Reduce Your Return Mail by One Third! National Postal Forum Nashville TN March 20–23, 2005 Jan Caldwell, Address Management Sharon Harrison, SBC Liz Weber, Capital One

ADDRESS QUALITY OPPORTUNITIES ADDRESS QUALITY OPPORTUNITIES Customer Contact with Business Customer Address Changes Business Generates Mail Business Enters Mail USPS Accepts Mail USPS Processes Mail USPS Delivers Mail 2

Reduce Your Return Mail by One Third! Sharon Harrison, SBC

SBC COMPANY OVERVIEW SBC - Global Telecommunications Company Mailing 30M+ Customer Bills each month Two Mail Manufacturing Facilities West Sacramento & Houston Annual USPS Postage from SBC = 125M+ REDUCE YOU RETURNED MAIL BY ONE THIRD

Reduce undeliverable-as-addressed (UAA) mail to ensure customer bills are delivered accurately & timely! Ensure bill mailing address is compliant to USPS addressing standards to reduce cost and improve deliverability. QUALITY ADDRESSING GOALS REDUCE YOU RETURNED MAIL BY ONE THIRD

RESOLVING THE PROBLEM SBC Quality Studies defined: Need to get the correct address at the front-end of the process! Improve 30% of addresses during initial capture on front-end ordering validation system using CASS/DPV (USPS certified systems) Coding Accuracy Support Systems Delivery Point Validation REDUCE YOU RETURNED MAIL BY ONE THIRD

DEFINED OPPORTUNITY Reduce calls to/from business offices Reduce calls to/from collection offices Reduce mailing (postage, material, production) costs for products mailed Improve postage discounts on address match Reduce cost for returns managed Improve cash flow Meet USPS address standards/requirements REDUCE YOU RETURNED MAIL BY ONE THIRD

ADDRESS IMPROVEMENT STRATEGY/ PROCESS 1. Track the amount of returned mail received 2. Determine average return rate for industry 3. Identify percentage match rate for CASS 4. Obtain support from company Quality Teams 5. Evaluate reasons for mail returned using internal sources/USPS data REDUCE YOU RETURNED MAIL BY ONE THIRD

ADDRESS IMPROVEMENT STRATEGY/ PROCESS 6. Perform follow-up study (90 days later) to evaluate total business impact 7. Document customer impact (disconnects, additional calls, loss of customers, etc.) 8. Identify business cost/savings with reduced calls, customer impacts, mailing costs, etc. 9. Identify solutions for incomplete/inaccurate addressing with front-end validation REDUCE YOU RETURNED MAIL BY ONE THIRD

ADDRESS IMPROVEMENT STRATEGY/ PROCESS 10. Evaluate address fields/lengths to ensure space to support validation results 11. Evaluate technology solutions and identify potential cost 12. Identify business savings opportunity 13. Obtain Executive Management and Financial Teams support to evaluate business opportunities and savings to approve plan REDUCE YOU RETURNED MAIL BY ONE THIRD

ADDRESS IMPROVEMENT STRATEGY/ PROCESS 14. Develop a technology model for validating address data - ensure override capability for new addresses not yet defined 15. Ensure representatives are trained to ensure optimal performance of tool for deployment 16. Evaluate performance once deployed to ensure returned mail reductions REDUCE YOU RETURNED MAIL BY ONE THIRD

CHALLENGES Multiple organizations impacted across SBC Size and scope of SBC systems to modify field length changes CASS/DPV functionality not separated Ordering system screen limitations Multiple legacy systems/applications with non- centralized customer database and data feeds Interfacing with outsourced systems New/emerging systems REDUCE YOU RETURNED MAIL BY ONE THIRD

MEASURING SUCCESS Returned mail volumes - reduced over 30% Improvements in CASS matching Reduction of mailed pieces Reduced customer calls & complaints REDUCE YOU RETURNED MAIL BY ONE THIRD

