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helpIT Feedback to Royal Mail PAF® Consultation

On 14 June 2013, Royal Mail launched a consultation on proposed changes to the Postcode Address File (PAF®) licensing scheme and invited contributions from anyone affected. Said to “simplify…the licensing and pricing regime”, helpIT has concerns that the proposed changes would negatively impact direct mailers. As a provider of data quality software to more than 100  organisations that would be affected by such changes, helpIT systems notified customers, collated their input and drafted a response on their behalf. The Consultation is now closed but you can read more about the PAF® licensing options here.

Below is a summary of the feedback submitted to Royal Mail and the kind of feedback received from our customers which mirrors our own concerns.

Q.1: Do you agree with the principles underpinning PAF® Licence simplification?

We are a major provider of PAF address verification software for batch usage – our users are a mixture of service providers and end users who use PAF software embedded within our broader data cleansing solutions. Our feedback includes feedback from many of our users who have replied directly to our notification of the consultation, rather than reply via your portal.

We agree with the principles except for no. 6, “to ensure that current levels of income derived from PAF® licensing are maintained for Royal Mail”. In addition, although we support no. 8, “to seek swift deployment of a PAF® Public Sector Licence”, we feel that free usage should be extended to the private sector, or at least made available to all private sector organisations at a small flat fee of no more than is necessary to cover administration of the licence and to discourage users without a real need.

Q.2 Are there other principles that you believe should underpin PAF® licence simplification?

Royal Mail should follow the example of postal providers in other countries who have made PAF free for users, which (unsurprisingly) is proven to result in improved address quality  and lower sortation and delivery costs through higher levels of automation. We believe that in the UK too, these reduced costs will far outweigh the loss of income by eliminating or reducing the income received from PAF licensing.

Q.3 Do you agree that these are an accurate reflection of market needs?

The market needs an efficient and cost-effective mail system – this principle is not mentioned! Royal Mail’s approach should be to encourage use of direct mail and delivery of goods by mail. It should focus on reduction in handling costs to more effectively compete with other carriers, rather than increase prices in a vain effort to improve profitability.

Q.5 Is the emergence of ‘Licensee by Usage’ as a preferred model reasonable when assessed against the principles, market needs and evaluation criteria?

For reasons stated above, this model does not fit the market needs, or Royal Mail and the UK economy’s fundamental interests. If a usage-based charging model is adopted for batch use of PAF, at the least we would not expect to see a transaction charge applied to a record whose address and postcode are not changed as part of a batch process, as in our opinion this will deter usage of PAF for batch cleansing and directly lead to a lower return on investment for use of mail. Even if this refinement is accepted, this will increase work for solutions and service providers, end users and Royal Mail in recording changed addresses/postcodes and auditing. We have a large, established user base that has made use of PAF, particularly for batch address verification, essential to maintenance of data quality standards. Any increase in charges to our user base will result in decreased usage and the more significant any increase, the higher the dropout rate will be amongst our current users and the lower the take-up from new users.

Typical feedback from an end user is as follows:

We currently use a Marketing Data Warehouse which is fed from transactional databases for Web, Call Centre and Shop transactions. The addresses captured in these different systems are of variable quality, and includes historical data from other systems since replaced. Much of it is unmailable without PAF enhancement, but we are unable to load enhanced/corrected address data back to the transactional systems for operational reasons. This Marketing Data Warehouse is used to mail around 6 million pieces a year via Royal Mail, in individual mailings of up to 600,000, as well as smaller mailings. The quality of the data is crucial to us in making both mailings and customer purchases deliverable. Our Marketing Data Warehouse is built each weekend from the transactional systems, and as a part of this build we PAF process all records each weekend, and load the corrected data into the database alongside the original data. It’s not an ideal solution, but is a pragmatic response to the restrictions of our environment, and enables us to mail good quality addresses, and to remove duplicate records (over 100,000). If we simply count the number of addresses processed per week, at 1p per unit, this would be completely unaffordable. Should this happen we would have to re-engineer our operations to remove redundant processing. Also, when a new PAF file was available we would still have to process the whole file (currently around 2.6 million records), at a cost of £26,000 assuming the minimum cost of 1p per record. This is again unaffordable. It is not in Royal Mail’s interests to price users out of PAF processing records in this way. We therefore urge Royal Mail to reconsider their proposals to ensure our costs do not rise significantly.

Typical feedback from a service provider is as follows:

95% of our PAF usage is to achieve maximum postage discount for our clients. We would either enhance an address or add a DPS suffix to an address.  Therefore, the primary principle of PAF is to assist with the automation of the postal process.  Reading through the consultation document there is very little discussion surrounding PAF and postal system. All the working examples are for call centres. In paragraph 10 of the consultation document, Royal Mail acknowledges the wider use of PAF in areas such as database marketing, e-commerce and fraud management.  However, these areas have no additional benefits to Royal Mail.  On the traditional mail side, Royal Mail directly benefits from the automation of the
postal system through the use of PAF validated addresses.  If Royal Mail wish to promote mail and strive for full automation in the postal system then they should be encouraging the use of PAF validation by mail customers.

