An Ounce of Prevention

One of the most hated calls to customer service is the WIZMO question: Where is my order? Many retailers have dealt with that question by installing order-tracking links to package delivery companies’ Web sites. But while that technology has diminished WIZMO calls, it hasn’t eliminated them.

With sophisticated shipping technology and tracking procedures, many retailers had thought they had driven a stake through the heart of WIZMO. But WIZMO lives on. One of the biggest reasons: customer error in entering delivery address information.

Huh? Don’t customers know their own addresses? As a matter of fact, as many as one-fourth of addresses that consumers enter into order forms on e-retail web sites have errors, according to companies that provide address correction software. The most common errors are incorrect ZIP codes and misspelled addresses for gift purchases being sent to an address other than the buyer’s.

Fix—for a fee
The delivery companies will take care of the problem—for a fee. At a cost of about $10 per package, they will re-route the package to the correct address, if there is enough information on the label to deduce the correct address.

Nonetheless, quality of implementation is important in preventing drop-offs. “For us, the value of reduced resends outweighed a very small percent of abandons,” Baly says. “I’ve seen address verification implemented poorly on a few sites, so I think it could be a significant prompt to exit when the step is not communicated clearly and if the process does not implicitly assist the visitor.”

Those $10 charges add up, retailers report. In the first half of last year, Overstock.com Inc. spent $83,000 in re-routing costs to ensure that 8,300 packages with wrong addresses could get where they were supposed to go.

And then there are other fees associated with incorrect addresses. Shari’s Berries, a retailer of gourmet, chocolate-dipped strawberries, spends $25 on carrier fees and its own handling costs of each incorrectly addressed package that it must re-send.

Where there’s a cost, there’s a vendor with a solution. In this case, the solution is address correction software that flags address errors and asks shoppers to enter the correct address. Some work as the shopper inputs the address, prompting for corrections immediately and suggesting fixes; others check for errors after the order has been submitted and return the shopper to the address page to fix any problem areas.

For time-sensitive deliveries, the reputation issue is even more critical. Shari’s Berries, which has used Melissa Data Corp.’s address correction software since 2004, believes that more accurate delivery reflects positively on the company’s reputation, says Dustin Baly, marketing manager.

In fact, that was an aspect that Shari’s Berries specifically wanted to measure with the implementation. “We have quantified our improved brand reputation to deliver gifts on the exact dates that a customer chooses. These dates quite often coincide with important events such as birthdays, Valentine’s Day and Mother’s Day,” Baly says. “There is not a delivery window; it is all next day, not sometime next week.”

And, he notes, customers do notice when a package is delayed. “We get customer calls because they babysit our product.” Baly says installing the address correction software reduced calls to Shari’s Berries’ customer service center by 5%.

No tripping point
Given that e-retailers find adding a step to checkout, no matter how benign, causes some buyers to abandon a purchase, Overstock carefully monitored the drop-out rate of shoppers filling in address forms. “That’s a very sensitive issue with us,” Tryon says. “Every change in checkout will affect whether a customer will buy.” But, he adds: “Drop-offs were not significant. When we weighed it against the reduction in other costs, it was worth it.”

Although such software has been available for some time, the online retailing industry has yet to embrace it widely. Melissa Data, for instance, counts about 500 online retailers using its address verification software, reports Greg Brown, director of marketing.

Part of the reason the market had not heated up before is that many online retail businesses, especially mid-sized and smaller retailers, are run by entrepreneurs without a lot of experience in the direct marketing business. They may not even be aware that delivery companies are fixing addresses and charging the retailer for the fix.

Such charges may have gotten buried among other charges and they were few enough that no one paid attention to them.

“As a retailer grows, areas that were not a big deal before become a big deal,” says Rob Karel, an analyst who follows data correction vendors for Forrester Research Inc. “It’s possible to absorb address re-routing charges without realizing how much you are spending on them. Especially for mid-sized retailers who have experienced rapid growth, by the time it becomes unaffordable, it’s a big problem.”

Fixing the call center
Entry-level cost of the Melissa Data product is only $3,200 per year. Melissa Data offers their software on a licensing basis for installation and operation by the retailer and with a web services option.

Melissa Data recently rolled out a guarantee that the retailer will recoup the cost of the investment in four months or Melissa Data will refund the cost.

While customer input is prone to errors in entering data, that is not the only source of address mistakes. Mistakes also come through customer service reps who can mistype data, misunderstand a customer, or are simply inputting incorrect data that the customer has provided. Some retailers have moved their customer service reps to web-based data input so call center errors can get the same red flag treatment that customer data input gets.

Whatever its source, bad addresses will cost e-retailers money.

---Source: Internet Retailer Magazine June 2009 (www.internetretailer.com). Kurt Peters is vice president of Vertical Web Media LLC. Reach him at kurt@verticalwebmedia.com.