The Real Value of Data
In the quest to achieve revenue growth technology has been positioned as the great enabler of managing customer relationships. In fact, there seems to be a general sentiment that if a company wants to grow revenues and improve profit margins, it needs to make investments in technology to more effectively and efficiently manage customers. Call it emotional contagion brought about by a seductive promise of profitable growth.
Unfortunately, this emotional contagion has led to an irrational exuberance that caused many companies to make significant investments in new processes, software, and systems without a clear plan. Worse yet, the technology does not play as critical a role in achieving improved sales and marketing efforts with customers, as companies had hoped.
But most often it's not the technology itself that is the problem. One of the top reasons for CRM failure is poor quality information. It's the information within the technology that matters. In fact, technology has really become a fungible good, while the specific information collected on a customer or a channel partner becomes the ingredient of competitive advantage. Information is money and if a company fails to use it well, money will be lost.
But it's not just CRM initiatives that feel the impact of information quality. Poor information quality can seriously undermine a company's ability to effectively manage each stage of the customer life cycle, including acquisition, service, retention, and growth.
For example, customer acquisition is often based on using information about prospects from third-party data providers. At minimum this information is used to determine the location or medium to promote products and services, and more often than not it is also used to find new customers. But what happens when the information is bad? If a company uses a partner that doesn't invest in its information quality process, the results can end up costing more than the information itself.
The difference between good and bad information at the acquisition stage of the customer life cycle can mean that a company increases direct marketing expenses, suffers poor response rates, and captures too many unprofitable customers. Additionally, if the data associated to the lead generated in the acquisition campaign is incomplete or inaccurate, the result is a lost opportunity. Add to it direct marketing expenses, and you have a dreadful combination.
Information quality also impacts other stages of the customer life cycle. For instance, the bottom line in growing customers is better information about the customer needs and wants that shapes response. If a company has good information about customers, it knows something about the customer that the competition does not. And if it is able to meld the various sources of information that are available externally, it has a clear perspective of demand and overall potential of the customer.
This type of insight can help a company reallocate resources to grow revenues from the best opportunities, which helps it outperform competitors in terms of revenue and profitability. In fact, it has been calculated that companies that use an information-driven solution for their sales and marketing efforts are growing revenues 40 to 50 percent faster than those that do not.
Companies need to ensure they invest appropriately in maintaining good information quality. It's the information and the ability to use it that drives companies to improve sales and marketing results across the customer life cycle. Without it companies will be missing key customer opportunities.
About the Author
Krishna Chettayar is assistant vice president of marketing strategy for D&B's Sales & Marketing Solutions. Previously he held the title of assistant vice president, customer information management solutions. In this role he focused on developing information management solutions to help companies achieve the promise of CRM, BI, and data warehousing. Prior to joining D&B Chettayar held positions such companies as GE Financial Assurance, Kraft Foods, and Sprint Communications. He holds an MS in integrated marketing from Northwestern University, and a BA in marketing from California State University, Fullerton.