The High Cost of Low Quality Customer Data – Or – Why Does My Wife (Still) Get (So Many) Duplicate Catalogs?

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First off, let me admit something: in my household, we do our share of direct response shopping, via Internet and mail catalog. A wrought iron floor lamp from Morocco and a wall clock from France for the kitchen, flexible thumb picks for me to play my baritone uke, a cast brass walking stick holder from New Zealand for the foyer……well, you get the idea. As a result, our family, especially my wife, gets a ton of catalogs and other promotional content. Not a week goes by that she doesn’t get two of the same catalog, one addressed to her name when she was previously married and one addressed to her name now. Even though we’ve been married for many years, these catalog companies are obviously using databases that are neither clean nor current.

Clean and current data are but two aspects of data quality. According to the Navesink Consulting Group, data are of high quality “…if they are fit for their intended uses in operations, decision-making, and planning.” That means the data:

– Are free of defects: accessible, accurate, timely, complete, consistent with other sources, etc.
– Possess desired features: relevant, comprehensive, proper level of detail, easy to read and interpret, etc.

Using these criteria, even in this era of sophisticated merge-purge in the name of better, more efficient marketing, no customer database is error-free; and the high level of erroneous data has become a high-cost problem for suppliers and an annoyance for customers. In a recent study, close to 80% of consumers polled said they dislike receiving duplicate pieces of mail for the same promotion. But, names can also be misspelled, or mail pieces can be sent to former residents or the wrong address. High quality data and the sophisticated statistical techniques to analyze this information are absolutely essential for successful customer programs and processes. Everything is potentially important in customer relationships – historical purchase data, essential demographics, and life style characteristics – so suppliers are becoming increasingly concerned.

The range of estimated errors in most databases is quite broad. I’ve seen percentage figures that go from the low single digits to forty percent, and higher. Errors can come as a result of keying errors, misheard names and addresses, or straightforward multiple entries of the same data. They can also arise from poor list merge-purge programs, errors when data streams are integrated, infrequent cleaning, and so on.

Costs associated with poor data quality go well beyond the easily identifiable, and obvious, waste from mailing duplicate merchandise catalogues. They include dealing with customer complaints caused by data errors, and the staff costs involved in checking databases, finding missing data, and fixing incorrect data. Order entry staff, for example, may spend up to 25% of their time performing these tasks. In a company with 40 people on this staff, that would equal 10 effort-years annually. Further, if the loaded cost for each of these staff members is $50,000 per year, the annual cost associated with data errors – in just this one area – would be $500,000!

Lutheran Brotherhood (now Thrivent Financial for Lutherans), a member-owned fraternal benefits organization (mutual funds and annuities, insurance, estate planning, college and retirement programs, etc.) has several million member names and addresses spread across several product and service line databases. In addition, they have millions of names in their prospect database. Several years ago, they often ran into customer service problems, one of which centered around delivery of their bi-monthly magazine. If a household had multiple members, and they requested multiple copies, there were questions about why they were getting only one copy. Also, like my wife with merchandise catalogues, the same member might get multiple copies of the magazine even if they should have received only one.

The organization was principally using front-line staff to rectify member data quality problems, but this was both expensive and inefficient. They undertook a process to centralize all member information into one database (customer data integration), so that employees would have a complete view of their members. This was a proactive and positive first step, but it didn’t eliminate the bigger problem of duplicate names and addresses. Staff were still responsible for the name file searching and matching process, functions that were costly, time-consuming, and negative for morale. According to a senior business analyst for the organization: “We were spending too much time entering and cleaning duplicates.”

They solved this issue by using advanced linking software to de-duplicate member and prospect names from the organization’s database. Their entire file of can now be cleaned for duplicates in just a few hours. Much of the problem surrounding magazine delivery evaporated as a result.

Data quality upgrade efforts such as these are usually transparent to customers, and they should be. The real rewards of higher quality data, however, are improvements in areas of customer relationships such as service and market research, and greater efficiency in marketing and other customer-related processes, making CRM and customer experience management activities more productive and consistent.

I haven’t even mentioned that the lack of personalization and overall data quality sends many bland and untargeted email promotions our way. This is another major data management, customer experience, and marketing communications effectiveness issue, and it’s extremely important in building and sustaining relationships, as well as controlling costs – but it’s a topic for another day.

Michael Lowenstein, PhD CMC
Michael Lowenstein, PhD CMC, specializes in customer and employee experience research/strategy consulting, and brand, customer, and employee commitment and advocacy behavior research, consulting, and training. He has authored seven stakeholder-centric strategy books and 400+ articles, white papers and blogs. In 2018, he was named to CustomerThink's Hall of Fame.

