Best Practices toEnsure Address Quality

White Paper

Address Quality®

A Pitney Bowes Company

Executive Overview

The operational costs of poor address quality are well known –undeliverable-as-addressed (UAA) mail, lower response rates tomarketing campaigns, delayed payments and dissatisfiedcustomers. Given the USPS® rate case announcement,companies are taking a look at all the ways they can reduce theimpact of the postal rate increase.

This White Paper offers useful suggestions to optimize yourmailstream by keeping your company’s address data clean,complete and deliverable.

On-line Address Correction

Currently, many mailers batch cleanse addresses with a CASSCertified™ software solution just prior to mailing. Whencustomers are on the phone or they are browsing your web site,they are live and open to interaction. Companies thatincorporate address correction (including DPV™) intocustomer-facing systems are able to query the customer forcorrections or missing information.

About 40 percent of address errors, (misspelled names, streetsand cities, truncated addresses, and abbreviated streets and citiesthat do not follow USPS standards) can be traced back to dataentry. To address this problem, some companies haveincorporated point-of-entry address “building” and validationroutines to reduce address errors as well as the number ofkeystrokes required to update the data. In the screen shot at thetop of the next column, keystrokes were reduced by about 72 percent.

There are both hosted and in-house solutions. Web services orAPI calls from your customer care, billing and other businesssystems enable real-time address validation and correction.There also exists certified connectors that interface with themost popular customer-facing applications, such as MicrosoftCRM, SAP, Siebel and Salesforce.com.

Going Beyond CASSTM Certification

Even if your company already cleans and validates its customeraddress data and mailing lists using either a service bureau or aUSPS CASS Certified solution, you may not be benefiting fromall of the address correction options available. In a recentsurvey, Group 1® Software found that 67 percent of itscustomers were not taking advantage of DPV, even though thesoftware is included “free” with their CASS software. It isimportant to note that beginning August 2007, DPV processingwill be required as part of the CASS process.

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Web Interactive Demo

Please click here to perform another search.

Input Address Output Address16 Characters 58 Characters

4200 Parl GROUP 120706 4200 PARLIAMENT PL - STE 600

LANHAM MD 20706-1844

Keystroke saving of 72.41%

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A Pitney Bowes Company

When DPV is run with a CASS engine, it enables mailers toconfirm that an address is a delivery point for the USPS. TheCASS process checks addresses against a range in a database.So for instance, in a new subdivision, 10 Birch Drive, 12 BirchDrive and 14 Birch Drive are all “valid” addresses because theyfall within an acceptable range. However, 12 Birch Drive is anempty lot. DPV alerts the mailer that 12 Birch Drive is anundeliverable address. DPV is also helpful for multi-dwellingunits and high rise buildings because it alerts the mailer that asuite or apartment number does not exist for that street address.

RDI™ is another essential technology. RDI does not reduceyour postage, but it can save money. This technology helpsparcel shippers reduce shipping costs by verifying whether anaddress is residential or business. It enables companies toeliminate the address correction surcharge ($5-15 per package,depending on the carrier) as well as the residential deliverysurcharges associated with shipping materials via a third partysuch as FedEx or UPS.

The USPS does not charge a residential surcharge because theyare already set up for local last mile delivery throughneighborhoods. However, third party carriers charge fees to helprecover the extra handling costs incurred for making residentialdeliveries (i.e. moving materials off of 18-wheelers to vans).Companies that maintain an RDI flag on the customer file andappend it in real time when customers order goods over the Weblet the shipper calculate and collect the residential surcharge up front.

LACSLinkTM is another cost-saving tool. It is a database of convertedrural route addresses to their city-style addresses. The LACSLink

Product was initially implemented by the USPS to help emergencyresponders find a physical address. Approximately 400,000 ruraladdresses have changed each year since the database wasimplemented in 1994. According to the USPS, approximately 40percent of rural route addresses cannot be delivery point validated.To help improve delivery to rural route addresses, LACSLink

processing will be required to receive CASS certification effective

August 1, 2006. Also note that NCOALinkTM Full Service Providersare required to offer the LACSLink service and process addressesagainst the LACSLink database.

