Getting Ready for NCOALink
Besides having to deal with new file layouts and codes, a new Postal Acknowledgment Form, procedural changes and the like, you will face a choice between two NCOALink products.
Full file vs. partial file. Whether you're thinking of getting your own NCOALink license or planning to use the services of a vendor, you'll need to choose between the 48- and 18-month NCOALink files. The full-service vendors will pay an annual fee of $175,000 and have the complete NCOALink file consisting of four years of COA data.
The limited-service vendors will pay only $15,000 and end-user licensees will pay $7,500, but each will have only 18 months worth of COAs. Since the limited-service vendors will have a lower cost basis it's probably safe to assume that they will be able to charge less than the full-service vendors (end-user licensees can process only their own files).
So, you need to ask yourself -- "Can I really get away with only 18 months of NCOA data?" Well, not if the lists you mail are similar to those that we process at Time Customer Service. We've looked at many NCOA runs including individual lists and large merge/purge files, and we've found that at least 7 percent and as many as 53 percent of the NCOA hits were older than 18 months.
It's important that you carefully analyze your past NCOA runs to see how many NCOA matches fell beyond months 1 to 18. Look at your own files as well as those you rent from other mailers. If you are an NCOA reseller, analyze the results of your clients. Without doubt you will find that in many, if not most, instances the four-year file paid a handsome dividend. Are you prepared to lose the benefit of those additional COAs? If you're thinking of getting a license will you be able to justify an 18-month service to your clients?
Getting a license. Maybe your own NCOALink license makes sense. There are now six licensed distributors of NCOALink software eager for your business. There must be great anticipation that many mailers and suppliers will seek a license of their own.
Securing and maintaining a license is no cakewalk, however, and the responsibilities are significant. The licensing process can be lengthy and involved -- more than just acquiring the software from a vendor. You will need to consider license fees; hardware and software costs and upgrades; additional staffing; U.S. Postal Service site survey and security reviews; significant administrative requirements for proper completion and management of USPS required reports and documentation (in particular the PAFs); weekly updates that must be completed within 24 hours of receipt; protecting against unauthorized disclosure; and the list goes on.
Once approved as a service provider, you will need to maintain the NCOA Link infrastructure in which you have invested. That means making USPS-mandated changes to your systems and going back to your software vendor and negotiating a deal for the modifications.
It also means facing periodic USPS audits (remote and on-site). On-site audits include a security review and a thorough audit of your Postal Acknowledgment Forms. Audit failures can be expensive and potentially result in suspension or termination of your license (though that's only if you cannot correct the oversights in 30 days).
Another option? If your motivation for becoming a licensee is speed or even saving money, you might consider another option. Several NCOA vendors provide an automated NCOA service (typically very fast), and they generally offer very competitive pricing.
Jobs are submitted and tracked by your staff, and these systems come very close to running NCOA on your own computer -- without the enormous responsibilities that come with being an actual licensee. Besides, NCOALink is sure to make it more of a "buyer's market," so waiting until the market adjusts may be wise.
Choosing a NCOALink vendor. We probably can expect the 18- vs. 48-month issue to become a factor for mailers choosing a NCOALink vendor. Mailers looking to cut costs (and who isn't?) may be tempted to select a vendor offering a less-expensive 18-month NCOALink service. So, will mailers look to save the "short-term" buck and sacrifice the benefit of using a full four-year service?
This is why it is so important that mailers prepare for NCOALink by analyzing their past NCOA runs and estimating the dollar value associated with the "older" COAs. Only then can they understand whether a lower-priced limited service makes sense for their situation.
The limited-service vendors will need to develop new markets for the 18-month service. Let's assume that most files have NCOA matches older than 18 months. Doesn't it stand to reason that we will see a rise in Undeliverable as Addressed mail if current NCOA users switch to a limited service? That's clearly not what postal officials intended when they decided to license a limited-service version of NCOALink. It is important that limited-service vendors find opportunities in situations where NCOA is not being used today. If they only cannibalize the current NCOA market, then what do they really bring to the table?
NCOALink is coming, and it will be here before you know it. Start weighing your options carefully and ensure that your organization has done due diligence so that you make the best possible decision for your situation. The other day I heard about a FastForward vendor that is upset because its annual fee will increase to $15,000 when it is required to change over to NCOALink.
The additional cost apparently outweighs (for that vendor, anyway) the benefit that will be derived from having 18 months of COA data to offer clients. We're all trying to cut costs, and it's difficult to find fault with any effort designed to save money, but we must be mindful of the long-term impact of our decisions.