MOVE UPDATE METHODS
  Some mailers who meet certain criteria may satisfy Move Update requirements without any of the
  approved methods described above. The two alternative methods, both of which must receive
  advance USPS approval, are:
   Legal restraint method—This method is for organizations that are restricted from incorporating
    Postal Service change-of-address information into their mailing list without permission from
    addressees. Nongovernmental entities must provide a citation of the specific legal restriction and
    copies of the statutes or regulations.
   99% accurate method— This method is for mailers whose customers diligently provide
    notification of address changes and who can demonstrate that their mailing lists are at least as
    current as the Postal Service database. It requires an ancillary service endorsement, advance
    approval from the USPS, a multistep validation process, and an annual letter to the USPS
    confirming current eligibility.
THE APPROACH
  A BLEND OF PRE- AND POST-MAILING UPDATES
  In a competitive and cost-conscious marketplace, the value of change-of-address processing is
  well-documented. According to the USPS and mailing associations sources, some mailers have
  realized as much as a 20-to-1 ROI—$20 gained for every dollar invested.
  (Because of the many variables involved, ROI varies from one business to the next. The USPS has
  developed an easy-to-use worksheet for calculating potential ROI—see the “Resources” section at
  the end of this paper.)
  For most companies, especially those relying on mail as a primary marketing tool, the question is
  not whether to implement a change-of-address program, but how to proceed. Specific questions
  may include:
   Which tools and technologies deliver the best results and ROI?
   Which criteria should a mailer use in choosing change-of-address products, services, and
    vendors?
  With post-mailing methods, such as ACS™ and ancillary service endorsements, the business
  receives change-of-address information after the Postal Service™ determines the piece is
  undeliverable to the address on the mail piece. Alternatively or additionally, depending on the
  service, the mail piece may be forwarded to the intended recipient’s current address. In any case,
  the resulting delay could mean a missed opportunity, especially if the mailing promotes a time-
  sensitive offer.
  Post-mailing address updates may also prove to be costly, sometimes beyond budgeted amounts.
  For example, electronic ACS notification can cost 6 cents per updated address for First-Class Mail
  and 25 cents per piece for other classes of mail. It’s also important to remember that the business
  has already incurred costs for the mail pieces (creative, printing, postage, etc.), regardless of
  whether they were delivered or not.
                                                                                                6
Forwarded mail presents another potential drawback. The address block contains extra characters,
creating a cluttered look which may be negatively perceived by the recipient. The mail piece may
proclaim, “We have an offer just for you,” while the implied message may be, “We have no idea
where you live.”
1.   People and businesses are moving all the time. From the point a mailing list is updated until
     the mail pieces are produced and delivered to the Post Office, a significant percentage of the
     addresses may no longer be current. (If the process takes two weeks, as many as 2 million
     U.S. addresses may change.)
2.   The USPS uses different name-to-address matching rules for different address update
     services. Consequently, an address change missed during the pre-mailing update, using
     NCOALink or FASTforward, may be applied on the back end with ACS.
When used in tandem with a pre-mailing update, a post-mailing update should result in minimal
cost to the mailer. The reason—most of the moved addresses will be updated during the pre-
mailing phase, where costs are more predictable and, in many instances, considerably less on a
per-record basis.
Mailers who use FASTforward usually update their addresses each time a mailing is processed
through their automated system. Other mailers will want to perform a pre-mailing address update
using NCOALink in one or more of its versions.
There are no hard and fast rules for selecting a specific NCOALink service or update frequency. In
general, the greater the dependence on mail to generate sales and acquire customers, the more
thoroughly and frequently the mailing list should be updated.
Following is a recommended address update strategy for mailers who use the NCOALink service.
It’s based on the best practices outlined in the Mailers’ Technical Advisory Committee Workgroup
97 Address Quality Methodologies document, available at http://ribbs.usps.gov/bestpractices.pdf.
PRE-MAILING TACTICS
Complete an NCOALink PAF
Prior to any NCOALink® processing and once annually thereafter, the NCOALink licensee (mailer or
outside provider) must complete an NCOALink Processing Acknowledgement Form (PAF). This
form, which stems from the Privacy Act of 1974, requires the USPS to maintain records of all
entities receiving change-of-address information. (See the “Resources” section of this paper for
links to a PAF guide and the form.)
