Compliance is defined as acting in accordance to a set condition. In this case, compliance is acting in accordance to the rules and procedures set forth in the U.S. Postal Service's Classification Reform/Move Update regulation that came into being five years ago.
Many in the mailing community understand that Move Update has something to do with keeping First Class databases up to date in order to earn postage discounts. However, when asked what it takes to be in compliance with this regulation, all too frequently an oversimplified and incorrect definition was given. Specifically, ill-informed mailers and mail service providers state compliance to be the use of an approved database update process, for instance, National Change of Address (NCOA) or ancillary envelop endorsements within the prescribed 180-day frequency.
Well, that's wrong, and herein is part of the educational and communication problem that persists five years in the life of the regulation and only 18 months before the Move Update regulation's planned expansion, which is to include periodicals and standard class mailers.
Compliance is (1) the act of applying the update information to one's database from whichever acceptable Move Update service chosen and (2) keeping on file proof of service used and application to database. In the case of returned mail resulting from use of ancillary endorsements, this means keeping copies of the returned information (yellow stickers) to show the newly furnished address replaced the old address in the database should an audit take place. Simply using an approved method does not satisfy the rule of compliance and it's shocking to see how many fail to know (or choose to ignore) this distinction.
Upside of Compliance
No sooner had the Federal Register announced the Postal Service's intent to expand Move Update to include periodical and standard class mailers did an uproar begin claiming Big Brother's heavy hand to small mailers. Actually, nothing could be further from the truth. Cleaning up one's database, large or small, provides two net gains:
Following is an NCOA example that uses rather conservative match rates and cost estimates. Plug in your own experience factors and compare results.
Using these figures and an in-mailpiece value of $0.41 (postage & materials) the results translate to:
This example presents a favorable reduction in the campaign budget and an exceptional 13:1 return on investment ratio. However, further benefit is gained when one evaluates the response generated from the 4,500 corrected and now deliverable records:
In summary, employing the Move Update compliance process of NCOA for this hypothetical standard class mailing yielded the following overall benefit:
Note: Although Move Update is presently a First Class mailer issue, this example uses standard class postage to illustrate the upside to other mail classes that will come under the Move Update umbrella in the months to come. And again, compliance to the regulation means updating internal and external (i.e., prospect) databases. In return, the Postal Service extends a workshare postage discount.
Downside of Compliance
If a Postal Service audit finds that the change information provided by the service selected wasn't implemented, the front-ended workshare discount must be refunded. In the example presented, the mailer budgeted postage at the standard class rate less a workshare discount of $0.06 per piece. (Note: Although the example uses standard class instead of First Class, the per piece workshare principle holds and the discount would be the same for a First Class mailing.) So, with a $0.06 per piece value, a total of $6,000 postage discount was taken up front, and that's the amount at risk in this case.
Actually, the risk exposure may be greater based on present interpretation of the regulation. While one convention is to limit reimbursement to the mailing in question, other schools of thought feel the reclamation period extends back six or even 12 months. This means one audit might have reimbursement ramifications for all mailings over a six- or 12-month period. Debate is underway to clarify the extent to which reimbursement is required.
One venue in which this matter is under active discussion is the Mailers' Technical Advisory Council subcommittee responsible for review of the compliance issue. The committee expects to have clarification of this topic and more explicit procedures and guidelines established in December 2002.
Regardless of what comes forth from the committee, it makes good economic sense to abide by the requirements of Move Update whether the mail goes into the mail stream as First Class, periodicals or standard class. The upside gains in savings and increased response makes it foolish to do otherwise.
Again, it's shocking to experience how little is known about the huge savings and response improvement for taking proactive measures or the dollar exposure for not complying with Move Update and being caught. Ignorance is anything but bliss.
The Postal Service is challenged to improve its outreach efforts, and first steps have been taken. The Postal Service's Suncoast District (Tampa, Florida) helped me create a PowerPoint presentation on this topic. This is definitely a matter every Postal Customer Council should share.
Bob Swick is vice president of Data Services for Anchor Computer, Inc. He is a regular contributor to a number of industry publications. Bob sits on the Mail Fulfillment Services Association Postal Affairs committee, Mailers Technical Advisory Committee's Move Update Compliance subcommittee and is industry co-chair of the Pinellas Postal Customer Council. His presentation is available at no cost. Direct your e-mail requests to firstname.lastname@example.org.