Data Quality Drives 1-to-1 Relationships

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Accurate customer data is the lifeblood of any business. It's the most important component in helping companies capture new business, generate repeat sales and increase overall response rates to maximize revenue. The reality, however, is that maintaining accurate customer data has been almost impossible for businesses to achieve.


In the past, the complexity of this task and the limitations of data accuracy technology caused businesses to place customer information quality initiatives on the back burner. As a result, the majority of customer databases are filled with inaccuracies, severely limiting their effectiveness for maintaining contact with customers.


To ensure financial success and meet the expectations of today's sophisticated customers, businesses must make customer data quality their top priority. Accurate data is essential to show customers you care enough about them to know them as individuals, a concept known as one-to-one marketing. Establishing one-to-one relationships with customers allows you to identify each one at an individual level. Once you can identify and manage personal information about your customers, you then can maximize each customer's lifetime value.


The lifetime value of every customer directly affects your bottom line. Say you have a prospect database of 500,000 names with a data error rate of 20 percent. Right off the top, you have 100,000 prospects that are missed. Now, assume this prospect base would have generated a 1.5 percent response rate. This would mean that the 20 percent of bad data cost you 1,500 customers. If you assigned a $2,000 lifetime value to each of these customers, this 20 percent data-error rate would cost you $3 million in revenue.


Although customer data is a company's most important asset, improving the quality of that data is one of the biggest challenges businesses face. In the past, companies have relied on three major sources to update customer information: the U.S. Postal Service's ZIP+4 and delivery sequence file databases, move update information provided by National Change of Address (NCOA) licensees or the customers.


Today, this is not enough. Companies must find ways to take data quality to a new level to communicate with customers and drive one-to-one relationships with them. New data-quality technology that uses third-party data and can be integrated into your own operations provides one way to elevate data integrity to an unprecedented level.


Innovative technology that uses a third-party consumer database allows you to verify and correct the information you want to know about customers, including where a customer lives and what his personal profile is. Using third-party data, you also can append other important information such as telephone number and date of birth. By knowing your customers on a personal level, you then can manage your customer relationships more effectively.


Say, for instance, you want to know whether Tom Smith lives at 11 N. Main St. or 11 S. Main St. Using USPS data, you can only determine that the addresses are deliverable, not that he lives at one of those addresses. By harnessing third-party data, however, you can match name-and-address information to determine his specific address. Taking it a step further, suppose you want to promote merchandise to customers over 65 years of age. Using third-party data, you could append Tom Smith's birth date to your file and learn that he's 68 -- an excellent candidate for your promotion.


To successfully use customer information, you must involve every aspect of the business in ensuring data quality. Establishing one-to-one customer affects every facet of an organization, not just the customer service or operations groups.


Each individual who uses your customer database, comes in contact with customers or touches customer documents has an impact on the integrity of the data, the relationship with the customer and, ultimately, the company's bottom line.


Paul Greene is executive director of industry relations at Pitney Bowes Software Systems, Lisle, IL.
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