48-month NCOALink processing
Available exclusively from a Full Service NCOALink licensee, a 48-month update is performed once
or twice annually. The 48-month database contains the Postal Service’s most comprehensive
change-of-address information.
                                                                                                      7
18-month NCOALink processing
To capture changes occurring between 48-month updates, mailers should perform (or outsource)
18-month NCOALink processing as close as possible to the mail drop. Adding the ANKLink service to
the process will flag moves that may have occurred from months 19 through 48, allowing the mailer
to send these addresses to a Full Service provider for 48-month processing.
POST-MAILING TACTICS
ACS Address Update
A post-mailing address update with ACS notifies the mailer of address changes that occurred
between NCOALink runs. It may also provide updates for addresses that didn’t meet NCOALink
matching rules. Available for all classes of mail, ACS must be used with either an ancillary service
endorsement and participant code or an Intelligent Mail® barcode containing a business entity
identifier (BEI).
Ancillary Service Endorsements
The combination of NCOALink (18 and 48 month) and ACS processing will capture and apply the
vast majority of address updates to a mailing list. For the remaining “straggler” changes of address,
an ancillary service endorsement enables forwarding of the mail pieces and/or address change
notification to the mailer. The mailer may incur charges, but only for updated addresses (which
should be a minimal number at this stage).
Bring Address Changes Back In-House
If an outside provider is processing the mailing list, the mailer should make sure that address
updates are incorporated into the source database. A surprisingly large number of mailers overlook
this important step.
Most mailers find it impractical and cost prohibitive to acquire an NCOALink license. In fact, only a
relative handful of companies are licensed for 48-month NCOALink processing, given the high cost
($175,000 annually) of a Full Service license, the rigorous application process, and the very
stringent USPS® requirements for data formatting and transfers. Even the cost ($7,500 per year)
and requirements for obtaining an End User license call for careful consideration.
For the majority of mailers, a blended approach to address updating—combining some in-house
processing with outside services—makes the most sense.
The following checklists are intended to assist mailers with selecting an NCOALink service provider
and the software that contains an interface to vendor and/or USPS databases.
Recommended Criteria for NCOALink Service Providers
                                                  Link
 Provides both 48-month and 18-month NCOA               processing
 Has flexible input file and media requirements, eliminating the need for customers to perform
  costly data conversions
 Offers a complete continuum of database, mailing list, and data conversion services, such as
  telephone append, ZIP + 4® processing, merge/purge, presort, bar-coded mailing labels, and
  inkjet files
                                                                                                8
          Ability to match processes and security features to client needs, versus forcing clients to adapt to
            the provider and processes
          Delivers high-quality reports that increase the usefulness and value of change-of-address
            information
          Provided by a vendor with an established track record of staying in sync with all USPS address
            quality initiatives and, ideally, possessing a history of close collaboration with the Postal Service
            and keeping mailers informed of upcoming regulatory changes
ACS TM
                                                ANKLink
                                                                     TM
                                            NCOALink
                                                                          TM
TM
SuiteLink
                                             DPV
                                                          TM
Link TM
                                       LACS
                                                     TM
Figure 1. USPS address quality solutions for standardizing, validating, and updating mailing lists.
                                                                                                                9
SUMMARY
  The argument for mailing list address updating is compelling from a number of vantage points.
  From strictly a cost perspective, mailers who religiously apply Move Update methods can
  significantly reduce their UAA mail—and thus the dollars wasted on production and postage for
  pieces that never get delivered.
  Postage automation discounts are also at stake. Mailers who don’t meet USPS Move Update
  requirements risk the loss of their presort and automation discounts. This issue will only intensify
  as:
  From a marketing perspective, the case for address updating is even stronger. By improving the
  timeliness and predictability of each ad mailing, businesses should experience a boost in response
  and sales. What was once a 1% or 2% response potentially now becomes a 3% or 4% response—
  a substantial difference when applied to tens of thousands or hundreds of thousands of mail
  recipients.
