What is address cleansing, and how does it work?

At first glance, “address cleansing” may well sound like something that would happen in crime films. But in reality, this process is far less cinematic (and far more helpful). Incomplete or incorrect address data can be a significant operational and financial burden for enterprises across various industries.

 

In 2023, 1.2 billion pieces of First-Class Mail were returned to senders (that’s 63% of the mail class). At $0.576 per piece, returned First-Class Mail deliveries cost senders nearly $700 million. It’s clear that address cleansing can be a real money-saver. But how exactly does this process work, and how can you leverage third-party tools to do it effectively?

What is address cleansing?

Address cleansing is the process of reviewing and reformatting postal addresses to make them accurate, complete, and updated. In practice, this involves using automated tools that compare addresses entered into your system against official postal databases, then edit them to match recognized, deliverable formats.

 

Each country typically has its own official address database. For example, the United States Postal Service (USPS) database is the official source in the United States. In the United Kingdom, the equivalent is the Royal Mail Postcode Address File (PAF).

 

There are various reasons why addresses may be incorrect or incomplete. For instance, users may accidentally make a spelling mistake, add one wrong number in their postcode, or even input their previous address after a move.

 

Most of the time, these mistakes are unintentional, but in some cases, users may intentionally add wrong details for fraud purposes.

Why is address cleansing necessary?

If you’re not using any tool to prevent address errors at the point of entry (when users submit their data), errors will accumulate over time. These inaccuracies create various challenges for businesses and customers alike:

1. Failed deliveries

Few things are more frustrating than waiting for a parcel that never arrives. Failed deliveries instantly lead to unhappy customers, but there are various monetary consequences too. The unexpected costs of reshipping products or refunding customers add up over time and can eat into profit margins. Importantly, delivery issues damage customer trust and can easily hinder future sales.

2. Poor communications

If you need to frequently send letters to customers with bills or account updates (think utility services with monthly billing, for instance), having the correct customer addresses is paramount. Sending bills or Personally Identifiable Information (PII) to the wrong person could cause payment delays or lead to compliance issues. Even if it doesn’t get to that, it will cause unnecessary friction and affect customer relationships.

3. Operational costs

>When address errors occur, your team may need to spend significant time tracking down accurate details, verifying them, and making corrections. While these inefficiencies are harder to quantify, they inevitably drive up operational costs and slow overall productivity.

4. Reduced marketing efficiency

Inaccurate data undermines the value of your marketing activities. For starters, if your customer data is incorrect, so are your customer insights. Wrong address data also leads to poor audience segmentation and wasted marketing spend, as you will target the wrong contacts. By keeping customer records accurate and consistent, you can create accurate customer segments that you can target with tailored messaging and improve your ROI on marketing spend.

5. Compliance issues

The consequences of bad or insufficient data go beyond missed parcels and failed marketing campaigns. State laws and standards, such as ISO 20022, require businesses to keep user data accurate. Industries like financial services are held to particularly stringent standards to prevent fraud and protect customers. Address cleansing will help these businesses stay compliant with all relevant regulations.

How to do address cleansing effectively

If you have an ever-growing amount of customer data spread across systems and platforms, and no insight into how much of this data is even up-to-date, you’re not alone. Attempting to cleanse addresses manually is unfeasible at scale, but specialized global address cleansing software like Loqate can help.

 

Loqate’s address cleansing API lets it easily access your address data. Then, the tool can automatically standardize formats, correct typos, fill in missing information, deduplicate records, and flag undeliverable addresses. Some manual input may be needed, but more often than not, it’s your tooling that does the heavy lifting.

 

Here’s the typical step-by-step process to cleanse your address data effectively:

1. Export all your address data

Your user address data is likely spread across various tools, from your CRM to invoicing software, e-commerce tools, or support ticketing systems. Export the relevant data from every source in a standard format like CSV or Excel. Then, merge the files into one master document for upload. Having all records in a single dataset makes the process faster and more straightforward.

2. Upload and parse this data

Next, upload the dataset into the cleansing tool. The address cleansing software automatically scans each record and breaks the addresses into components like street number, street name, or county. It then analyzes and validates each element before moving to correction and standardization. If you’re using the Loqate API, you don’t need to export or upload data - the API does this automatically.

3. Standardize and correct

Your tool then formats addresses according to recognized postal standards. It edits abbreviations, capitalization, spacing, and punctuation to follow the same rules. For example, it may correct common mistakes like misspelled street names or add missing critical elements like postal codes or state names.

4. Validate the data

Next, the tool cross-references each address against up-to-date, official postal and reference datasets to confirm whether the address exists and is deliverable. This validation helps you catch errors that standardization alone can’t fix, like non-existent streets, invalid postal codes, or addresses that don’t match the geographic region.

5. Deduplicate  addresses

Duplicate addresses are two addresses representing the same physical location but recorded differently. For example, “1 56 Bread Street” and “56 Bread Street Apt 1” are the same address, but variations in formatting and ordering can cause them to be treated as separate entries.

 

According to Gartner, poor data quality (including address duplication) costs organizations an average of $12.9 million annually. Thankfully, your tool should be able to identify and merge these automatically, reducing clutter and redundancy.

6. Handle unique cases manually

Sometimes, the tool flags addresses that need to be verified by a human. It’s then up to you and your team to decide how to best handle them. You can review and correct them manually, contact customers for updated information, or remove them from your active database to maintain data hygiene.

7. Plan ongoing data validation

Once you’ve cleansed your existing data, you should continuously validate new address entries immediately as they come in, such as during online form submissions or customer sign-ups. Tools like Loqate integrate directly with CRM systems, e-commerce platforms, and marketing software to perform real-time validation at the point of entry.

Schedule batch cleanses of your database regularly to maintain accuracy over time, and make sure this data is integrated across all relevant systems to avoid discrepancies.

Why choose Loqate for address cleansing?

When you rely on a tool to handle the heavy lifting of address cleansing, choosing one that offers all the capabilities your business needs is even more critical. For example, companies with global operations or handling large volumes of data need a flexible, scalable tool with international address cleansing coverage.

Loqate delivers a fully integrated platform designed to meet those demands - and many others. Its Global Parsing Engine automatically breaks unstructured or inconsistent addresses into clear components and formats them according to local postal standards. It covers 250 countries and territories through a single API, so you don’t have to use multiple modules or regional tools.

The platform can also enrich your data with features such as transliteration, which is helpful for international alphabets, and geocoding for location-based services. Importantly, you can use Loqate not just to batch cleanse large datasets but to perform real-time validation at the point of data entry, so you can avoid more incorrect or incomplete data from entering your systems in the first place.

Turn address cleansing into a streamlined, effective process with Loqate's market-leading Address Verify tool.