The True Cost of Not Using Address Standardization for Your Data

No matter how detailed your instructions are or how you restrict your input fields, some users will find a way to enter address data incorrectly. From the street label (street vs avenue), to the formatting (order of parts), to the street name, there are a number of opportunities for users to make a mistake (and they will!).

While this may seem like a small issue, it can have a significant impact on your business, costing you time, effort, and in some cases, a decent amount of money. You can get away from these issues entirely by using a tool like Placekey’s universal location identifier.

If you want to standardize addresses in a traditional way, we cover the following top reasons to standardize your address data:

1. Minimize duplicate data
2. Clean data in, clean data out
3. Save on mailing costs
4. Improve lead segmentation
5. Reduce fraud
6. Simplified application development

If you need more of a background on what address standardization is and why it’s important to do, see our ultimate guide to address standardization. Let’s dive into the potential problems you will run into if you don’t standardize your data, with explanations as to how address standardization will solve this issue for you.

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6 reasons to standardize your address data

Address standardization is a form of address cleansing through the process of converting addresses to a standard format. This is important for maintaining and indexing a database of address records, as well as for comparing records in different databases.

In practice, this will save your business time, money, and effort in a number of different ways:

1. Minimize duplicate data

Duplicate addresses can cause a number of issues, the most obvious of which would be shipping and billing errors. This can lead to customers being double-billed or receiving twice the product. 

It can also cause confusion, since duplicate addresses can lead to confusion about how many items were sent, resulting in an ‘unsent’ item, when the item has in fact been received. This can double your shipping, billing, and product expenses for each duplicate address.

Duplicate address data causes a much more fundamental problem though, which affects your customer segmentation and marketing efforts. Most advertising and marketing campaigns are built around customer profiles and personas, which are only made possible when you have accurate, reliable customer information.

Duplicate address data will negatively skew your customer analytics, making it much more difficult to advertise and market to your customers effectively. Overall, cleaning and address deduplication will greatly improve your ROI, as your marketing efforts will more effectively target your audience and will better reach your potential customers.

Example of how address standardization helps:

Address standardization ensures that addresses are not duplicated within your records. Knowing that your address data is correct allows you to ship and bill with confidence, as you don’t risk doubling your expenses.

More importantly, duplicate address data frequently results in poor lead segmentation. In turn, this affects your marketing efforts and ROI, as your advertising and outreach are built on poor demographics. Your segmented lists will be less accurate, as they will contain duplicates (sometimes at the expense of excluding other, valid addresses). This can lead to wasted marketing efforts, as you will be planning your outreach campaigns on incorrect audience data.

As you can see, what seems like a very small administrative issue can have a significant impact on your business, costing you double (or more) in lost product, shipping fees, billing errors, and customer segmentation errors.

Types of organizations this applies to:

• When database accuracy is critical to operations

2. Clean data in, clean data out

The main principle of ‘garbage in, garbage out’ applies to your data. If you are feeding your systems with poor, inaccurate data, you are going to get poor, inaccurate results. Without properly cleaning the address records in your databases, you are going to experience more errors when matching addresses, shipping, billing, segmenting customers, and analyzing market trends.

Example of how address standardization helps:

Preprocessing — or cleaning — your data prior to processing it will greatly improve your results. This allows you to refine your parameters, limiting the amount of information you process, which will significantly reduce your processing time. 

You can approach address cleansing in a number of ways to make comparisons easier:

• Additional spacing and characters: Removes any additional spacing and unnecessary characters within data.
• Standardized formatting: Convert labels (such as street labels and directions) to a standardized format for easy comparison. For example, “St” “St.” and “Street” are all converted to a standardized version prior to comparing addresses.
• Character case: Convert all characters to lowercase, so that character case does not impact a match score.
• Transposed characters: Reorder out of place characters, correcting small spelling errors to fix the address.
  

The best way to clean your data is to run scripts. You can use these to standardize, match, and query address information. While this automates the process for you and will run quickly, it does take significant computational power. When running many comparisons or querying a large database, this can still take significant time.

Preprocessing your data limits the quantity of data you need to process, so you can speed up your task. Overall, this will save you significant time processing irrelevant data and improve accuracy in your results, resulting in fewer manual reviews being necessary.

Types of organizations this applies to:

• When database accuracy is critical to operations

3. Save on mailing costs

Shipping costs can run very high, especially if you have to reship and redeliver items. Unfortunately, errors in mailing mean that you need to reship the items, and you will need to eat those costs. This will for sure mean you are out the original cost of shipping, and you will still need to reship (and potentially even pay for the item to be returned to you). For companies that deliver many items, these costs can add up quickly and significantly.