10 COMMENTS

  1. I get lots of marketing material in the mail that has my current name (actually the one I was born with), but are based on interests I haven’t had in decades. That said, some of my high-rise neighbors leave their extra copies of interesting catalogs in the mail room and I’ve been known to pick one up to browse. While I haven’t bought any walking stick holders or thumb picks, I wonder if there are enough random customer acquisitions to offset the extra printing/mailing costs. Just a thought, although of course you are correct!

  2. … but I think it needs an overhaul as a strategy to be useful *this* century.

    I wonder how many customers are lost because of this. I would have to think your margins must be too high if you can afford to send me six versions of the same catalog.

  3. ..depending on size, number of pages and colors, and quantity, not using clean and targeted/accurate data for promotions, and relying on serendipity for the catalog to find a monetizing home, is more along the lines of a “Cast Your Fate To The Winds” (1963, Vince Guaraldi Trio) strategy.

  4. Mike, Back in the days when merge/purge was invented – it was repeatedly argued that if you removed duplicates, you would generate a higher response rate. I conducted numerous tests and it NEVER was the case. How could this be? Well, my theory is that first, the very very best people to mail, are mail-interested people – so they are already on many lists. If they receive more than one catalog, they are much more likely to give it to a friend than if they received merely one. A catalog from a friend is about 1000x more powerful than one that just arrives in the mail. @JRMigs

  5. …in all of the studies I’ve seen, or conducted, with respect to receipt of duplicate content, recipients simply discard the dupes. The incidence of saving a brochure or catalog, and passing it along, is very low. In addition, receipt of multiples of the same piece of promotional material impairs trust and efficiency perceptions, a key element of reputation and image, which has a corresponding negative effect on marketplace behavior.

  6. … Did they control for the prestige value of the catalog? I’d be more inclined to give you my extra copy of, say, Prada than Walmart…

  7. I cannot site academic studies – frankly do not put much stock in them. Eventually ALL catalogs end up in the trash and the vast majority sooner than later. I can say with complete confidence that removing the duplicates did two things: first, it cut down on the customer complaints, second it increased the cost while the response the remained the same (which probably explains your wife’s situation). The compromise which I have advocated since is to use merge/purge to identify duplicates, then hold them for a week or two and mail them later. Make sure you notify list owners.

  8. …a key element of perceived trust and reputation, both of which drive customer behavior, so this can’t be minimized as a benefit of merge-purge (http://www.customerthink.com/blog/addressing_customer_complaints_truth_or_consequences_of_using_social_media_to_help_protect_bran). As noted, there are multiple methods for addressing and reducing complaints. For duplicates, the cost associated with reducing or eliminating them is likely more than offset by the greater trust this will create. Mailing the duplicates a week later could have the same effect of advertising repeat and reinforcement, or flighting, i.e. if there is any value seen in the catalog or brochure the first time around, the second viewing may be enough to stimulate action.

  9. Hello Michael,
    Long-time Customer Think reader, first time commenter!

    Thank you for the though provoking article above. I have to wonder how of this mailing can be tied back to corporate culture, namely Marketers that need to be able to check a box when it comes to their action-oriented goals?

    I once worked in an organization in where we were able to show across several global studies that sending one-page paper flyers to each of our 1,000's of locations was not a good strategy for changing front-line behavior. Our associates were frankly afraid to change what they were doing and needed someone to model their behavior after—they weren't going to change because a piece of paper told them to do so. What was stunning however was Marketing's response, rather than investing resources in creating change-agents in our locations they continued to spend tens of thousands of dollars on these one-page flyers.

    What seemed to motivate them was being able to check a corporate box, to create the appearance they were 'doing something'. There seemed to be an absolute reluctance to admit that a. We know we need change agents, but b. We are not quite sure what that means or how to create them. For me these points back to the need for a corporate culture that allows its employees to explore these issues, they may not be 100% right each time but it is better than continuing to do something that has been shown not to work.

    Your post makes me wonder if the catalog issue might not be a manifestation of similar phenomena, could these be print Marketer's that are not sure what is 'next' in their field simply relying on what is comfortable for them? And if so can the CEM skillset be turned inward to address this type of culture issue?

    KD

  10. …and technology investment by senior enterprise executives, will typically contribute to these challenges – which represent an array of accompanying contributory issues, including poor systems, lack of customer focus/centricity, and general sloppiness where marketing and communication are concerned. In these circumstances, unengaged, disaffected and unmotivated employees will also be evidenced among drivers of negative customer behavior.

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