SA direct mailers losing millions through incorrect postal codes

The consequences of poor address quality is costly: millions of rand are wasted annually on undelivered mail and returns, resulting in delayed payments, re-mailing costs and poor cash flow.

"Poor address quality has a greater effect on companies than they realise," says Darryl Joubert, chairman of specialist data quality software supplier and service bureau Intimate Data. "These costs tend not only to be ignored but absorbed into the overall cost of doing business. And yet these are real costs and they add up. The bottom line is that data quality problems hurt the bottom line."

There are distinct bottom-line rewards to be had from attention paid to clean address data. For instance, a leading retail bank improved the quality of its customer addresses by one percent and saw the reduction of incorrectly addressed statements, brochures and other correspondence slice R1 million from its postage bill.

People are quick to blame the South African Post Office (SAPO) for the non-delivery of mail, says Joubert. But the issue is endemic, and it is not unique to South Africa. "It's a widespread, global issue, occurring in countries where postal or zip codes are in use." For instance, the US Postal Service reports that 26% of all addresses on US mail are incorrect.

Returned mail has a huge impact on the bottom line. A large company may send over a million pieces of direct mail annually. An average 15% undeliverable rate would mean 150 000 undelivered pieces of mail.

When industrial giant 3M identified poor data quality as its weak point in 2000, it implemented data cleaning software that improved the rate of valid addresses to around 90%, saving the company the equivalent of about R850 000 a year, plus a further R850 000 in reduced surcharges from shipping and courier companies. Apart from improved address accuracy, the company's data warehouse now delivers accurate customer, product, sales, inventory and financial data direct to the desktops of 3M workers and partners who can access the information via the Internet.

Locally, Daimler Chrysler found it had 800 000 customer names on its database; when it had applied the appropriate data cleansing disciplines to the software, it was able to reduce this number to 260 000, with major savings and improvements in business processes.

The implementation of effective, reliable address cleaning software delivers direct savings to the bottom line. SAPO offers substantial bulk postal rebates to companies qualifying for postal address management service supplier (PAMSS) certification, which not only means savings on postage but results in improved cash flow by ensuring mail items are correctly addressed to reach their destination.

Address data quality needs to become a way of life for business, identified at board level as a core focus requiring ongoing attention. Data is a business's most valuable asset, so setting data quality standards and achieving accurate data needs to become one of its highest priorities, adds Joubert.