Exception Processing to EnhanceAddresses

According to the address quality white paper published by theMailers’Technical Advisory Committee (MTAC), “There is nowidespread Industry best practice in place at a transactional orbatch level for assignable addresses. It’s unknown what mailers doto evaluate un-assignable addresses. It’s assumed that they mail atfull rate or pre-sort at the full rate or determine not to mail. Mostmailers don’t know what level of evaluation their company does toidentify root cause for un-assignable addresses. As a last resort, theMailer initiates customer contact to get resolution.”1

Based on the benchmark data that Group 1 gathered fromcustomer files across various industries, addresses frequentlycannot be matched against the USPS database because either a keypiece of information is missing or there is conflicting data, such asa street address being outside the range for that ZIP Code™.

One option available to mailers is the USPS Address ElementCorrection (AEC) program. Companies may submit up to500,000 records a day at a cost of $15/1000 records. The AECsoftware will parse the address into its elements, match itagainst their database and provide reports of the resolved andunresolved data elements.

Most address hygiene tools in the market are limited to onlyusing the United States Postal Service® data. The USPS isresponsible for delivering mail, however it does not track everyphysical address in the United States. For instance, there aremillions of households that receive mail at a Post Office™ boxin communities that do not offer city-style mail delivery, so theUSPS has no record of these types of addresses in its database,even though they exist.

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White Paper

Address Quality

1 MTAC Workgroup 97, Address Quality Methodologies, Best Practices in Address Quality.February 2006.

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Many Group 1 customers are benefiting from a unique object-oriented database that conflates the USPS address datawith non-USPS street network data. By combining the two datasources, this technology achieves much higher match rates. Inaddition, the quality of the match results has been consistentlyproven to further increase the accuracy of address data.

In addition, Group 1 can augment address information bymatching addresses against a consumer credit data file usingFineTune Data™. When FineTune Data finds a match, it canappend new address information as well as demographic andother lifestyle data. These updated addresses are then processedagain through a CASS engine, where they receive a higher ZIP + 4® match rate – sometimes coding an additional 25-30percent of the exception file. These results not only qualifymailers for additional postal discounts but reduce costly UAAmail as well.

Complying with Move Update

Over 17 percent of Americans change their residence each yearand nearly 20 percent of all businesses change locations.Identifying address changes quickly is vital to your business.Each old address could represent a “lost” customer. Keepingcontact with your customers and their revenue stream can easilybe automated with a Move Update solution so you never lose acustomer or a sale needlessly.

The NCOALink database contains more than 160 million permanentaddress changes, is updated weekly, and covers (on a constantlyrolling basis) the past 48 months of change-of-addressinformation. In order for First-Class™ mailers to take advantageof postage discounts, they must be in compliance with MoveUpdate requirements. Currently there are different approaches tocompliance – pre-mailing and post-mailing.

Pre-mailing Move Update Solutions Pre-mailing Move Update solutions include:

■ In-house (Group 1’s VeriMove™ solution)■ Outsource (service provider)■ MLOCR (post-print)

In the pre-mailing processes, when MLOCR and serviceproviders are used, companies neglect to update their databaseswith the new address. Best practices to ensure address qualitywould be for mailers, regardless of which update method used,to update their customer data with change-of-addressinformation immediately upon receipt.

Post-mailing USPS Provided Move Update Methods Post-mailing Move Update methods provided by the USPSinclude:

■ Ancillary Service Endorsements (ASE)■ ACS™

In the post-mailing process, mailers include an ACSendorsement line on the mail piece, the USPS forwards the mailpieces and charges a fee for the service, then returns a file ofcorrected addresses to the mailer. There are companies that donot update their mailing list with these addresses and aretherefore out of compliance and subject to USPS penalties.

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A Pitney Bowes Company

Best Practices Process Flow

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Address Quality

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What’s on the Horizon for AddressQuality?

