The Impact of Returned Mail

Posted by PBBI on September 24, 2009 in Mail

In this post we interview Mike Cooper, Managing Director of Emerging Business Opportunities at Pitney Bowes. Over the past year, Mike has met with organizations across the country, gaining first-hand insights on how returned mail can impact bottom line results.

Who should be concerned about return mail?

Mike: It’s a problem that affects every organization. In the US, 2.5% of First-Class Mail is returned every month.  In Canada, it can be as high as 4% – 5%.  And we’re talking about important customer communications, such as bills and checks.

It touches so many customers, why do these problems linger?

Mike: Most organizations we visit have traditionally looked at return mail from the perspective of the mail room.  Mail is returned, corrected, resent.  People calculate what it cost to resend mail then just assume it’s a necessary cost of doing business.  They assume that the mail room costs are the only impact.

But the impact goes beyond the mail room?

Mike: Absolutely. The bulk of the costs associated with returned mail are incurred outside the mailroom. The fact that returned mail impacts so many departments, though, can make it difficult to quantify.  Five percent of incoming cash could be delayed for a month or longer, which has a huge impact on borrowing and cash flow.  Call centers will spend $5 to $20 contacting customers by phone to follow-up on bills and checks that were never received.  We’ve even uncovered insurance companies that were losing customers worth $500 sales because they simply lost contact with them.  And these are just a few examples. 

Given that it might take 40 days or more for the physical piece to actually be returned, it’s a reoccurring problem, too.  In many companies we’ve studied, nearly half of the returned mail had already been returned at least once before – but unless you make process changes, you just can’t deal with the problem in a timely manner.  In a large organization, the total cost or returned mail can quickly reach the mid-seven figures.

What are some areas where improvements can be made?

Mike: First, you want to eliminate the physical handling of returned mail.  It’s slow, expensive and prone to error – so you need to understand which functions could be handled electronically.  Secondly, the USPS offers a number of technologies that help organizations identify problems and deal with them sooner, and we help our clients leverage processes and technologies more effectively.

What advice would you give mailer today?

Mike: In many companies, the sheer size and scope of the returned mail problem can be daunting – and some use that as an excuse to avoid taking action.  In actuality, given the budget pressures that everyone faces these days, the size and scope of this opportunity should be the reason why it should become a high priority initiative.  Some companies have literally saved millions by addressing this head on.

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