Everyone has a different idea about the impact of undelivered mail. Most times, the estimates are way too low. The cost of paper, ink, and wasted postage is just the start, so I prefer to look at undelivered mail from a broader perspective.
First, let’s define exactly what we mean by undelivered mail. For some, an item transported to the address on the piece counts as delivered, even if the person to whom marketers targeted the communication no longer lives there. That thinking is flawed. If the sender’s objective was getting their piece to random people in a neighborhood, they could use a service like Every Door Direct Mail (EDDM) and forget about individual addresses entirely.
When data drives direct mail campaigns, marketers compose variable messages on the fly. Documents may vary in offer, language, or appearance, depending on data points like age, income, credit history, or buying patterns. Any piece that fails to reach the person matching the profile is unlikely to generate a response. I’d consider mail like that as undelivered, even though the address data was correct.
Next, we should think about what mailers lose when their mail isn’t delivered. With direct marketing, this calculation depends on the average purchase price of the advertised items. Only a fraction of the mail recipients will buy. For a true estimate of lost opportunity, multiply the number of undelivered pieces by the purchase price and expected conversion rate. That calculation will produce the lost revenue from a particular mailing.
If a campaign history exists, use the conversion rate already established. If it’s a new campaign, you can rely on statistics compiled by recognized authorities like the Data and Marketing Association (DMA). In recent studies, the DMA pegged average direct mail conversion rates for prospect mailing lists at 2.9%. House lists converted at 5.1%.
But we can’t stop there. Direct mail is a great channel for customer acquisition campaigns, even if the actual sale happens online. To completely understand the impact of undelivered mail, you must factor the revenue a new customer typically creates over time. When the lifetime value of customers not acquired because of undelivered mail is included in a campaign evaluation, it can change the way organizations think about investing in ways to improve the accuracy of their mailing lists.
I put together a calculator for estimating the impact of undelivered mail. Input numbers from your own campaigns to see how improved deliverability can affect costs and revenue for you or your clients. You can visit www.printmailconsultants.com/undelivered_mail_calc to do the calculations.
Making a Difference
Mailers can never guarantee 100% deliverability, but many tools can help you reduce the cost of wasted production and postage while simultaneously increasing sales opportunities for direct mail marketing.
By the way, if you’re thinking transactional documents like bills and statements aren’t affected by the same statistics on deliverability, you’re right. The impacts can be even more severe! Mailers still miss out on advertising goods and services via pre-printed inserts and transpromo messaging, and they still waste production expenses and postage. But they also deal with issues like cash flow delays, customer complaints about late fees, and initiating collection actions. Just handling undelivered transactional mail can be expensive. Analysts have estimated each piece of returned mail costs organizations up to $3.00 to research, correct, and remail.
In some regulated industries, companies are required to initiate processes to locate individuals whose mail has been returned. Prescribed actions can include contracting with outside vendors to do the work. Organizations must comply with such regulations when attempting to contact beneficiaries of life insurance policies, for example.
You are probably using an approved method to update addresses of mail recipients who have moved. The USPS requires mailers to employ move update measures to qualify for discounted postage. Though Americans are not moving as often as in the past, the US Census says 11% of us moved in 2017. That means close to one percent of your mailing list goes out of date every month. The time between updating your list and mailing your project affects deliverability, costs, and revenue.
Some people don’t file a change of address with the US Postal Service, or they’ve moved over 48 months ago and have dropped off the National Change of Address (NCOA) file. Consider augmenting your move update process by subscribing to additional databases compiled by magazine publishers, retailers, and others that may contain records of movers not included in NCOA.
If your list includes apartment-dwellers or businesses, missing apartment and suite numbers can put a dent in your campaign’s ROI. Consider implementing steps to add apartment numbers to your database before mailing. Several data quality vendors offer such services. An additional one or two percent of your material delivered as planned can make a difference in campaign performance. As a bonus, appending apartment numbers before composing variable-data documents helps you accurately identify the recipients. You can target your messages appropriately and improve conversion chances.
The response rate for mail sent to dead people is understandably low. While filtering deceased or incarcerated individuals from your list won’t improve revenue, it will lower your production and postage expense and make campaign statistics more favorable. The impact of deceased or incarcerated suppression has on your project depends on the characteristics of your list, but you may be able to eliminate records with extremely low conversion rates and reduce production expenses by another one to four percent.
Delivery Point Validation (DPV) is another way to avoid sending mail that can’t be delivered. The DPV process differs from CASS processing, which merely validates an address is within a defined range. With DPV, the USPS identifies individual problems such as a missing mail receptacle or a vacant lot. Like deceased/incarcerated suppression, DPV reduces processing and postage costs, but won’t increase the revenue generated by the campaign.
Making better mail means doing everything possible to ensure the people paying for the mail, whether in-house customers or outside clients, realize the greatest benefit from their investments. Eliminating mail pieces that don’t have a chance of converting is painful when you’re getting paid based on the volume you create. But generating poorly performing mail campaigns will eventually force customers to reduce the number of campaigns or stop using the mail entirely.
I recommend my clients become partners in their clients’ success, not just service vendors. Customers can easily replace print and mail companies if their mailing objectives are unmet. Optimizing mail list performance is one way mailing service providers can help customers get better returns on their mailing investments.
Mike Porter at Print/Mail Consultants helps his clients meet the challenges they encounter in document operations. Follow @PMCmike on Twitter, send a connection request on LinkedIn, or contact Mike directly at firstname.lastname@example.org.
This article originally appeared in the May/June, 2019 issue of Mailing Systems Technology.