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Data: The dirtiest four-letter word in CRM

Is bad data the real cause of CRM failure?

Where there is failure, there is usually blame…and the CRM market has seen its fair share of both.

A few years ago, when CRM initiatives were under scrutiny for high cost and low success rates, people blamed technology and those who sold it. CRM vendors became villains.

Kerry Glance
Glance

Then it became apparent that lack of a CRM strategy was the biggest hindrance in most of those cases where failure was reported. The technology was working just fine. The problem was with organization, sponsorship and acceptance -- all human issues.

Yet today, even companies who have a sound CRM strategy combined with the best technology are still not 100% satisfied with their projects. Now what can we blame? Something that has been staring us in the face all along: dirty data.

Think about the number of name changes, address changes, divorces, births and deaths that occur within a company's customer base on a daily basis. Add to that number all the customer records with missing or incorrect information. That's a whole lotta bad data. