Dirty Data Impacts Profitability
Knowing your customers is even more difficult when pieces of crucial customer data are old or just plain wrong.
According to a study of 500 European marketing directors from financial services, insurance, banking, and telecom companies, 66 percent claim that inaccurate or incomplete data has negatively affected their company's profitability.
Two-thirds of the companies surveyed across France, Germany, Italy, the Netherlands, and the United Kingdom say that customer satisfaction and loyalty within their organization is suffering due to the bad data.
Business intelligence and analytics provider SAS Institute commissioned the independent study, which was conducted by KRC Research. The research focused on challenges facing those creating and investing in customer marketing campaigns.
Only 25 percent reported having a "great deal" of confidence in their data quality, while more than 50 percent said they experienced lower-than-expected ROI from campaigns due to incorrect data.
Given those figures, it's not surprising that 76 percent of the survey respondents say they need to focus more on data accuracy. More than 87 of those surveyed say they plan to raise awareness of the data quality issue and its impact within their organizations. Nearly 75 claim they are already working to improve data quality or making plans to implement improvements.
Previously published reports by Gartner state that at least 80 percent of enterprises underestimate the time and resources needed to cleanse and consolidate data, with many budgets exceeded by 200 percent to 300 percent.
According to the KRC research, third-party data, which is the most common source of information for companies in Europe, was cited by 56 percent of respondents as the most frequent source of inaccurate data.
Kent Allen, research director of CRM at market researcher Aberdeen Group, says that dirty data is the number one cause of failure of many large-scale CRM implementations. Allen adds that in many cases the data going into the system is bad. "Garbage in, garbage out," he says.
The ability to integrate data from diverse systems was identified by 52 percent as a major source of inaccuracies and the cause of significant problems, according to the SAS-sponsored study.
Speaking at DCI earlier this year, Hewlett-Packard CRM director Mike Overly said he estimated that "80 percent of our contact information changes every two years." Overly says data quality cost HP $200 million in 2002. The company has since implemented new CRM solutions to help trim that figure.