Doug Edwards is the President and COO of address data intelligence company, Smarty.
Not all companies think about address verification. It has come a long way from manual cross-referencing to sophisticated AI-powered tools.
In the early days, addresses were primarily handwritten, and verification was a manual process. This involved cross-referencing address information with written records or consulting postal authorities to confirm the validity of addresses. This method was time-consuming and highly prone to human error.
The latest advancements in address verification involve machine learning and artificial intelligence. These technologies can analyze and validate addresses with high accuracy, even for complex or handwritten addresses. They can also provide additional information about the address, such as geospatial data and proximity to points of interest.
Its evolution has been driven by the need for efficient mail delivery, the growth of e-commerce and advancements in technology. Today, address verification is often considered essential for businesses, postal services, and individuals to ensure accurate and reliable address information.
How Address Verification Works
In a nutshell, address verification is a process that reformats addresses to match the country’s standard postal format and ensures it is valid. It certifies that the address walks and talks like an address and, more importantly, that it is a real one.
Customer communication, order fulfillment, location-based marketing, logistics and supply chain, compliance and regulation, customer data analysis, and fraud prevention are just a few areas that can see an uplift from address validation.
Benefits Of Address Verification
When companies implement address verification across their organization, they often report benefits extending beyond improved data quality. Frequent examples include boosts to ROI, better customer satisfaction, and fewer challenges with compliance and risk management.
Improved Data Quality Increases ROI
Improving data quality in systems can help streamline business processes. Address validation helps avoid wastes of time, product, patience and money while facilitating more accurate decision-making later down the line.
Improved Customer Experience And Perception
There is also a direct link between data quality and customer satisfaction. If you make it easy for customers to buy, they’ll be more likely to do so. Plus they’ll be happy enough to do it repeatedly, refer friends, and maybe even blog about it or tag your company in social media posts.
For example, a study done by Magellan Solutions found “humans are bound to make more mistakes when doing repetitive tasks like data entry,” asserting that manual human entry resulted in between 18% and 40% error rates for simple spreadsheets and a whopping 100% error rate for complex data spreadsheets.
These errors can affect the customer in a plethora of ways, including, but not limited to:
1. Having delayed or incomplete shipping of mail or parcels.
2. Receiving duplicate billing statements.
3. Being bombarded by duplicate ads for the same company.
4. Not receiving paid-for subscription items such as magazines or meal prep.
5. Wasting time trying to fix all of the items listed above, and much more.
In addition, decisions based on incomplete and flawed data can cause data scientists and analysts to draw incorrect conclusions about customer demographics, competition and other imperative business statistics. Clean and accurate address data is crucial for analytics, reporting and data-informed decision-making across departments.
Reduced Compliance And Risk Management Issues
Auditing procedures can become incredibly expensive and lengthy if your company holds bad data. Maintaining accurate data demonstrates compliance, gives stakeholders confidence in your company’s competence and speeds up the auditing process.
Even experts recognize that this isn’t just an IT problem. Data governance should be an “organization-wide topic,” according to Ties Carbo, the consulting director of Artefact. He maintains that it is not just about compliance. Every company’s goal should be to approach data governance as a holistic data ecosystem.
Risks And Challenges Of Address Verification
Despite the benefits, there are potential risks and challenges to consider as well. When implementing an address verification or validation API, professionals like CTOs, CIOs, data analysts and others should be aware of these potential challenges, such as privacy concerns, the potential for the generation of false positives, costs from licensing fees and more.
Data And Privacy Laws
Handling personal address information means adhering to data protection regulations (e.g., GDPR, CCPA). Noncompliance can result in legal and financial consequences. This can also become difficult when a global scale is involved. Address formats, languages and validation rules vary worldwide.
You can combat this issue by ensuring that the API you choose supports international addresses for global operations and that each nation’s privacy laws are strictly followed by the API.
Generation Of False Positives
Striking the right balance between flagging incorrect addresses (false positives) and missing valid addresses (false negatives) is challenging. Over-validation can hinder user experience.
Address verification is a complex process, and eliminating false positives may not always be possible. However, by fine-tuning your verification criteria, implementing fuzzy matching, utilizing additional data for cross-referencing, and allowing user feedback and data correction, the likelihood of false positives and negatives in your database can be significantly minimized.
Cost
To get an accurate estimate of the licensing fees for address validation, you should contact the specific service provider you’re interested in. They will be able to provide detailed pricing information based on your specific needs and usage patterns. Keep in mind that costs can vary significantly, so it’s a good practice to shop around and compare offerings from different providers to find the best fit for your requirements and budget.
Essentially, you should be aware of the limitations of the specific address verification API you are using and the company providing those services. Different APIs have varying data sources, coverage and accuracy, so understanding their capabilities and potential shortcomings is important.
Making A Decision
Address verification can become a critical component of business success when done correctly. Validation has the potential to save time, money and products while maintaining your company’s glowing reputation with a slew of satisfied customers.
However, if implemented incorrectly, this process can complicate your business practices, increase operational costs and increase your risk of not complying with privacy laws. To avoid this, be aware of the various companies that offer address verification. Identify your needs when deciding if they are the right fit, but also become aware of their API’s pitfalls and shortcomings.
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