I gave a letter to the postman,
He put it his sack.
Bright ‘n early next morning,
He brought my letter back.
Elvis Presley, Return to Sender
In 2014, 64.5 billion pieces of First Class Mail were handled by the U.S. Postal Service, a 35% drop since 2004 when almost 100 billion passed through the system. Today, people who continue to use First Class Mail (FCM) are financial institutions sending statements and grandmas sending birthday cards to their grandkids, the kind of folks who are likely to have good addresses, you’d think. But you’d be wrong. According to USPS figures, 3.7% of FCM mail was returned to senders in 2014 versus only 3.4% returned in 2004.
Despite services offered by the Postal Service, such as the National Change of Address system, as well as several software and data packages available to help keep marketers’ lists clean, those lists remain dirty—and expensive. According to Christine Erna of Novitex, the 9,000-person mail management company spun off by Pitney Bowes, the cost to marketers for a returned mailing is at least $3 a piece and can go as high as $50.
“For business mailers, the cost of returned mail is high, just from an operational standpoint,” says Erna, Novitex’s senior solutions architect. “That $3 per returned mail piece includes the cost of postage, prep, printing, data entry of undeliverable mail, IT systems, destruction, and research and validation. We have one client in the financial services industry that employs 40 people full time just trying to get addresses right.”
The $50 tab is shouldered by transactional mailers for whom the mails are the chief conduit of delivering cash back to them in the form of insurance premiums, merchandise purchases, credit card payments, and loan installments. But attendant costs go beyond the $3 for all mailers in customer churn and lost opportunities.
Erna, a Postal Service veteran, has unwittingly found her life’s mission in correcting the undelivered mail situation and spreading the news that the problem is bigger than everyone thinks. No matter how much the Postal Service and digital pundits talk about electronic payments taking over, more than half of such remittances continue to travel the U.S. Mails, Erna says. Novitex assesses the cost of UAA mail (undeliverable as addressed) to the U.S. economy at $65 billion a year.
It’s not entirely direct mailers’ fault that they’re swallowing this bitter pill. We’ve become a migrant nation; some 76% of all undeliverable mail is attributable to movers. And different mailers have different issues to deal with in correcting the problem. Healthcare and financial services companies, for instance, must comply with strict regulations preventing them from changing customer records without personal input from customers. But, all companies can do something to stem the flow of return mail and save a lot of money, Erna says. A few of her key recommendations:
- Use automated services to drive NCOA and other methods to update incorrect addresses. Automation could reduce operational expenses by 70%.
- Centralize return mail operations.That quickens reaction time and minimizes the risk of postal service audits and lost postage discounts.
- Take advantage of data technology to get at the root cause of why mail is returned. Tracking mail behavior can lead to a modified approach that saves customers and reduces the downstream cost of returns.
Elvis, it turns out, was more ahead of his time than we thought—actually presaging the advent of one-to-one marketing and personalization at the conclusion of “Return to Sender:”
This time I’m gonna take it myself,
And put it right in her hand.
And if it comes back the very next day,
Then I’ll understand.