The USPS has a $2 billion UAA mail problem and a stated goalof reducing undeliverable mail by 50 percent. Group 1anticipates that the USPS will continue to announce rulechanges to CASS engines to enhance address quality, such asthe new rule that CASS engines cannot apply a ZIP + 4 to anaddress without validating both the street and the house number;that is, comparing the address to the DPV database. This rulegoes into effect August 1, 2007.

In addition, in the Federal Register Notice (August 28, 2003),the following Move Update changes were proposed:

■ 95 day processing of Move Update■ 95 day processing of CASS■ Use of monthly directory updates for

address-matching software■ Disallow Ancillary Service Endorsements as a

standalone Move Update method■ Move Update for other classes of mail (First-Class

represents only 50 percent of total mail volume)

Summary

Group 1 Software is uniquely qualified to assess your addressquality processes and evaluate them against what is consideredthe industry standard. Group 1 and Pitney Bowes representativesparticipate in the MTAC work group which published the“Address Quality Methodologies” white paper in February 2006.

This MTAC work group focuses on address quality issues andsupports MTAC’s purpose which is to be “a venue for the United States Postal Service (the Postal Service) to share technical information with mailers and to receive advice andrecommendations from mailers on matters concerning mail-related

products and services in order to enhance customer value andexpand the use of these products and services for mutualbenefit.”2

The “Address Quality Methodologies” white paper is availablefor download from the Group 1 web site at www.g1.com. If youhave any questions regarding your company’s specific addressquality, contact Group 1 Software directly at 888.413.6763.

About Group 1 Software

Group 1 Software, Inc., a wholly owned subsidiary of PitneyBowes, develops software that provides a comprehensiveCustomer Communication Management (CCM) solution, whichhelps maximize the value of customer data and improves theefficiency and effectiveness of customer communications.Group 1 Software’s solutions are an essential component ofenterprise applications, serving to consolidate, cleanse andenrich corporate data, and generate personalized businessdocuments for multi-channel delivery, customer care andefficient business processing. The company’s solutions areutilized by over 3,500 organizations worldwide in the utilities,financial services/banking, GIS/mapping, retail,telecommunications, insurance and other industries, includingEntergy, L.L. Bean, Microsoft, QVC, Siemens, Wal-Mart andWells Fargo.

About Pitney Bowes

Pitney Bowes provides the world’s most comprehensive suite ofmailstream software, hardware, services and solutions to helpcompanies manage their flow of mail, documents and packagesto improve communication. Pitney Bowes, with $5.6 billion inannual revenue, takes an all-inclusive view of its customers’operations, helping organizations of all sizes enjoy thecompetitive advantage that comes from an optimized

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A Pitney Bowes Company

2 MTAC Work Group Guidelines, USPS RIBBS, January 20, 2006.

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Address Quality

mailstream. The company’s 86 years of technological leadershiphave produced many major mailstream innovations, and it isconsistently on the Intellectual Property Owners Association’slist of top U.S. patent holders. With approximately 34,000employees worldwide, Pitney Bowes serves more than 2 millionbusinesses through direct and dealer operations. Moreinformation about the company can be found at www.pb.com.

White Paper

Address Quality®

A Pitney Bowes Company

For more information about our products andservices, please log onto our web site: www.g1.com

For more information about Pitney Bowes,visit www.pb.com

©2006 Group 1 Software, Inc. • All Rights ReservedAn Equal Opportunity Employer • Printed in U.S.A. • WPP1008/0606G1

Group 1 Software4200 Parliament Place • Suite 600

Lanham, MD 20706-18441-800-368-5806

Group 1 and the Group 1 logo are registered trademarks ofGroup 1 Software, Inc. Pitney Bowes is a registered

trademark and the Pitney Bowes Process Bar Design is atrademark of Pitney Bowes. The following trademarks areowned by the United States Postal Service®, USPS, UnitedStates Postal Service, ZIP + 4, RDI, LACSLink, NCOALink, Post

Office, ACS, CASS, PAVE, First-Class, ZIP Code, First-ClassMail, DPV and CASS Certified. AD#8.06. Group 1 Software isa non-exclusive Interface Distributor Licensee of the United

States Postal Service. All other marks are trademarks orregistered trademarks of their respective companies.

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A Pitney Bowes Company