At the very least, incorrect addresses will double your shipping costs, as you will have to reship the item(s). At worst, it will cost additional shipping to first get the item back to you and could even tarnish your reputation with the customer. In some cases, the customer may choose to order from another service rather than rebuying from you, which could cost you future sales, or even the original sale that was shipped incorrectly.

Example of how address standardization helps:

By standardizing addresses prior to shipping, you ensure that you are using the correct formatting and style for the address. You also validate the address against an authoritative database (in the US, this is USPS), so you are confident that the address exists, is current, and will cause no shipping errors.

While address standardization solutions will cost you in service fees (if you buy from a third-party) or internal management fees (if you build out your own), they will save you significantly in re-shipping costs and potential damage to your reputation. This will also affect billing, leading to delayed payments and upset customers.

Types of organizations this applies to:

• Marketing
• Shipping
• Billing

4. Improve lead segmentation

With non-standardized address data, it can be extremely difficult to segment your leads. Address information won’t match, duplicates will exist, and it’s generally harder to find patterns in your addresses when they are not formatted and stylized the same.

If you are sending out promotional materials based on region, you want to be careful to include addresses that fit within your target prospects. If you don’t have accurate address information, you could send region-specific mailers out to people in the wrong area.

Even worse, your entire marketing campaign could be based on inaccurate lead data. If you have greatly misjudged the demographic you are marketing to, you are not likely to make a significant impact.

Example of how address standardization helps:

Normalized address information makes it much easier to segment your leads, as you can use components of the address to segment leads by region. With this information, you can gain information about their social and economic standing, as well as the demographics they likely belong to. With this data, you are better able to sort and target your leads.

This will save you significant time, effort, and money on your outreach campaigns, as you are able to better target your audience with your marketing and sales materials. This can save you on promotional initiatives and mailing, as you will focus on your target audience specifically, leading to a greater conversion rate and higher ROI.

Types of organizations this applies to:

• Sales
• Marketing

5. Reduce fraud

Incorrect address data can lead to fraud, or limit your ability to protect yourself and customers against it. When dealing with shipping and billing by mail, you will need to be concerned about both mail and reshipping fraud. 

Your promotional products could be resold. Even worse, mail sent to an incorrect address can result in providing malicious actors with personal information that could be exploited. This could theoretically put your customers in danger of being exposed to fraud.

Example of how address standardization helps:

The costs of fraud protection or reduction are often not realized until fraud occurs. Address standardization will actually help prevent fraud, as it will ensure accurate delivery of shipped products. Even more importantly, it will ensure that personal and private information is not sent to the incorrect address, potentially exposing your customers to fraud.

For certain types of companies, such as insurance and financial institutions, standardized address data is extremely useful in determining an authentic claim, assessing whether a home was affected by geographic conditions and is able to make a claim. It can also be used to determine the potential risk (and exposure) associated with an upcoming disaster. Accurate, standardized address data can limit fraudulent claims against you and allow you to protect yourself and customers.

Ultimately, reducing fraud saves you any lost revenue due to fraud, any chargeback fees associated with fraud, and any lost product. Beyond this, your business reputation could be significantly impacted if you expose clients to potential fraud (even unintentionally) by having incorrect address data.

Types of organizations this applies to:

• Insurance
• Financial

6. Simplified application development

If you can’t query a normalized database of addresses, you won’t be able to build applications or properly analyze those records. To get analytics that you can use to improve your service and extend your reach, you need to have reliable information in your database. To build out applications that integrate and work efficiently, you will need standardized address data.

Example of how address standardization helps:

Without having standardized raw data, you will need to convert formats in each database. Having normalized raw data, you can then build applications that communicate more effectively. By standardizing all data, you make it easier to build out your applications (as they can be built to handle the same address formats).

It also makes it easier for these systems to communicate with each other, when addresses are standardized. This will speed up query times in your database and make your information more accessible and usable.

Types of organizations this applies to:

• When database accuracy is critical to operations

If you think you could benefit from address standardization, we cover everything you need to know about how to standardize addresses in our other post. This will teach you how to use address standardization to address the issues we discussed above, so you can solve these problems, saving yourself time, effort, and money.

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Alternatively, you can use Placekey, a tool that renders address standardization unnecessary. With Placekey’s universal identifier for physical locations, you don’t have to worry about input and spelling errors on addresses. Placekeys are already standardized, and all addresses have been validated prior to being encoded. This means that you can use Placekey to gain accurate, extensive address and POI information, without requiring address standardization.