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Customer data quality being ignored at peril

18th Feb 2009
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Most firms say they are looking to concentrate on better customer service to survive tougher market conditions, yet a woeful number have failed to even gather the right data identifying who exactly their customers are.

By Stuart Lauchlan, news and analysis editor

Despite the importance placed on customer monitoring in the economic meltdown, nearly a third of UK businesses lack the data management capabilities needed to understand who their most profitable contacts are.

According to a report by credit information firm Experian, some 30% of 600 professionals responsible for data management that were surveyed admitted their employers had not profiled contact data, while less than half of those polled analyse their most important clients to influence marketing plans and bring extra revenue to the business.

"Nearly a third of UK organisations admit that they do not even know if they have the right name and address details for their most valuable client contacts."

Stuart Johnston, UK managing director, Experian QAS

"The bedrock for any customer management strategy is having high quality data insight," says Stuart Johnston, UK managing director of Experian QAS. "Nearly a third of UK organisations admit that they do not even know if they have the right name and address details for their most valuable client contacts."

This has potentially serious implications for any business trying to grow in the current economic climate, he warns. If the customer contact data isn't right to begin with, then it's almost impossible for an organisation to identify who its good customers are.

As things stand, one in four of respondents were unable to name who the top users of their products and services are, while only 45% use analysis of their best customers to influence marketing strategy and drive new business.
"If inaccurate data is used to inform customer strategy then there is a risk that the wrong decisions could be made," notes Johnston. "Take simple steps to improve data quality and the benefits will long outlive the recession."

Lip service or customer service?

That said, there appears to be some awareness of these shortcomings as most respondents said that their organisations intend to invest heavily in data quality over the next six months to improve their contact data management strategies. But Johnston warns: "Investment should be governed by a clear strategy to ensure that it is concentrated in the right areas and will have a quick impact on business performance."

The question of the right areas is not one that is being addressed by an alarming percentage of firms. Some 20% of those surveyed didn't know how much they were going to be investing, while 55% of respondents admitted that they didn't have a data strategy in their organisation – or if they did, they weren't aware of it!

"Having accurate customer information is not the only solution for surviving in tough market conditions - however, it's not a bad place to start," Johnston points out. "A clear data strategy will ensure that effort is concentrated in the areas that will make the biggest impact on business performance. Combine this with measurements to track ROI and data can become a real business asset."

In the report, Experian found that funding is still available for data management projects, but that timing is everything. "Investment in data management must happen before the data becomes critical for decision making," Johnston adds. "Only half of organisations said that they have good levels of trust in their data in terms of it being clean, accurate and up to date."

"Investment in data management must happen before the data becomes critical for decision making."

Stuart Johnston, UK managing director, Experian QAS

He says the three main reasons for such a lack of trust were insufficient internal resources, lack of budget and a lack of an overall data strategy. Only half of respondents reckoned they could trust their data quality completely. Those least trusting of it are people working in marketing and CRM related roles.

So, what's to be done? Experian advises that firms should ensure that data management projects are tied closely to business initiatives such as customer retention and single customer view initiatives where the outcome is intended to improve customer intelligence and communications, and where ROI can be delivered within the first year of investment.

Organisations also need to see the bigger picture when it comes to their strategy. Small, quick fix projects are fine for localised issues and problems, but it's only with an organisation-wide view of data quality issues that you can prioritise projects and investments based on relevant criteria.

Jonathan Hulford-Funnell, global managing director for Experian QAS, says: "When pitching for budget, you must ensure that your project ties in with wider business objectives. At the moment, three topics that are hot on many boardroom agendas are: how to strip out cost, how to protect revenue/make customers sticky and how to improve efficiencies. Data plays a key role in all three. Position data quality as a solid foundation for improving business performance."

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