Prepared For QAS, An Experian Company October 2007 Confirm The Quality Of Address Data As It’s Captured, Not Later Using Front-end Address Verification Software Can Reduce Risk Of Invalid Addresses By Rob Karel Principal Analyst Confirm The Quality Of Address Data As It’s Captured, Not Later Table Of Contents Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Bad Address Data Is More Than Just A Nuisance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Address Data Is Leveraged Across Your Entire Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Batch Address Cleansing Alone Is No Longer Sufficient . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Who Knows An Address Better Than The Person Living There? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Front-end Address Verification Software Allows Your Customers To Play A Key Role In Ensuring Their Data Is Accurate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 © 2007, Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, RoleView, Technographics, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. Forrester clients may make one attributed copy or slide of each figure contained herein. Additional reproduction is strictly prohibited. For additional reproduction rights and usage information, go to www.forrester.com. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. -2- Confirm The Quality Of Address Data As It’s Captured, Not Later Executive Summary The cleansing and enrichment of postal address data for customers, suppliers, prospects, and other indi- viduals or organizations of interest is the foundation, and often the only, data quality investment made by many enterprises. This is because the cost and risk associated with incorrect or incomplete address information is often the most visible and easily quantifiable of all data quality concerns. By focusing on address data quality, organizations control escalating direct marketing costs, enable a single view of their customers for analysis and trending, ensure effective order fulfillment, and improve overall customer experience. Unfortunately, the traditional means of mitigating poor address data is solely through sched- uled, or at minimum one-off, batch cleansing efforts. While after-the-fact batch cleansing is extremely valuable for scrubbing large volumes of legacy or acquired address data, it is a downstream process with no ability to request additional information. The only way to guarantee that an address will be accu- rate and deliverable is to verify it during the data capture process — while the customer is still engaged online, on the phone or in person. Bad Address Data Is More Than Just A Nuisance Back in 2001, the U.S. Postal Service (USPS) formed the Mailing Industry Task Force which noted that the costs associated with Undeliverable-As-Addressed (UAA) mail totaled $1.9 billion each year. According to the Direct Marketing Association (DMA), this cost would amount to almost two cents on the First Class stamp if the costs were passed along to consumers. The DMA also estimated UAA volume in the year 2000, totaling 5.7 billion pieces of mail. According to the USPS, the majority of UAA Standard Mail is disposed of as waste — only a small percent of mail is endorsed for forwarding or return. In 2004, the USPS reported that it disposed of approximately 6 billion Standard Mail mailpieces at a cost of almost $248 million . While the wasted cost of the postage used to send undeliverable mail can be significant, that is only the tip of the iceberg when it comes to total impact. Organizations must consider the financial costs associat- ed with producing the materials shipped and, of course, the current and future opportunity cost when the ability to communicate with a customer has been lost. Address Data Is Leveraged Across Your Entire Business Usage of address information spans across your business and likely includes functions such as market- ing for customer communication, sales for account management, finance and order management for ful- fillment, privacy for communication preference compliance, and operations for customer service and sup- port. Joe Sacco, an IT Application Development Supervisor at Hastings Mutual Insurance Company shared that “Addresses are a key data element in insurance. We needed a solution to solve the issue of invalid addresses before they affected rating, billing, and customer service.” Examples of other prob- lems associated with bad address data include: • Wasted direct marketing costs. Returned mail from undeliverable addresses or mail sent to the incorrect individual at an old customer address will decrease the effectiveness of your marketing programs and can inhibit your ability to secure funding for subsequent campaigns. • Fulfillment issues. When a customer orders a product, either online or through your call center, they expect timely shipment and delivery. Incorrect address data captured during the order man- agement process will delay your ability to deliver these products, resulting in increased call vol- umes and poor customer satisfaction, and can easily drive your customer to consider a competitor. • Inability to perform credit authorizations. A billing address is required to perform either business or consumer credit worthiness checks with third-party credit bureaus. An incorrect address may not pro- vide a matching credit score, which increases your chances of extending credit to a high-risk customer. -3- Confirm The Quality Of Address Data As It’s Captured, Not Later • Non-compliance with privacy regulations. If a customer accidentally provides an incorrect address and opts out of communication at that address, there’s a chance that the customer’s actu- al address is already within one of your customer databases. How are you going to ensure market- ing communications are not sent to the customer at the alternate address on file? If you have decent audit trail and traceability capabilities, you may have legal protection to prove that the cus- tomer entered the incorrect address, but that does little to help you maintain customer loyalty. • Sending service personnel to wrong address. For example, inaccurate customer address data can cause big problems for telecommunication firms. When customers request a service call, repair personnel may be sent to old addresses or are not given valid addresses, which can lead to lower service technician productivity and angry customers to boot. • Inhibiting master data management (MDM), single view of customer. A customer’s address is one of the primary components for developing matching rules to create this single view of its cus- tomers. Customer-centric MDM capabilities are often enabled to facilitate recognition of your cus- tomers, including their purchase patterns, propensities to buy, and support contact history. This infor- mation can improve revenue up-sell and cross-sell opportunities and improve the customer