THE U.S. GOVERNMENT is now realizing what corporate America has know for years: Data is king. As a result, data management companies are now using their data cleansing technology to help the U.S. government hunt down suspected terrorists in a massive effort to avoid another large-scale attack. Simply put, having the most current and accurate data on an individual could save lives by preventing a terrorist from carrying out any plans of destruction.
Following the September 11 terrorist attacks on the World Trade Center and the Pentagon, Nora McGuinness, vice president of marketing at Vality Technology Inc., a provider of data quality software and services based in Boston, insisted there must be a way to track known terrorists through the use of the airlines' customer databases. She approached Stephen Brown, vice president of product strategy at Vality, with the idea. "There was a pattern with the terrorists. And where there's a pattern we can be used," McGuinness says.
Her inquisitiveness resulted in the quick release on November 5 of Vality's Veri-Quest, which matches the U.S. Office of Foreign Assets Control (OFAC) list of wanted terrorists and criminals to transactional and other customer records to pinpoint and track possible suspects. Veri-Quest searches companies and organizations' databases for known terrorists and criminals from the OFAC list. The application works in batch and real time, and helps companies and charitable organizations to comply with the OFAC requirements for reporting and blocking suspects' transactions.
"The OFAC list is a list of known terrorists and drug dealers that are suspected of providing funds. It's the black list. If you are a bank, the government wants you to process your existing customer list against the OFAC list. Banks need to do this to spot terrorist activity and freeze accounts," Brown says. If they do not run the data matching technology against the OFAC list regularly, he says, they can be fined up to $250,000.
Due to a heightened sense of security, Brown says, the OFAC list went from being updated on a monthly basis to a weekly basis. Thanks to Vality, more organizations, such as universities, are required to check their databases against the OFAC list as well. Specifically, universities are being asked to compare their lists of foreign exchange students against the OFAC list to make sure known terrorists are not infiltrating U.S. schools.
The process of comparing databases against the OFAC list is done using Vality's probabilistic matching technique. So accurate is this process that Brown says it is "justifiable and can be upheld in a court of law."
Vality is not the only data management vendor trying to work with the U.S. government. Experian, a Costa Mesa, Calif.-based provider of credit reports and related services, maintains it can also help fight terrorists by combining its credit reports information with its recent data matching and cleansing technology.
As a powerhouse in the credit services industry and owner of one of the largest consumer databases in the U.S., Experian can track the movement of money perhaps better than any company in America. Once the money is linked to terrorists the government can freeze the account, making it impossible for anyone to withdraw money from it. Experian executives could not go into detail about any negotiations with the government, as nothing was finalized at press time.
Taking It to the streets
Vality and Experian's efforts with the government are a clear case of utilizing a commercial application for a greater good. Both companies have had success in corporate America, in which their mantra is data cleansing across the enterprise. It is not enough to maintain high customer satisfaction levels to retain quality customers. An organization could have a high customer satisfaction rating and still deplete its customer base by double-digit percentages. In most cases the culprit is inaccurate data.
"According to the U.S. Census Department, about one in seven people change addresses within a year. That's about 40 million people in the United states. That means your customer data has a very short shelf life. If you're using CRM to touch customers electronically and trying to generate cross-sell and upsell opportunities through your database, then having old data is like having no data," says Denis Pombriant, an analyst at Aberdeen Group.
Further, a recent PricewaterhouseCoopers survey revealed that poor data quality costs global businesses more than $1.4 billion a year. Additionally, one third of companies have been forced to delay or scrap new CRM systems because of faulty data.
To make matters worse, GartnerGroup finds that information collection is growing at the rate of 90 percent per year. If the problem of faulty data persists unchecked, the damage to businesses will likely skyrocket as companies become more dependent on their data for such CRM initiatives as marketing, sales, customer support, and analysis.
The fault, however, may not lie in the hands of the database administrator, but in the technology. For many organizations existing data cleansing software that updates the database on a monthly or quarterly basis is not responsive enough. "Database administrators know their data is dirty, but it's a question of how tuned in are they with it," says Susan Funke, research manager, specializing in information and data management at IDC, in Framingham, Mass.
The industry is finally recognizing the need for enhancements in data management solutions. Erin Kinikin at Giga Information Group stated in a report last summer that customer data management will emerge as a "new CRM trend, bringing a new set of vendors to CRM projects."
Kinikin was right. After viewing this market opportunity, Experian-an unlikely contender-expanded its business model and jumped into the CRM ring in September 2000. While a veritable newcomer to the CRM industry, the company has a unique advantage over other CRM vendors: It owns one of the world's largest databases of up-to-date customer information. Experian, which reported nearly $1.5 billion in revenue last year from its credit services side, maintains credit information on approximately 14 million U.S. businesses and 205 million U.S. consumers in 110 million households.
