How much can you save with the validation of addresses?

WHAT AN UNSUCCESSFUL DELIVERY REALLY COSTS YOUR COMPANY

Every day billions of products are shipped worldwide via the postal service or private courier services. Of this enormous amount of goods, some will not arrive at their destination due to an extremely common error: an incorrect address. There are dozens of reasons why this happens. Typos and data compilation errors during online purchasing (e-commerce), failure to update postal/zip codes, incomplete addresses in the company database … It’s called data quality and it is the reason why some companies stand out in the eyes of the customer and why some don’t. A periodic review of postal addresses, as well as an immediate control during purchases or registration, eliminates this problem at the source, avoiding unnecessary waste of resources and money. But just how much do those who choose to normalize postal addresses and postal/zip codes save? Read on to find out the answer!

 

We tried to calculate the average cost of an unsuccessful delivery for a company that sells through ecommerce in Italy. Our intention is not only to quantify an exact figure (there are hundreds of parameters), but rather to offer a complete overview of the consequences for the company. When a package is “undeliverable”, the vast majority of couriers try to contact the recipient by phone. If the latter cannot be reached or does not answer, the package either remains in storage or is returned to the sender. The recipient is convinced that there has been a mistake, and they will not hesitate in chasing up the company about their goods. This leads to waste of resources in providing answers, contacting the courier service and recovering the goods. Rarely will the company have to bear the cost of a new delivery, but without a doubt it will spend a great deal of its time trying to sort the problem out. Let’s assume that the hourly cost is 20 Euros gross, and that it takes 30 minutes to solve the problem. We would therefore have thrown away 10 Euros just to get back on track, a fixed cost that does not yet take customer satisfaction into account…

The KNOCK-ON EFFECT OF A DISSATISFIED CUSTOMER

The real consequences of an unsuccessful delivery are perceived at a later date, when the customer decides to take action. The greater the delay in resolving the problem, the greater the customer’s commitment to seeking compensation. If we calculate that for every 1,000 shipments, 1.5% will not be delivered (indicative number), we will have 15 potentially dissatisfied customers. Of these, let’s assume that 10 don’t want to buy anything else from us; 3 remain indifferent; and 2 take the trouble to share their negative experience on a few social networks or consumer opinion platforms. This is where the real damage emerges, because in the long term the review will be read by an ever-increasing number of users, resulting in potential customers that are interested in our products changing their minds. Here is a summary outline in which we compare the consequences of correct delivery (with a normalized database) and erratic delivery (with a database that is yet to be normalized).

COMPARISON OF 2 DELIVERY MODELS
1.000 successful deliveries	1.000 successful deliveries with 1,5% errors
Conseguenze: maggior soddisfazione dei clienti ottimizzazione delle tempistiche nessun commento negativo legato a errori nella spedizione miglior impiego delle risorse interne	Conseguenze: 15 clienti insoddisfatti 150 euro di costo/orario danni di immagini passaparola negativo (meno conversioni future) dispendio di risorse interne