Accurate data must be at the heart of any effort to reach b-to-b customers and prospects. But 70.8% of all business people change one or more elements on their business cards each year, according to a recent study by the Sales and Marketing Institute, so the challenge of maintaining accurate data can be daunting, even for the most savvy direct marketers.
"Itâs probably the single most important factor in marketing products and services to a particular population," said Bernice Grossman, president of database marketing consultancy DMRS Group Inc. and chairman of the Direct Marketing Associationâs B-to-B Council.
Industry observers say data-quality techniques are gaining the spotlight and may have overshadowed expensive customer relationship management projects for now.
The two major data-quality processes are "data hygiene" and "data appending." Data hygiene refers to cleaning and standardizing customer information using software that flags errors, inconsistencies, typos and incorrect postal coding. Data appending gives marketers more information about their customers by tapping into third-party databases.
Money is a big motivator behind these data-quality initiatives. Many companies have expressed disappointment with newly installed CRM systems. Those multimillion-dollar packages were supposed to provide a complete view of customers, with full integration of data from every corner of the business. But they often fell far short of that promise. There have been endless studies conducted to get at the heart of why CRM has come up short. Flawed execution and lack of senior management support are often cited as the main culprits. But perhaps the biggest roadblock has been poor data.
"A lot of CRM projects have failed because of bad data," said Robert Lerner, analyst-business intelligence and data warehousing for Current Analysis, a research company. "Multiple silos with marginally bad data is chaos."
Others agree. "Quality data really are the basics," said Lawrence Hefler, VP-e-business and strategic alliances at Hilton Grand Vacations Co. "Only quality data will lead you to the right customer."
Jeff Canter, exec VP-operations at Innovative Systems Inc., a data-cleansing software company, said, "It [quality information] is what is needed to get anything out of that CRM investment."
Companies have retrenched and are dealing directly with the issue through data cleansing and appending. These applications now go beyond merging records and deleting duplicate names and addresses to encompass address standardization, the addition of relevant information to customer records and the integration of data from disparate sources. This cleansing and appending can be done periodically through "batch" processing or in real-time, a recent innovation enabled by the Web.
Improving data quality enhances marketersâ ability to target existing customers. "Companies are looking inward and saying, âHow do we get more business out of our current customers?â " said Steve Varsolona, information quality market director at Firstlogic Inc., a data-cleansing company. In the b-to-b world, he said, that might mean understanding how many related companies, i.e. parent company and units, are contained in a database and then finding a way to provide discounts for combined purchases.
Christopher Lucas, VP-sales and marketing solutions at business database giant Dun & Bradstreet, noted, "The cost to acquire a new customer is anywhere between five and 10 times more than [the cost] to retain a customer."
In addition to providing better customer targeting, data quality initiatives can bring cost savings. Postal discounts, for example, are awarded to companies with standardized and coded data.
Driven by bottom-line pressure, companies are looking to data-quality initiatives to provide significant cost savings. "Data quality is an issue thatâs going from the mailroom to the boardroom," said David Peiken, corporate communications director for Group 1 Software, a data-cleansing company.
Itâs a shift born of necessity. "Companies are under significant pressure to reduce their expenditures," said Bob Zurek, VP-advanced technology at Ascential Software, another data-cleansing company. "Theyâre reaching a limited audience with poor data. Whether itâs an e-mail blast or bad zip code information, you have a cost issue."
Barry Litwin, director of marketing at Labelmaster, a manufacturer of hazardous materials signage and labels, said, "Itâs expensive to reach people who have no interest in your product."
Cleaner data have helped Landsâ End Business Outfitters mail 25% fewer catalogs this year while maintaining its revenue level. "By reducing circulation and costs, weâve managed in a very short time to achieve much higher pre-tax profits," said Rick Horton, direct marketing manager of the Business Outfitters unit, Landsâ Endâs b-to-b corporate apparel division. The unit used cleansing tools to "determine clearly who the recent buyer is at a company vs. the person who bought three years ago," he said.
Need for quality growing
The need for database quality has grown with the evolution of the Internet and its ability to gather large amounts of customer information, as well as the ease with which various departments can now access vast amounts of customer data.
Finding a way to keep up with business customers and the ever-expanding data associated with them may be the next Holy Grail in database marketing. Once companies master the delivery of clear marketing messages using data-quality software to reach the right customers at the right place, the next step could be to formalize a way to automatically maintain that clean house.
"The ability to know where contacts within an organization go" is the biggest challenge for b-to-b mailers, Horton said.
DMRSâ Grossman agreed. "The next really huge product somebody is going to come out with is a âmoveâ list,â " she said. "You donât put in a change of address when you switch companies. If you are my customer, I want to do two things: I want to know who replaced you, and I want to stay with you when you move to a new company."