There is also a potential conflict of interest for Royal Mail. The more changes they make to PAF then the more revenue they could generate from address updates.  Worthwhile having some limits on the number of addresses that can be changed in a year or at least some authority checking on the necessity of the address changes. I believe there is a conflict of interest with Royal Mail being both the provider and an end user of PAF (through mailing system).  It would be better to have the administration and selling of PAF as an independent organisation.

Q.6 Do you believe that a different model would better meet the principles that underpin licence simplification?

Yes, a flat rate payment model.

Q.9 Are there any further simplification or changes that might be required?

Due to the short notice for the consultation period, during a holiday period, and the lack of notice provided proactively to us as a solutions provider, we can’t currently comment on this except to say that it is probable that changes will be required.

Q.10 Are the ways you use PAF® covered by the proposed terms?

Same answer as Q9.

Q.13 Do you think Transactional pricing is an appropriate way to price PAF®?

As explained above and made crystal clear in the typical responses from two of our users, transactional pricing is NOT an appropriate way to price PAF for batch usage. It will simply lead to a large exodus by batch users of PAF and a significant reduction in the use of direct mail and delivery by mail.

Q.14 Do you think ‘by Transaction’ is an appropriate way of measuring usage?

There are significant systems and auditing problems associated with measuring usage by transaction.

Q.15 Does your organisation have the capability to measure ‘Usage by Transaction’?

Our software does not measure volume of usage and it will not be possible to do this in a foolproof way. It will also lead to significant challenges for audit.

Q.16 Are there situations or Types of Use that you don’t think suit transactional measurement?

Batch database and mailing list cleansing.

 

The Cost of Addressing Data

In a recent article in Database Marketing, James Lawson discussed the ongoing debate of whether address data should be free. Back in November 2012, The Open Data User Group (ODUG) presented a paper that suggested an Open National Address Dataset (ONAD), built from three sources: Royal Mail’s Postcode Address File (PAF), Geoplace’s National Address Gazetteer (NAG) and OS’s AddressBase Plus. All three files would be made available under the Open Government Licence as free data, just like OS Code-Point Open.

As we all know, the Royal Mail’s PAF database is the most widely adopted reference file for UK addresses. It has been since its inception and I believe will remain so for many years to come, free or not.  In the more recent years we’ve had various rumours and promises of alternative and complimentary solutions from the LLPG & NLPG, Address  Layer 2 to the more recent NAG and subsequent AddressBase offerings but they’ve all had their challenges.  As with any accurate or usable database it takes a considerable amount of time and effort to compile and somebody needs to take this burden on.  I agree with the current concept that any small to low volume usage (as delivered by the Royal Mail’s postcode finder solution) should be free but the argument of savings and the implied benefits for public bodies is currently being debated for the recently released AddressBase solution.  The questions of industry benefit really comes from the high volume corporate users and wider DM industry.  The impact to pre-sortation requirements, which the Royal Mail enforce on their direct business clients as well as the rules they impose on the wholesale Down Stream Access partners, would no doubt be part of any discussion.  Whilst it would be Holy Grail to ensure all addresses entering the Royal Mail’s network were perfectly addressed, I think any serious conversation on the topic will always be deferred while a potential sale of the Royal Mail is in the wings.

 

 

Royal Mail Mailsort Changes April 2012

As anybody who uses Mailsort will no doubt be aware, a number of major changes have recently been introduced by Royal Mail, which will take effect on 2nd April.

So, what’s different from the usual selection code and price changes?

Well, for the first time in many years, there’s been a complete overhaul of the services, replacing all the old services with new ones – there are no direct replacements of old services with new ones, but some new services bear a close resemblance to certain old services e.g. the Low Sort services are similar to the 120 services in that they only require 3 digit (town level) selection codes, and there’s no minimum selection size when presenting the items in bags. Similarly, the High Sort services cater for Direct and Residue selections, like 1400 or Presstream services used to. None of the new services bear any similarity to Walksort, although Royal Mail do suggest appropriate services for Walksort mailers. You can read Royal Mail’s “Product Comparison” document, which contains suggestions as to which of the services should be used for different types of jobs, here.

We first learned of Royal Mail’s intention to make radical changes to Mailsort on 4th Nov at a Mailsort Software Suppliers Forum. At the time, we weren’t convinced that these changes would really be introduced that quickly, given past experience of delays with less pervasive changes. But we started to plan for the work anyway, which promised to be substantial. Although we appreciated the advance warning, we weren’t actually able to get on with most of the development until detailed information about the new services was released on 31st Jan. The new price tariffs were made available on 20th Feb although these were not finalised (confirmed by Postcomm) until 15th March.

As mailers often prepare jobs well in advance of the mailing date, our customers have been calling us all this month asking for information about the availability of the new version of the sortIT module of the matchIT suite, to support the Mailsort changes. We were able to tell them that we’ve worked hard to get it ready in time, and would release as soon as the price changes were confirmed, or soon after if there were any changes to the proposed prices. In fact, there were no changes so we did release on 15th March. However, it must have been difficult for some software suppliers and some mailers to be ready in time, let alone in advance for those jobs prepared before 2nd April but mailing on or after 2nd April. Fortunately, Royal Mail did decide, after some discussion, to allow a six week grace period, so mailings can be sent using the old selection tables and old services, but with new prices, until 12th May. Unfortunately, accreditation for the new services won’t be available from Royal Mail until the beginning of June, so there is no way of independently verifying the accuracy of any software updates until then.

