Address Validation: Why It Matters More Than Ever

Think of all the important steps in your company’s revenue pipeline: lead generation, qualifying prospects, building a sales funnel, nurturing customer relationships. Now, let me throw in one more step that ranks up there with all of these, that many people never talk about: validating your contact data.

Validating your customer and prospect addresses sounds about as glamourous as flossing your teeth or eating your vegetables. But in this article, we’re going to explore why it is often a painless step that has a real, substantive impact on your company’s revenues – and why you should be doing it nowadays if you sell to customers.

Address validation and front-end costs

A little history lesson here: once upon a time, many businesses simply accepted a certain percentage of bad addresses as a cost of doing business, much like farmers expected bad eggs or ears of corn. After all, addresses have a surprisingly short half-life: around 25% of them change every year with things like moves, job changes, passing on or retiring to Italy. In the US alone, there are over 3 million moves per year, and according to a 2015 study by the Data Quality Index, up to 40% of marketing leads have bad or incomplete data.

Then there are also bad actors who intentionally fake you out with bogus contact information, often when you are offering a free marketing goodie as a lead magnet. All of these bad addresses have a cascade of front-end costs associated with them, ranging from the human effort of servicing non-existent leads to the costs of extra printing and postage for direct mail.

Customer satisfaction and brand reputation

Suppose that just one percent of your holiday shipments to customers were mis-delivered? If you were Amazon.com (one of our customers, by the way), that would translate to nearly half a million unhappy customers per month – and beyond the obvious costs of making it right, your brand image could take a serious hit very quickly in a world of social media.

There are similar concerns on the marketing side of the equation as well – for example, television personality Carol Roth once famously wrote about companies who marketed to her believing she is (a) pregnant and (b) male (she is neither). Stop paying attention to wrong and ever-changing addresses, and your marketing reputation can become tone-deaf very quickly.

The role of addresses in regulatory compliance

In some business sectors, accurate addresses serve as proof of serving customers in specific geographic areas. Address validation can ensure that your business is meeting address-based requirements in cases like these, such as compliance with lending regulations or other geographically-based legislation.

Address verification and fraud prevention

E-commerce fraud now costs businesses US $1 billion annually in the US alone, and merchants report a 140% increase in fraud attacks since 2020, particular as more and more transactions move online. Sometimes an address is meant to be incorrect – particularly when fraudsters set up bogus addresses as cover for fake orders to be delivered elsewhere. Address validation can flag addresses that don’t exist or don’t correspond to other information such as a customer’s IP address.

Why addresses suddenly matter

As we hinted earlier, for years many businesses tolerated a certain percentage of bad contact data, perhaps cleaned up periodically, and often in response to errors. So, what has changed?

The answer is simple: the emergence of automated, cloud-based software for address validation. Today we have cost-effective address validation solutions that are easy to implement, work directly within most business automation platforms, and are like putting the entire world’s postal systems inside your application.

As these tools became routine, easy to implement, and affordable, it made no sense for customer-facing businesses of any substantial size to keep incurring all the costs of bad contact data quality – and ignoring this issue now puts firms at a substantial competitive disadvantage.

An example of a business-grade address validation solution

What kinds of capabilities should you look for in an address validation solution for mission-critical applications? Here is an example of the capabilities in our own DOTS Address Validation suite of products, including versions for US, Canadian and global addresses.

First and foremost, these products puts the power of the world’s postal systems – including USPS and Canada Post – right in your contact data applications. They integrate with business automation platforms such as CRM, marketing or order processing systems using API interfaces, to help capture and process input mailing addresses such as leads, prospects, or customers.

In milliseconds, these products then validate, correct and append these addresses to provide deliverability and compliance with postal standards before they are added to your database. For example:

• Using up-to-date postal data, validate addresses as accurate and deliverable.
• Correct common spelling and syntax errors to make mistyped addresses accurate.
• Append missing data such as ZIP or ZIP+4 codes in the US, or Canadian postal codes.
• In the case of US addresses, return USPS data such as Delivery Point Validation (DPV) (flags address deliverability), Residential Delivery Indicator (RDI) (whether an address is a residence or business, allowing you to take advantage of postal discounts), SuiteLink (adds apartment and suite information) and Delivery Barcode Digits (for lower postage costs and easier duplicate address removal).
• Format addresses in the correct format required by postal or delivery services, for over 250 countries.

These products gives you near real-time validation of addresses at the point of data entry, for all of your contact data touch points. In addition, batch processing options are also available for cleaning and updating existing address databases.

In closing

For an increasing number of businesses of all sizes, address validation of incoming contact addresses has become a competitive and financial necessity. However, it has also become an automated and easily implemented function within a typical business data flow. By looking at the full range of benefits, businesses can help determine how these capabilities can best benefit their own contact data assets.

About the Author: Rob Manser is Senior Digital Marketing Manager at Service Objects, a Santa Barbara, CA-based firm providing industry-leading contact data validation solutions. Its customer base includes major firms such as American Express, Microsoft, and Amazon, and as of 2022 the company has validated over five billion addresses for clients. Visit them online at www.serviceobjects.com.