experi- ence, increasing overall customer satisfaction. An incorrect address can inhibit your ability to match with a valid address, and you therefore run the risk of not recognizing your high-value customers. Batch Address Cleansing Alone Is No Longer Sufficient Batch address cleansing is valuable when high volumes of address data collected from a variety of dis- parate data capture systems need to be processed. Hundreds of thousands of addresses can easily be standardized, cleansed, validated, and enriched in a few short hours using a centralized data quality or address cleansing software or service solution. As an additional benefit, downstream batch cleansing is not invasive to the existing upstream data capture processes, allowing for business as usual in your call center, on your website or in your retail stores. Unfortunately, business as usual may be part of your problem. When you rely solely on downstream batch address cleansing, the individual providing the address infor- mation to you is no longer engaged. If the information this customer has provided to you is later found to be incomplete or incorrect, there is no easy way to confirm or request additional information. If insufficient information was captured at the source, there is often little a batch cleansing process can do to remedy — the address will most likely remain unusable. A common scenario is forgetting to provide an apartment number. Let’s say a customer lives at 21 Main Street in apartment #12, but only provides 21 Main Street as their street address. The batch cleansing engine cannot determine what apartment number should be assigned to this address, only that one is missing. The address will be flagged as incomplete, and you will not want to send valuable, and potentially personal or confidential, information to this address. Of course, you may have alternate contact methods for your customers with undeliverable postal address- es, such as phone numbers or email addresses. You can choose to launch a phone or email campaign to refresh this address information, but these efforts can be prohibitively expensive — and there are no guar- antees that the response rate will return the value you hope. Batch address cleansing should continue to play an important role in your data quality infrastructure, especially if you are required to process large non-transactional data sets. This bulk address data may arrive through merger and acquisition activity, from resale partners sharing customer lists or many other means. But to complement these batch processes, it is time to consider a real-time address verification solution to improve the quality and usefulness of address data as it is captured. -4- Confirm The Quality Of Address Data As It’s Captured, Not Later Who Knows An Address Better Than The Person Living There? It does not matter how much you invest in data quality software and services downstream; you have one, and only one, chance to guarantee the quality and usefulness of address data captured: when you are interacting with a person who lives there. Depending on your business, you may capture address data when customers call in to your call center, when they use your website, or when your sales repre- sentative meets them in person. In order to ensure your interaction with the customer is as effective as possible, you need to evaluate both the process and the technology. You must consider how and why the address information currently captured is not up to par. Common inhibitors to high-quality postal address data collection include: • No minimum required data standards. For an address in the U.S. to be deliverable, you need to provide street address, city, state, and zip code. Do you have any data capture processes that do not require customers and employees to adhere to these minimum standards? • Lack of incentive for call center personnel. Performance of call center agents is most often meas- ured by average handle time and call volume. The faster an agent can finish a call, the more calls they can field, the better they are doing. It’s very rare for a company to measure the quality of infor- mation captured during that call, and the incentive to get off the call quickly leads agents to increased typos and poor listening skills, and an increased risk that address data captured is incorrect. • Insufficient employee training. Even your best sales reps and call center agents who enthusiasti- cally embrace the goal of capturing high-quality data need some help. Ensuring they can recognize and identify simple mistakes like a missing street ending (e.g., capturing 123 Oakwood vs. 123 Oakwood Lane) or learning to ask if there is an apartment number can mitigate some simple yet costly errors. • Customer sloppiness — intentional. It’s true — customers may not want to provide you with their address if they don’t see how it directly benefits them. A common example is product registration. When companies require their customers to register on a website or by sending in a business reply card to enable certain benefits or capabilities, the customer often does so grudgingly. In these instances the customer may enter only the bare minimum they feel should be required — and will make up the rest. • Customer sloppiness — unintentional. If your customer is ordering a product that will be shipped to them or if they are proactively setting up an account with you, they are going to do their best to provide accurate information. But human error is always a factor, and a customer may make a typo or forget to include relevant information. • Poor focus on international address formats. Every country has its own postal service, and each postal service has its unique methods for servicing the huge volumes of physical addresses in its domain. It is imperative that you understand and comply with the local customs and data for- mats required to deliver mail within any country where you do business. • No systematic validation of address quality. Any front-end system that captures address infor- mation should be set up to confirm that minimum required data has been captured. Once the mini- mum required fields have been captured, a data quality service should be called that can verify that the address entered is actually deliverable. -5- Confirm The Quality Of Address Data As It’s Captured, Not Later Front-end Address Verification Software Allows Your Customers To Play A Key Role In Ensuring Their Data Is Accurate Front-end address verification software is a technology enabler that can be leveraged across any address data capture systems within your enterprise. By implementing this technology within the channels that are directly interacting with your customers — call center, web, in store, kiosks — you and your customers can partner to ensure the most effective use of their address information. This front-end address verification software offers the following advantages in real-time: • Address verification. Is the address captured recognized as a valid, deliverable address by the national postal service? If not, the software can prompt the customer or agent to recheck and confirm the data entered. • Directing address correction. The software can proactively guide the customer or agent to the sec- tion of the address in question. For example, if street directionals are missing (North Main Street vs. Main Street), improper street endings are captured (Oakwood Street vs. Oakwood Lane), house num- bers are incorrect (1000 Main Street is not a valid street address, maximum house number is 100), or that an address is an apartment or office building requiring apartment or suite numbers (123 Main Street, Apt #1), all this information can be confirmed before the data is entered into your system. • Address correction. If a correct street address, city and state are entered, but an incorrect zip code is entered, the software can derive the correct zip code and allow the customer or agent to confirm the update. • Address enrichment. To ensure most efficient delivery and additional applications of the address information captured, the software can add relevant information such as geocode assignments for lat- itude and longitude, county, and the zip+4 extension for nine-digit zip codes. Front-end verification software is currently being leveraged across many industries, with earliest adoption by those placing the highest value on customer interactions — healthcare, retail, financial services, public sector, and education to name a few. Valerie Smith, Vice President of Information Technology at skincare retailer Murad, Inc. shared, “To maximize our operational efficiency, we implemented address verification on our e-commerce channel so we have the ability to intelligently prompt our consumers to provide any miss- ing information before it has a chance to affect their orders.” Other common usage scenarios include: • Retail. These days most retailers have e-commerce channels for online ordering or call centers for phone orders. During the order process, customers provide billing addresses for credit card authoriza- tion and shipping addresses for order delivery. Front-end address verification enables retailers to ship orders in an accurate and timely fashion because the delivery addresses are verified before any oper- ational processes begin. This allows retailers to drastically reduce the time and money spent on returned orders. Also, if an address is incomplete, delivery companies such as FedEx or UPS will charge the retailer expensive address correction fees because extra work was done to get the ship- ment to the correct address. • Banks. In retail banking, front-end address verification is critical when a consumer goes into a branch to open a new account. The customer service rep in that branch can ensure the customer’s informa- tion is complete and correct during the account opening process. Typically products such as debit cards or check packs are sent as quickly as possible to the new customer. If an address is incorrect, the bank incurs unnecessary costs to re-send the materials, and the delay could negatively impact the new relationship with the customer. Also, when banking documentation is returned due to bad addresses, financial institutions have lengthy regulatory processes they must follow before they can change an address. Many banks must wait for customers to confirm the address change verbally and/or in writing before making any change. -6- Confirm The Quality Of Address Data As It’s Captured, Not Later • Government. For instance, state motor vehicle agencies maintain up-to-date address records for state residents, and their databases are typically tapped by other state agencies in need of this pertinent contact information. When residents visit motor vehicle branches to renew their licenses or register vehicles, front-end validation at the point of address capture helps employees secure an accurate address more quickly. Employees are also prompted to ask customers for missing or incomplete data, ensuring that only deliverable address data is populated in a state’s central data- base. When the motor vehicle agency needs to send critical documents to residents, or when another department such as voter registration or law enforcement needs to contact residents, their address information will more likely be correct. • Healthcare. Today’s healthcare system is plagued by an inordinate level of bad debt — specifically revenue that hospitals bill patients for but that is never collected. Often these lost funds are the consequence of patients not receiving bills for services simply because the address information on file for the patients is inaccurate. Front-end verification at the point of capture can ensure that a healthcare provider records an accurate, deliverable address for all patients, whether they are being admitted to the emergency room or visiting an out-patient clinic. Validation at address entry points streamlines the registration process for patients accessing professionals, helping them move patients along to the care they are seeking, while guaranteeing the quality of address data commit- ted to patients’ records. There are certainly data capture channels that are primary sources for address information that do not allow for real-time customer interactions. These can include business reply cards sent by customers through the mail or customers faxing order forms to a sales rep. There are likely extremely good busi- ness reasons for supporting these somewhat low-tech communication channels — the best reason being that your customers expect it of you. In these cases, you cannot leverage the benefits of front-end address verification software, but once again that is where your complementary batch cleansing solution can save the day. Once this address information is manually entered into your data repository of choice, you should run this data through your batch cleansing process to ensure the addresses are valid and deliverable. Recommendations Diminishing returns in downstream batch data quality investments will require new strategic approaches to data quality. Consider front-end address verification software as a complementary or alternative approach to ensuring the delivery of high-quality postal address data. ––––––––––––––––––––––––––––– 1 The Task Force subcommittee on address quality had members representing Acxiom, Prudential Financial, BankOne Card Services, Progressive Insurance, Pitney Bowes, Quebecor World, and Time Customer Service, Inc. The committee was co-chaired by Charles Morgan, Company Leader of Acxiom, and Postal Service Senior Vice President and Chief Technology Officer Charles Bravo. http://www.usps.com/strategicdirection/fall2002/ImproveAddressQuality.htm, http://www.dmadminstitute.org/cgi/disppressrelease?article=344 -7-
"The Quality Of Address Data As It's Captured_ Not Later"