USPS MOVE UPDATE COMPLIANCE STARTING NATIONWIDE MAY 2003
by Robert B. Swick,
Vice President Data Services, Anchor Computer, Inc.

Compliance is defined as acting in according to a set condition. In this case, compliance is acting in accordance to the rules and precedence set forth in the US Postal Services Classification Reform/Move Update regulation that came into being five years ago. At that time the UAA problem had burgeoned to over five billion pieces annually at a cost of $1.5 billion to USPS.

Little known (then and now) is the enforcement side of the regulation, Compliance. This element of the regulation authorizes the Postal Service to reclaim postage discounts given up front if the mail is found not to have earned its discount through specific work share efforts.

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 is given.

Specifically, ill-informed mailers and mail service providers’ state compliance to be the use of an approved database update process, for instance, NCOA or ancillary envelope endorsements (yellow stickies) 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:

• The act of applying the update information to one’s database from whichever acceptable Move Update service chosen.
• Keeping on file proof of service used and applied to the database. In the case of returned mail resulting from use of ancillary endorsements, this means keeping copies of the returned information (yellow stickies) 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.

Compliance upside. No sooner had the Federal Register announced the Postal Service’s intent to expand Move Update to include periodical and standard class mail than did an uproar begin claiming Big Brother’s heavy hand to small mailers. Nothing could be farther from the truth. Cleaning up one’s database, large or small, provides two net gains:

• Immediate cost savings
• Greater responses

Following is an NCOA example that uses rather conservative match rates and cost estimates. Plug in your own experience factors and compare results.

100,000 Record NCOA Example: New Addresses (4.50%) 4,500 records Nixies* (1.75%) 1,750 records Total Adjustments (6.25%) 6,250 records *An NCOA NIXIE is a record which almost matches a record in the NCOA database, but due to strict USPS name and address matching logic, a new address cannot be provided. Also included are records on a input client file which do not contain a house number.

Using these figures and an in-mailpiece value of $0.41 cents (postage and materials), the results translate to:

Mail Budget (100M x $0.41) $41,000 Less Adjustments (6,250 x $0.41) $2,562 Add Back Cost of NCOA $175 Net Reduction to Budget $2,387 Adjusted Budget $38,613 % Budget Reduced 5.8% ROI of NCOA Services 13:1

This example presents a favorable reduction in the campaign budget and an exceptional 13:1 return on investment ration. However, further benefit is gained when one evaluates the response generated from the 4,500 corrected and now deliverable records:

Corrected Records 4,500 Average Response Rate 2% Recaptured Orders 90 Revenue Orders (@ $55/Order) $4,950 Less Cost To Mail ($0.14 ea.) -1,845 Net New Revenue $3,105

In summary, employing the Move Update compliance process of NCOA for this hypothetical standard class mailing yielded the following overall benefit:

Cost Savings $2,387 Net New Revenue $3,105 Total Contribution $5,492

Note: Though Move Update presently is a First-Class mailer issue; this example uses Standard class postage to illustrate the upside to other classes that will fall 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 work share postage discount.

Compliance downside. If a postal service audit finds that the change information provided by the service selected wasn’t implemented, the front-ended work-share discount must be refunded.

In the example presented, the mailer budgeted postage at the Standard rate less a work -share discount of 6 cents per piece. (Note: although the example uses standard class instead of first class, the per-piece work-share principle holds and the discount would be essentially the same for a First Class mailing.) So, with a 6-cent per-piece value, a $6,000 postage discount was taken up front, and that’s the amount at risk in this case.

And the risk exposure may be greater based on present interpretation of the regulation. For instance, one convention is to limit reimbursement to the mailing in question while 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. It makes good economic sense to abide by the requirements of Move Update whether the mail goes into the main stream as First Class, periodicals or standard class. The upside gains in savings and increased response makes it foolish to do otherwise.

Communication void. Again, it’s surprising 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 can cost you money

The postal service is challenged to improve its outreach efforts and the first steps have been taken. USPS Suncoast District (Tampa, FL) helped me create a PowerPoint presentation on this important topic. To download a copy of this presentation, please click here. For further information on how you can make sure you are within USPS Move Update Compliance please call 888-728-6262 or email us at E@anchorcomputer.com .

THIS ARTICLE WAS WRITTEN BY BOB SWICK, VICE PRESIDENT DATA SERVICES ANCHOR COMPUTER INC. IT WAS PUBLISHED IN DM NEWS (12/02 Issue) AND MAILING SYSTEMS TECHNOLOGY (March/April 2003 Issue)

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