The quandary of bad data has flustered marketing professionals for decades. It’s pretty obvious that outdated customer information wastes time and resources as well as reduces opportunity creation and revenue, but it’s so hard to quantify rarely is action taken. Fear not, there is a way to change this paradigm…
Based upon the visionary work of W. Edwards Deming, the software industry adopted the “1:10:100” rule to measure the financial impact of software defects throughout the development lifecycle. For example, a defect caught in development phase costs a factor of 1x to correct, whereas a defect caught after production release will cost a factor of 100x to correct. Using this system, engineering and IT could justify investments around automation and quality assurance.
The same logic has been employed by industry analysts in the marketing realm relative to the cost of dirty customer data. Research and advisory services firm Sirius Decisions estimates that the cost of each record increases exponentially throughout the customer relationship as follows: $1 to verify record upon entry, $10 to clean and de-dupe after entry, and $100 per record if nothing is done. When you think about the number of inbound records coming into your marketing database every month, combined with the volume and age of your existing records, you can imagine how these costs (and opportunity costs!) manifest.
Based on our experience at ReachForce, for every 1% of data quality improvement, marketing can generate 5-6% of incremental revenue in concert with sales execution. Another data point from Eloqua’s 2011 Marketing Automation Benchmark Report reveals that companies that employ consistent data hygiene create 7 times the number of inquiries and 4 times the number of leads. Combined with lead scoring, marketers can achieve up to 11x lead generation “lift.” Now that sounds like low hanging (revenue) fruit!
In sum, using the 1:10:100 rule, marketers have another tool to justify critical investments in customer data quality to drive significant improvements in campaign execution and lead conversion rates. Leveraging customer data and industry statistics, ReachForce has developed an ROI model to empower marketers to drive the adoption of data hygiene practices. We’d love for you to “reach” out here to learn more.