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40% of BUSINESSES DO NOT VALIDATE THEIR DATA

19/09/2008

So how do they know who their customers are?

Experian®, the global information services company, has revealed that 40 per cent of Australian businesses do not validate any of the information that they collect and that 45 per cent do not have a data quality strategy at all. This raises the important question of how do businesses know they are talking to the right people in the right way?

The report Contact data: the profit maker or neglected asset?, commissioned by specialist data integrity business Experian QAS, surveyed 2,078 respondents with a data-related role within companies and showed that 30 per cent of Enterprises and 47 per cent of SMEs do not have a data quality strategy.

The absence of a data quality or validation strategy means organisations of all sizes have databases comprising of inaccurate or out of date data. Poor data quality raises environmental and data fraud issues and impacts revenue, with 96 per cent of organisations recognising the negative impact poor data quality has on revenue.

Besides impacting revenue and raising environmental and identity theft concerns, poor data management can also affect:

  • Customer satisfaction
  • Brand reputation
  • New customer opportunities
  • Customer retention

"People want to interact with businesses they trust," says Matt Glasner, General Manager, Experian QAS in Australia and New Zealand. "As the type of contact data held on individuals becomes more sophisticated, there is an expectation from customers that organisations will be more respectful of it. It's not just about a name and address anymore, information about people's lives and lifestyles is very much a part of delivering tailored products and services."

Who is responsible?
In Australia, 45 per cent of businesses have a data quality strategy and 97 per cent of those businesses have a person in charge of maintaining data quality. The Head of IT is the most common data champion in Australia on 14 per cent, followed by:

  • CEO - 12 per cent
  • Head of Marketing, a dedicated Database Manager and other - 11 per cent each
  • CRM Manager - 9 per cent
  • IT Manager - 8 per cent
  • Head of Sales and Marketing and Marketing Manager - 4 per cent each
  • Managing Director - 3 per cent
  • Head of Sales and Sales Manager - 1 per cent each
  • 6 per cent of respondents didn't know

The sales department is the most usual point of initial customer contact and the most likely and logical department to capture customer details. Why then are only 2 percent of data quality champions dedicated sales managers? Organisations need to establish clear data strategies from the outset, minimising potential problems with ongoing customer contact.

Poor quality data can lead to returned mail, rising postage and delivery costs, poor customer service, additional administration to filter erroneous customer contact and lost revenue.

If the consequences for businesses are so varied, why then is data not a high priority?

SMEs vs. Enterprises
Data quality is a critical component for Enterprises and SMEs alike. A poorly managed database in an Enterprise can have huge financial impacts, as there is a greater volume of customers. However, efficient and consistent customer contact is essential for SMEs who are establishing themselves and may not have the revenue to waste on returned mail and the associated administrative costs.

Some key findings of the report on SME's vs. Enterprises are:

  • 53 per cent of Enterprises have a documented data quality strategy compared with 38 per cent of SMEs
  • 23 per cent of SMEs set the target for accuracy of contact records at 100 per cent compared to 13 per cent of Enterprises
  • 27 per cent of Enterprises say they use the analysis of their customer databases in strategic planning every day compared to 17 per cent of SMEs
  • 63 per cent of SMEs say the responsibility for data quality rests with someone who sits on the top-level management team / board compared to 41 per cent of large organisations
  • On average, 58 per cent of SMEs say more of their employees are bought into the importance of data quality compared to 46 per cent of Enterprises
  • 32 per cent of SMEs say they are 100 per cent compliant with database-related regulations than Enterprises on 23 per cent
  • However, 24 per cent of Enterprises say they are at least 90 per cent compliant compared to 19 per cent of SMEs
  • 98 per cent of Enterprises think inaccurate and incomplete data costs their organisation in revenue, resources and productivity compared to 93 per cent of SMEs