Keeping your customer data up-to-date and accurate can be seen by some companies as an unnecessary expense rather than a favorable investment.
Let’s be honest, complete, accurate and up-to-date data is costly.
It takes money to store it, protect it, merge it, transfer it and obtain it. What’s more, it can take considerable investment to utilize it internally and make it actionable. And of course, data costs when it is wrongly used – complaints, bad press, and under CCPA or GDPR, fines.
However, in my opinion, I see data as an asset.
The power behind accurate customer data
Companies know that to stay ahead of the competition, they need to be data-centric. We are seeing companies with strong data assets and capabilities outperform their peers, and as a result, be valued at a higher price.
Businesses that have clean and accurate data benefit from consistency of management information and ease of data migrations, implementations and transfers. They can also more easily move into adjacent markets, products and services.
When it is invested in and maintained, data can drive better decision-making and performance throughout any business by:
- Helping you stay in contact and engage with more of your customers, promoting your brand and encouraging loyalty
- Creating the opportunity to upsell and cross-sell additional products and services
- Ensuring that you get the channels of communication right the first time
- Reducing operational inefficiency such as sending deliveries to the wrong address and double-counting the same customer on your database.
- Helping you adhere to legislation and reduce fines and complaints
How much is your data worth?
For those struggling to gain budgets and approval to clean their data on a regular basis, despite the advantages listed above, one way is to calculate how much your data is worth and use this value as a way of justifying investment.
Following the same logic as your car, which needs yearly service and budget allocated to its maintenance to keep it road-worthy, the same approach can be adopted for data. This can range from simple to complex calculations.
Personally, I like to keep things simple, and I have 4 ways your data value can be ascertained.
The focus needs to be on the concept, the debate and securing the understanding of data’s worth and the need for regular data maintenance, rather than the details of whether your data is worth $5.2m (£3.2m) or $5.3m (£3.3m).
- The first approach is simply to look at your company’s market value and assign a percentage of this to your data. Think about how much the company would be worth if it was being sold without the customer data. This calculation is rudimentary, but it can make people think!
- Alternatively, you could take the approach of looking at the incremental sales driven by data added to the cost savings made through quality data (such as not sending undeliverable mailers). This is more accurate but can be difficult and time-consuming to assimilate all the figures.
- A third approach is to simply ask, “if I lost all my data today, how much would it cost to replicate it”. Like the first calculation, it can help justify the significance of your data.
However, at a previous company, I took a fourth approach that calculated the value of data based on its volume and its completeness. A middle-ground calculation that has robustness in its creation, and is not overly time-consuming or complicated to calculate.
I knew that each customer was worth $200 (£153) and they had to renew every year. I, therefore, allocated 20% of this value to data, and I split this amount equally across 4 variables – customer name, customer address, email and phone number.
With each variable worth $10 (£7.50), the fully populated record was valued at $40 (£30). Two variables complete such as an email address with a name was valued at $20 (£15), and just one variable, like an email address at $10 (£7.50).
Totalling this all up, the data value across a base of 3m customers came out at $12.6m (£9.6m). As a rule of thumb, I took 1% of this amount as what was required to keep this data clean, healthy and therefore fit-for-purpose via correction, suppressing and validating.
I then had two numbers to present to senior management - the $12.6m (£9.6m) that showed the value of data and its significance as an asset, and $126k (£97k) needed to maintain data accuracy and quality. These figures helped steer the debate and raise the importance of maintaining data quality within that company.
Make data maintenance a priority
As an aside, the counts also highlighted the number of incomplete records and lack of accuracy across some data records. When factored into annual renewal rates, another business case was created that showed the positive return on investment from data cleaning. This further cemented having a planned and consistent approach to data maintenance.
So, to summarize, in a rapidly developing environment, customer data is one of the key weapons for any firm. Companies that take the time to understand it and correct it, will enjoy significant benefits over their competitors.
Find out more about how Loqate can help you maintain accurate customer data here.