Mail operations managers often consider mishaps such as double-stuffed accounts, empty envelopes, mismatches, and jams in terms of the time and material it takes to remedy mistakes discovered during document production. Corrective actions can be extensive. Entire print runs might have to be scrapped and reprinted. Operators must clear jams and inspect envelopes to manually assemble mailpieces while the equipment sits idle. Extra materials might have to be rush-ordered to handle reruns.
Even worse, some errors make it into the mailstream undetected.
Then the impact reaches beyond the mail center. For an example, see our May 12, 2016 newsletter "
Mailing Vendor Blamed for Error". The rest of the mailing organization, its clients, and ultimately the mail recipients, are all affected by inserting mistakes. Document Data Solutions recently released our Inserting Error Cost Calculator to provide mail service providers with an overall view of how mailpiece assembly and distribution errors affect all the involved parties.
According to research published last year by The Berkshire Company, mail service providers suffer an average mailing error rate of roughly 1.79 for every thousand finished envelopes. In most industries an error rate this low would be exceptional. In the mailing business, missing pages, unsealed envelopes, missing or incorrect collateral inserts, or mixed documents can be expensive if it happens only once a day - or even once a month!
Calculating the Real In
serting Error Costs - Direct Mail
When a mailing vendor receives complaints from a client concerning missing or mismatched documents, they start investigating. Our calculator includes user-entered estimates for the cost to do the research and then report back to the client. It doesn't take long to spend $50 - $200 worth of otherwise productive time. If mail service providers make billing adjustments or rerun a job to appease an upset client, errors are even more expensive.
Mailers we've spoken with have told us mailing errors have cost them several thousand dollars in labor time, lost business, and reprint costs.
Damaged documents represent another expense for both mail service providers and their clients. Most operations recreate and re-mail damaged documents manually. We assigned a cost of $1.50 to account for the time necessary to reprint personalized pages, manually assemble mailpieces, and apply full-rate postage.
The real expense of inserting errors includes costs absorbed by the document originator. For direct mail, lost revenue can be easily estimated by multiplying the average order size by the number of errors. Assuming direct mail converts at a rate of 3.5% we can estimate the portion of those incorrect or missing documents that would have generated sales. Our cost calculator reports client revenue separately from service provider expenses.
The Impact of Inserting Errors - Transactional
Transactional document errors are typically investigated on a per-document level. Mail center clients want to know why a particular customer's document was wrong and which other customers might be similarly affected. The cost calculator's section for transactional mail asks users for an estimate of their research and response effort for a single document. Even the briefest quality control review and client response will consume $10 - $20 worth of a mail center manager's time.
Errant transactional documents are costly for clients. Mailed envelopes might contain private health or financial information, exposing mailers to consequences for non-compliance. The Office of Civil Rights (OCR), which enforces HIPAA rules, lists
73 paper-based breach events reported over the last 19 months. When transactional document integrity errors occur, client damages can be considerable.
HIPAA fines can range from $1000 per violation to $50,000 if the violator did not exercise due diligence to prevent a breach.The DDS Inserting Error Cost Calculator uses values provided by the mail service provider to estimate client financial impact when transactional documents are improperly prepared or not delivered on time. If civil or criminal penalties for regulatory infractions are applicable, they will add to the damages.
Consumers regard mailed communications as more trustworthy and secure than digitally delivered documents that are hacked and spoofed every day. Mail service providers must be able to assure clients their mailpieces meet consumer expectations by properly assembling them, and verifying each piece was mailed on time. As the calculator shows,proceeding without tools tailored to prevent or intercept inserting errors is expensive.