  In contemplating potential ROI, marketing strategists should also consider the lifetime value of each
  consumer who becomes a customer. Even a fractional percentage increase in the productivity of a
  mailing list represents a huge windfall in sales over the long term.
  Another potential beneficiary of address update technology is the mail services provider.
  Lettershops and other vendors can give themselves a competitive edge by offering their customers
  the opportunity to reduce UAA mail and increase the effectiveness of their marketing campaigns.
  By partnering with a firm specializing in NCOALink processing, these mail services vendors can offer
  their customers powerful solutions without having to make a major investment in address update
  technologies.
  Whether adopted by a mailer or a service provider, the commitment to an address update strategy
  should be robust and long term. It should place a primary emphasis on updating addresses before
  the mailing occurs, yet it must also be able to capture changes of address on the back end.
  In addition to implementing a solid strategy, mailers and service providers need to carefully choose
  their move update products, services, and vendors. This requires thorough research, including
  verifiable comparisons of features and benefits, as well as discussions with peers to gauge real-
  world performance and dependability.
RESOURCES
   USPS National Customer Support Center: 800-238-3150
  USPS Publications
  (Click on link to access document)
     Updating Address Lists Is a Smart Move (USPS Publication 363)
  
                          Link
      Combined NCOA              Processing Acknowledgement Form
  
             Link
      NCOA          Processing Acknowledgement Form (PAF) Guide
     Certification of Move Update Compliance
     Move Update ROI calculator
     Best Practices in Address Quality (from Mailers’ Technical Advisory Committee)
                                                                                                 10
ABOUT THE AUTHORS
            Pam Corbeille-Lepel is Sales and Marketing Director at Lorton Data, a privately held company located in
            Minneapolis, Minnesota. With 18 years of experience in the direct marketing industry, she consults with
            businesses ranging from nonprofit organizations to Fortune 500 companies. Corbeille-Lepel began in the direct
            marketing industry representing mailing software and lettershop and bindery systems. For the past 15 years,
            through Lorton Data, she has provided a wide range of list management and database marketing services,
            designed to help clients reach their targeted audience and improve their return on investment. Corbeille-Lepel
            can be reached at Pamcl@lortondata.com.
            Christopher Lien is Director of Commercial Mail Marketing for Business Objects, responsible for setting the
            strategic direction of the company’s Postalsoft brand of products. Mr. Lien has been active in the mailing
            industry for more than a decade. During this time, he has developed several software products utilizing Mail.dat
            for electronic auditing and dynamic drop-shipment planning. He has been heavily involved in industry groups,
            such as the Association for Postal Commerce, the Mailing & Fulfillment Service Association, Alliance of
            Nonprofit Mailers, and the IDEAlliance, for which he currently serves as representative to the Postmaster
            General’s Mailers Technical Advisory Committee.
For more information, visit the Lorton Data website at www.lortondata.com or call (651) 203-8200.
            Business Objects has dual headquarters in San Jose, Calif., and Paris, France. The company’s stock is traded
            on both the Nasdaq (BOBJ) and Euronext Paris (ISIN: FR0004026250 - BOB) stock exchanges. More
            information about Business Objects can be found at www.businessobjects.com. To request a consultation with
                           ®
            a Postalsoft sales expert, email SalesTeamMailbox@businessobjects.com.
                                                                                                    ®
Lorton Data is a non-exclusive Full Service Provider Licensee of the United States Postal Service . Business Objects is a
non-exclusive Interface Distributor Licensee of the United States Postal Service. The following trademarks are owned by
                                      ®
the United States Postal Service : USPS, United States Postal Service, First-Class, First-Class Mail, Standard Mail, Post
                                 Link   Link                                          ACS       Link           Link
Office, Postal Service, NCOA , ANK , ACS, ZIP, ZIP + 4, FASTforward, OneCode , Suite , DPV, LACS , CASS
Certified, and Intelligent Mail.
© 2007 Business Objects & Lorton Data. All rights reserved. Part # WP3109-A. AD 15.07
11