Return mail: The unexpected costs and consequences

Do you know how much returned mail is costing your credit union? It’s probably more than you think. Every piece of undeliverable mail — whether it be an important financial notice or monthly statement — causes financial strains on your company, can impact your relationship with members, and ultimately affect your bottom line.

Four point two percent of first class mail is returned

When we consider that 4.2 percent of all first class mail is returned, the effects can be a financial burden on your company in many ways. Returned mail reduces cash flow that is essential to maintaining an efficient billing process and streamlined member communication. Many credit unions resend information to a single undeliverable address multiple times until it catches the attention of someone in the mailing department. Repeating this costly cycle ultimately leads to a reduction in profit.

Internal labor

Returned mail impacts more than just external cash flow. Consider the internal labor costs associated with opening, processing, and disposing of each piece of returned mail. If your staff is spending valuable time handling returned mail, causing other important tasks to be neglected, returned mailed is ultimately draining your most needed resources. There are also material and mailing costs to consider — including paper, envelopes and perhaps the costliest expense: postage.

Lost business relationships

Member satisfaction and a professional reputation are core principals of success within the credit union industry. If statements and important financial notices are being returned as undeliverable, it means these documents are never reaching the intended recipient. Members who incur late fees due to incorrect addresses may abandon their relationship with the credit union. People move at the rate of 12 to 17 percent per year and only 60 percent of them update their new address with the United States Postal Service in a timely manner, creating the opportunity for future error.

So how can you prevent these issues and ensure you don’t lose money, time and relationships because of returned mail? The best strategy is to track the number of undeliverable items, discover which members are receiving multiple undeliverable pieces and take action. Maintaining a high quality mailing list by removing bad addresses is essential to ensuring future mail is sent to the correct address.