Capital One, USPS, and ACS Change Service Requested – Option 2 Liz Weber, Capital One

Capital One began using Change Service Requested in Sept 03 when we entered into an NSA with the USPS n Due to our large 1 st class volumes, Capital One has proportionately large return mail volumes n Without the Change Service Requested endorsement 1 st class UAA pieces are required to be physically returned to the mail owner n Prior to the NSA we have always captured our physical returned pieces CAPITAL ONE, USPS, AND ACS CHANGE SERVICE REQUESTED – OPTION 2 Continue…

n Change Service Requested – Option 2: n This endorsement is an indicator to the USPS to capture the mailpiece return information electronically n Thus allowing for the USPS to destroy those physical mailpieces as opposed to transporting them back to Capital One n If it is a COA record the mailpiece is forwarded to the new address on file n An ACS COA notice is provided back to Capital One with the new address CAPITAL ONE, USPS, AND ACS CHANGE SERVICE REQUESTED – OPTION 2

We tested into Change Service Requested prior to the full implementation of the NSA n Initial testing showed electronic return rates lower than what was expected n Capital One partnered with the USPS to diagnose potential causes n The USPS created training documentation for the field to ensure proper handling of all Capital One 1 st class return mail CAPITAL ONE, USPS, AND ACS CHANGE SERVICE REQUESTED – OPTION 2 Continue…

n Capital One created internal training documentation around the production elements to ensure proper formatting on all our 1 st class mailpieces n Additional testing performed with an adapted endorsement to improve electronic return percentages n Mutual reporting shared on a monthly basis identified differences in capturing the return percentages Electronic Return Percentages moved from 60% to 85% CAPITAL ONE, USPS, AND ACS CHANGE SERVICE REQUESTED – OPTION 2

Return mail volumes declined significantly from 03 to 04 despite an initial spike in return volumes in early 04 n Early 04 testing with an adapted endorsement failed, which initially increased our physical return mail volumes n Even with that increase in return mail we still achieved an overall decrease in the amount of mail being returned CAPITAL ONE, USPS, AND ACS CHANGE SERVICE REQUESTED – OPTION 2 Continue…

n COA Records updates account for much of that decrease n Prior to our implementation of ACS we did not have insight into the mail which was forwarded n With this implementation, COA information is sent to Capital One on a daily basis and our system is updated in real time n This allows us to make the next contact with that potential customer in a more timely manner CAPITAL ONE, USPS, AND ACS CHANGE SERVICE REQUESTED – OPTION 2

Return Mail 2004 * Return with COA data indexed to 100 There is a wealth of information when you have access to the COA data…..

Return Mail Postage Spend Comparison *2003 data indexed to 100 ….as well there is a significant reduction in postage spend when applied appropriately.

In addition to mailing more efficiently we have achieved other savings n The returned physical pieces sent to our return mail supplier has decreased substantially, creating an operational savings of $1MM n We have been able to use this data to create a suppression strategy based on the nixie codes received thus creating additional savings CAPITAL ONE, USPS, AND ACS CHANGE SERVICE REQUESTED – OPTION 2 Continue…

n Additional benefits: n Real time data - A file is pulled on a daily basis and loaded into a Capital One database n Fresh address data n Additional analysis opportunities CAPITAL ONE, USPS, AND ACS CHANGE SERVICE REQUESTED – OPTION 2

The implementation of ACS has been mutually beneficial to the USPS and Capital One n Partnering with the USPS early on in the process allowed for a successful rollout n Monitoring performance on a monthly basis, has steadily increased performance n Savings have been realized by Capital One through the use of the data CAPITAL ONE, USPS, AND ACS CHANGE SERVICE REQUESTED – OPTION 2 Continue…

n The data has also allowed Capital One to invest postage $ more efficiently n The USPS has been able to cut transportation costs by not having to physically return those UAA mailpieces CAPITAL ONE, USPS, AND ACS CHANGE SERVICE REQUESTED – OPTION 2

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