How can I use address verification to identify business versus residential addresses?

Address verification is the process of determining whether an address is accurate and properly formatted while it also gives valuable data about the address. This process saves time and money by offering accurate data using information from the USPS and international carriers, including whether each address is categorized as a business or residential address.

Businesses that utilize address verification tools are able to provide information directly to their customers with confidence, avoiding extra fees and returned mail. Address verification and the important data related to it allows businesses to make more informed and cost-effective decisions throughout their mailing campaigns. Altogether, address verification is a key tool in effectively reaching customers and having an accurate picture regarding shipping expenses, and businesses should know how to use address verification to their advantage.

What is the difference between business addresses and residential addresses?

When it comes to shipping, business addresses and residential addresses are viewed differently by mail carriers. Businesses should be aware of these differences before planning a mailing campaign or delivering to customers. The costs of shipping can vary based on the type of address to which you’re sending. In fact, private shippers may charge an address correction fee if an address has been wrongly identified as a residence or business.

From the perspective of a mail carrier, business addresses are more convenient to deliver to as they are usually located closer together in dense commercial areas. This allows carriers to deliver more packages in a shorter amount of time. Alternatively, residential addresses are typically more spread out, using more time and taking carriers away from their high-density delivery route, which usually raises shipping costs.

As a result of the differences in mailing between the two types of addresses, it is crucial that businesses have accurate data in their system. This data allows them to understand where each mailing is being sent in order to avoid unwanted fees and make sure that each one reaches its target.

How different carriers classify residential addresses

All mail carriers categorize addresses as either residential or business addresses. However, the criteria used to define a residential address can differ depending on which mail carrier you use. This means that although an address may be considered residential by the USPS, it may not be considered residential by a private mail carrier.

The USPS designates each address as either residential or business based on the purpose of the address. Regardless of the location of the address, the USPS focuses on whether or not the address itself is home to a business or a residence. When mailing through the USPS, shipping costs are the same regardless of which address type you are shipping to.

On the other hand, private carriers rely on city zoning for designating addresses. This means that for private carriers, the actual purpose of the address is unimportant. If a business is located in a zone that is used primarily for residential purposes, then the business will be categorized by the carrier as having a residential address. Because private carriers charge higher fees for residential addresses, in these instances, businesses may need to anticipate paying a higher cost for commercial shipping in these zones.

What is a Residential Delivery Indicator (RDI)?

Residential Delivery Indicator (RDI) identifies whether an address is categorized as residential or commercial. RDI is a data type sourced and shared by the USPS. The USPS makes this data available to address verification tools for the sake of rate shopping and analysis.

What is Record Type?

Record Type is another descriptor provided by the USPS to give more information about an address. USPS uses Record Type to specify an address type further, providing information about the type of residence or business by using more specific categories. Record Type Includes the following values:

• “F” = Firm or business
• “G” = General delivery
• “H” = High-rise
• “P” = PO Box
• “R” = Rural route or highway contract route
• “S” = Street

Using the RDI and Record Type codes help you understand what kind of address you are sending to, and this can sometimes help you save on costs for shipping and mailing, while also giving you a sense of the mix of addresses where your business delivers its goods. Experian’s address verification tools give your business access to both RDI and Record Type in each dataset so that you can have a complete picture of the addresses you are sending to.

Benefits of identifying a business address vs. a residential address

Maintaining a database that accurately identifies residential and business addresses is a crucial part of any mailing strategy. By having access to accurate and up-to-date data, your business can boost its performance in the following ways:

1. Have a more informed mailing strategy

Information obtained from the address verification process, like RDI and Record Type, allows your business to gain more insight about customer locations, delivery tracking and more efficient shipping routes. An optimized shipping route will shorten delivery time, reduce shipping costs and create more satisfied customers. An informed and effective mailing strategy helps your business stay connected with customers and ultimately increases sales.

2. Reduce return mail

Using address verification tools gives your business confidence that your mail will be delivered the first time. Returned mail translates to lost time, materials and money. Managing return mail also takes more energy for employees who need to correct and sort it. A database complete with accurate and valid addresses will help you make sure that you have the correct address and that you pay the correct shipping costs for the type of address you are sending to, preventing return mail and protecting your investment.

3. Increase your marketing impact

When you are confident that your materials will reach their intended target, you can be assured your message will be received. Businesses that verify addresses will see a higher return on investment for marketing materials as they know which clients they are reaching and are less likely to receive returned mail or pay for address correction fees. Sending the right message the first time allows your marketing to reach clients without losing money on avoidable fees or errors.

How to use address verification to verify a business address

Experian’s address verification tools allow you and your business to verify each address so that you know where your packages and other mailings are going. With accurate data, your business is able to avoid address correction fees, reduce returned mail and properly connect with customers. Get started today by using Experian’s tools to verify a business address vs. a residential address. Contact us for more information on how to use address verification for your business.

Our address verification solutions help you improve customer experience, reduce costs, and boost business performance.