Credit information is generally regarded as the cleanest customer data available, says Chandos Quill, vice president of strategic marketing and integrated solutions at Experian. This is because "America is a very credit-oriented society. It's essential for the economy," Quill says. "If you don't make your credit information available, you won't get a loan."
Therefore, whether they want to or not, it is imperative that customers keep their contact information updated with credit services companies. With that in mind Experian executives recognized the value of sharing its up-to-date customer list with companies looking to clean up their customer data.
The Washing Machine
Since its launch less than two years ago Experian's Integrated Solutions group has released three data management services: a customer data integration (CDI) service, called Truvue; customer data quality assessment and analytics consulting; and CRM infrastructure and data hosting.
Truvue provides instant access to Experian's continuously updated national consumer database. The washing machine cleanses and integrates information from disparate sources across the company's organization to achieve a single view of each customer. With links to thousands of contributors of reliable and verifiable data, information is updated continuously. Truvue can update information at the point of customer interaction, and can personalize offers instantly while the customer is talking to a company representative or shopping on the Web.
Additionally, Experian offers Housefile Refresh, powered by Truvue, which is a data quality program that features address hygiene, change-of-address processing, duplicate identification, and data integration. Housefile Refresh, combined with Truvue data integration technology, builds internal matching capabilities across a company's databases to share data throughout the enterprise.
Unlike traditional software-based data integration, which relies on a mathematical process of finding matching customer names and addresses, Experian's knowledge-based data integration compares a company's customer data with an accurate, up-to-the-second consumer-information repository to identify and verify matches.
"There's technology out there that does matching, but it only matches the records to themselves," Quill says. "If you don't have the reference repository you may not know that you have a father and son living together with the same name or a family with more than one home. As a result you have software-matching that doesn't provide the real truth."
Experian Integrated Solutions focuses on the financial services, automotive, telecommunications, insurance, retail, publishing, and energy sectors. It has already signed on well-known companies such as American Express, AT&T, BMW, Continental Airlines, Ford, GE Capital, MCI Worldcom, The New York Times, Progressive Insurance, and Wal-Mart.
For Progressive Casualty Insurance Co., data accuracy is "absolutely critical," says Jill Weber, director of application services.
Progressive, based in Mayfield Village, Ohio, has been in business since 1937, and is the nation's fourth-largest auto insurance company and the largest writer of auto insurance through independent agents, with 30,000 agents in the U.S. So critical is data accuracy for Progressive that the slightest inaccuracy in data such as age, gender, location, and driving record can yield incorrect pricing information.
Quite often, though, information is missing or faulty. And because Progressive does not take any chances, it automatically assumes the worst-case scenario and charges a customer more money. Naturally, this does not bode well on customer satisfaction ratings. "The more accurate the information is, the better your chances are for a lower price," Weber says.
Customer information is collected in one of three ways. Customers can call or visit one of its 30,000 independent agencies, call Progressive directly over the phone, or contact Progressive via the Internet.
Surprisingly, although the Web is supposed to provide more accuracy by removing the middleman between the customer and the company, and so decrease the possibility of human error, "people have less ethics on the Web," Weber says. They are more likely to lie about information when they are not talking to a representative, she says.
So in 1999 Progressive decided something needed to be done. After examining solutions from BK Consulting and First Data Corp., Progressive selected Experian. "Experian's product was much more mature," Weber says. Additionally, Progressive was already using Experian's credit services, and had a direct link over dedicated lines to Experian that didn't need to be changed for the data cleansing services.
The decision to go with Experian paid off. "Experian is about 97 percent accurate on the records we're finding to be problematic for us. The remaining 3 percent of inaccurate data is from emerging consumers, such as a child sharing the same policy with a parent, or a child using a parent's social security number, because he or she doesn't have any credit," Weber says.
The value not only lies in time saved, but also in money saved. "Our customers see a return on investment of somewhere between $15 million to $150 million, depending on the size of the company," Experian's Quill says.
Although Weber cannot comment on the total return on investment, she says Truvue has cleaned 10 percent of Progressive's data. In addition to retaining more customers, Progressive has had an estimated savings of $600,000 within one year, thanks to improved data quality.
"If we took a manual approach to cleaning the data, it would have cost us much more in mailing and phone calls," Weber says.
An ancillary benefit to using Truvue is catching fraudsters. "We had several independent agents that were sharing one social security number with roughly 50 customers so other drivers could benefit from the low rate of a good driver," Weber says. Thanks to Truvue, "we were able to nip them in the bud."
Moving forward, Progressive is looking to graduate from operational CRM and move to analytical CRM. "Our key operating strategy for 2002 is to focus on improving customer retention and interactions to keep our good customers longer," Weber says.
Corporations have known for a long time that the quality of their data could be the difference between revenue generation and lost sales. The industry and the U.S. government are now realizing that it could also be the difference between life and death.