Is Data Cleaning an Investment or a Cost?

Is Data Cleaning an Investment or a Cost?

A 2015 survey conducted by Royal Mail Data Services has highlighted a startling statistic – that less than 40% of businesses take Data Cleaning seriously! Well, that’s what I take from the stats anyway – read on and tell me what you think…

The survey, conducted throughout this year, has shown that 63.3% of UK businesses reported holding out-of-date customer information within their client database. Even then, of the 37% or so who do hold up-to-date information, over 60% of those admit to having blank fields within the database, i.e. incomplete records!

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Clean Data is Essential

Data Cleaning is Good Business Practice

Why? Well, notwithstanding the potential issue of compliance under the Data Protection Act, in my mind, not taking Data Cleaning seriously is, to coin a phrase from the film Pretty Woman – “Big mistake…big…HUGE!!!” Here’s why:

1- Of those companies that continue to grow year on year when their direct marketing activities are reaching just 37% of their customers, imagine how much more they’d grow if their direct marketing efforts were reaching that missing 63%

2- Of those companies that aren’t growing and, instead, are possibly struggling, the key to survival is staring them in the face

It stands to reason – if you undertake regular Data Cleaning, you will always use good, clean data and your results will be better than if you don’t. Rubbish in = Rubbish out.

Picture of two rubbish bins, one says IN the other OUT, equals sign between them

You Do The Math…

Data Cleaning need not be an expensive exercise and in many cases, when compared to the alternative – working with unclean data – avoiding the perceived “cost” of Data Cleaning is counter-productive and, in some cases, nigh on insanity. Put into simple terms, Data Cleaning is an investment, not a cost. Let me give you an example, using a not uncommon percentage of 50% inaccuracies:

Scenario 1 – A company has a budget of £1,000 and for that budget, sends a mailshot to its “uncleansed” database of 1,000 customers. Of those 1,000 customers, 500 receive the mailshot and 500 are returned “Gone Away”. Of the 500 received, 5% take up the offer – 25 customers. They spend an average of £100 each with the company, bringing in revenue of £2,500. After deducting costs, the profit is £1,500 and the company has a database of 500 good, clean records to continue marketing to.

Scenario 2 – With the same budget of £1,000, the company first spends £250 on a Data Cleaning exercise. After cleaning, it has 750 “Good” records to send its mailshot to (370 records were already good, 380 more have been updated with correct information, but 250 businesses have closed or can’t be matched etc). It sends 750 mailings (for £750) and all are received, with 5% taking up the offer – 38 customers. They spend an average of £100 each with the company, bringing in revenue of £3,800. After deducting costs, the profit is £2,800 and they have a database of 750 good, clean records to continue marketing to.

It’s clear that investing part of the total budget on Data Cleaning results in a much improved Return on Investment, not only in financial terms, but also in the fact that a larger clean database is held for future marketing efforts. This will, in turn, deliver improved future financial returns.

MARKETING word cloud, business concept

It’s a No-Brainer

OK, so the above example is simplified and focuses on a mailshot only, but it does highlight the false economy that many companies place on spending money on Data Cleaning pretty well, I think. And yes, the cost of Data Cleaning may differ – that depends on the quality of the database to start with. That said, since we offer Free Data Cleaning Audits, the first step of any direct marketing campaign ought to include consideration of a free Data Cleaning audit – it’s a “No-Brainer”, you could say.

The example also transposes to telemarketing very well, since you also have to factor in a cost for wasted time calling dead lines, asking for people who aren’t there any more (then going through the process of finding out who does that job now etc), increased number of calls etc. As for emailing, there’s nothing more disheartening than sending a broadcast and getting a 40% bounce rate reported back – and the time taken to manually update all those records even if only removing the email address, rather than finding the correct new one (which would be done for you during the Data Cleaning process).

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So, you tell me – Is Data Cleaning an investment or a cost?

My message to anyone who forms part of the 63.3% is simple – you’re missing a trick. If the example above doesn’t get your cogs turning, I don’t know what will. That said, we’re here to help, so if you find that your direct marketing activities are often met with an increasing volume of returned mailings, dead telephone lines or an incredibly high number of email bounces, maybe it’s time you gave thought to getting a Free Data Cleaning Audit…in which case, contact me for more details on 01274 965411.

You can read more about the findings of the survey by clicking HERE


Other Blogs That Might Interest You (Click to Read):

Poor Quality Data Means Money Down the Drain
Keep Clean Data and Don’t Miss a Direct Marketing Trick!
How Much can Clean Data Add to your Bottom Line?