Below are some FAQ’s relating to these changes, which will hopefully help clarify things that might not be immediately obvious…

To sum up, we love a challenge! We would love to hear comments and experiences from any other Mailsort software suppliers or mailers out there. Let us know how you have managed.

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1. What are the key changes to Mailsort?

A. The Mailsort Database (the database is used to generate selection codes within records, based on the records postcode or town) has been replaced with a new database called “Selection Files 2012”.  The old database was “Mailsort Database 2012 R1”.

B. The list of old Mailsort services has been completely replaced by a list new services. The basic list of new services that are available is as follows:

  • Advertising Mail – High Sort
  • Advertising Mail – Low Sort
  • Business Mail – High Sort
  • Business Mail – Low Sort
  • Publishing Mail – High Sort
  • Publishing Mail – Low Sort

C. The old tariff (the base prices and discount percentages, last updated 18th April 2011) has been updated.

 

2. What are the features of each new service?

The following document outlines the key properties of each service:

http://helpitsystems.com/sortitupdate/April_2012_Sortation_Service_Properties.pdf

 

3. Which new services replace which old services?

As discussed above, there are no direct replacements of old services with new ones, however, some new services bear a close resemblance to certain old services. Check out the Royal Mail’s “Product Comparison” document for more information.

 

4. When should I update the software I use for sorting data?

Selection Files: All mailings that are to be posted on or after April 2nd  must be sorted using software that contains the 2012 selection files. Therefore, the very latest that the new selection files can be applied is April 2nd.

Services: The old Mailsort services can be used from until May 12th, just as long as they are used in conjunction with the 2012 Selection Files during the period between April 2nd and May 12th. Therefore, the very latest that the new services can be applied is May 12th.

Tariff: The new tariff applies to any mailings that are to be posted on or after April 2nd.  Any costs and discounts that may be displayed on a summary or computer planning report will not affect the validity of the sortation, so it is not a requirement to update the tariff in your software, in order to sort data.  However, if you wish to ensure accurate costs are calculated, the very latest that the new tariff should be applied is April 2nd.

Over the next few weeks, I will be sorting data for mailings before and  after April 2nd: This means that your software will need to use the old selection files (Mailsort Database 2010 R1) to sort the mailings that are being posted between now and April 1st, and the new selection files (Selection Files 2012) to sort data that is being posted on or after April 2nd.

If your Mailsort software has an option to choose which selection files to use for each sortation, then you will need to choose the appropriate option before sorting each data file. Otherwise, you will need two separate installations of the software – one containing the old selection files and one containing the new selection files.

Royal Mail to Charge VAT on Bulk Mail

Some important recent news from the Royal Mail indicates that because of recent changes in VAT law, from 2 April 2012, all bulk mail services will be subject to VAT. You can read more about this on the DMA website or at Royal Mail but unfortunately, this is just another in a long line of trends that are driving up the cost of mailing. While most mailers will be able to reclaim the VAT from their customers, this is going to worsen cash flow for the mailing sponsor and the bottom line is that companies need to be even more shrewd with their marketing and mailing strategy to keep costs under control.

So what can you do?

Know who you’re mailing. Make sure that the postage you spend for each mail piece is well-spent by ensuring it’s not a duplicate  and that it is a prospect or customer that is likely to be worth the investment. Whether you are a mail house or a marketer, here are some quick tips to make sure you are not paying for mailings that are not likely to generate ROI:

For Marketers:

  • First, always remember to request your mailer to perform deduplication and suppression on your lists. This may  not be standard and while you will spend a little bit extra to run these processes, the cost savings usually far outweighs the spend. You can ask for a cost estimate for these processes first if you prefer.
  • Always remember to send suppression files with your mailing list to remove customers who have opted out or to remove customers who are not likely to be a good investment for this mailing. Remember that your ideal target audience will change from campaign to campaign and to send the appropriate suppression list to get your ideal target list.
  • Consider using NCOA and Deceased/Gone Away suppression to reduce your list size even further – removing people who have died or moved and updating any addresses that may have changed – and of course MPS suppression not only saves money on unresponsive customers but is also a requirement for DMA members.

For Mailers:

  • Remember to remind your customers about the various types of suppression. Although it does take an extra step and it reduces the total number of mail pieces, your reputation and retention of business in the long run will be bolstered when customers know you are looking out for their bottom line.
  • Create a check list for customers to prompt them for certain types of target market suppression – Have you suppressed customers who have recently purchased this product or service? Have you targeted your list to the price range of this particular product or service?
  • Promote NCOA and other new address services where possible to help your customers target the right address

For more information on Address Validation and Suppression services that can help you reduce mailing waste, visit www.helpIT.com or contact our sales team at [email protected]