How to ensure your company is using quality data
Why are marketers paying so much attention to data quality? Companies are starting to recognize data quality as an enterprise problem that must be solved to ensure success on many fronts, says Rod Ford, president and CEO of Little Rock-based marketing technology company CognitiveData. Ford answered questions from Direct Connect on data quality's increasing importance.
Direct Connect: Why is data quality such a hot topic?
Rod Ford: As direct marketers turn their attention to optimizing the customer relationship, they are realizing the foundational requirement of any customer relationship management strategy starts with the ability to identify, value and ultimately reach each individual customer.
DC: Hasn't the level of data quality increased over the years?
Ford: Most marketers believe their customer and marketing data is much more accurate than it actually is. They believe their current tools and methods are serving them well. As a company that processes this data on the output of incumbent processes and methods, we know that the average inaccuracy of the typical marketer is still 3% to 5% – and this number has not declined over the past five years.
DC: For direct marketers, what is the cost of “dirty” data?
Ford: There are several direct costs of inaccurate data: Inaccurate recognition of customer value in the modeling and selection process; overpaying for postage costs to reach the customer in the mail stream; and perhaps the biggest cost of all, never reaching the targeted recipient at his most responsive address.
DC: A lot of people think e-mail doesn't matter as much as postal mail data. Is that an accurate assumption? Are there costs and other business impacts related to e-mail data inaccuracy?
Ford: It's true most people don't think there is a direct cost associated with inaccurate e-mail because the cost of the transmission media is so low compared to direct mail. However, I would argue that e-mail address accuracy starts with the proper identification of the consumer identity, and thus all of the costs associated with not accurately knowing your customers are as applicable as they are with direct mail promotion.
DC: Why should data quality be of concern to CFOs?
Ford: At a macro level, there's the obvious lifetime value loss of any lost customer due to poor data accuracy tools and methods. There's also the period direct replacement cost of a lost customer, ranging from $10 to $200 depending upon the marketer's business model.
DC: What can organizations do to ensure quality data?
Ford: There are several things organization can and should be doing to ensure the accuracy of their data. The most obvious ones are to advance their methods and tools in the capture of the data. The most commonly overlooked step is to utilize advance data quality technologies, and to utilize them in multiple steps in the customer identity cycle. For instance, advance data quality in the database should be deployed weekly to ensure the identity and value of each customer is properly consolidated at any give instance. However, the same process should also be applied to each direct mail campaign deployment to refresh the postal address and ensure the promotion is reaching the consumer at his current and most responsive address.
DC: What do you see emerging in data cleansing and data quality over the next five years?
Ford: I believe there will be a convergence of interactive data to name and address data for the purpose of properly identifying the individual across multiple media. Regulations permitting, whether it be a direct link or an inference, marketers need, and it is ultimately to the consumers benefit, to be able to recognize an individual and accurately segment and promote to that individual across all direct marketing mediums, whether mail, e-mail, display, mobile or social.