Dynamic Business

Data quality is still a global issue but many organisations are still not taking basic steps to care for their customers’ data. Failure to invest in a data strategy will not only waste money but also isolate customers and put businesses on the wrong side of the law.

Creating a culture of contact data excellence where responsibility for data quality is given at board level is the only way businesses can ensure that employees believe in its importance. Inaccurate data can damage both brand value and bottom line profits.

Consider the cost inaccurate data has on organisations worldwide. The report Contact data: the profit maker or the neglected asset? commissioned by Experian QAS found that the overall approach to data quality and integrity in organisations around the world is what can be described as at best half-hearted, at worst, cavalier. The study revealed there have been some improvements in the last two years but there is still a lot more to do worldwide.

Less than half (46 percent) of organisations worldwide have a documented data quality strategy in place, with only North America and France citing more than 50 percent of their organisations as taking such action. In a similar picture, 49 percent do not have any targets around how accurate, up-to-date and complete their customer records are. Unbelievably, a further 34 percent of organisations do not validate any of the information they collect on their customers and prospects, whether that be name and address, contact number, email address or bank account information. Despite these unacceptably low figures, organisations are beginning to take data more seriously as only 27 percent told us they had a formal data strategy two years ago. And although you would agree that this is a step in the right direction, there are still a significant number of organisations lagging behind.

Risky business
So what is the impact of this cavalier approach to contact data management? What organisations most definitely are aware of is the damaging effect bad data has on their profits. More than 90 percent of respondents believe that inaccurate and incomplete customer or prospect data costs their business in terms of wasted resources, lost productivity or ineffective marketing and communications spend. This is a significant increase from our study in 2005, when only 73 percent of respondents recognised its impact. Digging deeper into the impact on the bottom line, respondents now estimate that the amount of budget (or funding) wasted due to inaccurate data could be as much as 19 percent, much higher than the six per cent previously cited.

Wrong side of the law
However, financial hazards are not the only risk here. Inaccurate data is also leaving many organisations dangerously vulnerable to breaches of national and international data regulation. Only 27 percent of organisations worldwide say they are 100 percent compliant with database-related regulations, down 10 percentage points from 2005. UK organisations are ahead of their global counterparts and, on average, 87 percent claim to be compliant with database regulations, perhaps due to the structured and mature regulatory environment. That said, in the UK, very little action has been taken by the Information Commissioner’s Office against firms that do not abide by the Preference Service laws. This could change with the new focus on the protection of personal data and organisations may have to brush up their act. The Netherlands holds the lowest average compliance level at 73 percent.

Whose responsibility?
To get a measure of where many companies are failing worldwide, it is important to look at where responsibility lies for ensuring high data quality standards across an organisation. Businesses as a whole appear unable to decide who should own and champion data quality, often making it the burden of middle management. Only three job functions: head of marketing, head of IT and “a dedicated database manager,” scored double figures, with the highest, head of IT, only reaching 15 percent. With these levels of inconsistency, it’s perhaps not surprising that the level of employee buy-in to the importance of data quality is low. On average, organisations say that only 52 percent of their employees believe in its importance, ranging from 54 percent in North America and Singapore to an average of 46 percent in Australia. What is perhaps more worrying is that certain regions had many organisations actually claim not to know how bought into data quality their employees are, with 32 percent of Singaporean organisations and 27 percent of UK organisations falling into this category.

How to fix it
This lack of cohesion and lethargy towards data needs to be tackled at boardroom level if previously mentioned revenue losses are to be reduced. Members of senior management need to have responsibility for pushing data quality targets, yet only half of organisations have somebody at board level championing data integrity. Meanwhile, this very data that organisations are neglecting is in many cases (23 percent) used on a daily basis for strategic analysis and decision-making. Directions that the board and management are driving the business in are influenced by data, whether that be financial reporting, customer analysis or marketing strategy. So that data, which paints a picture of the customers, needs to be right.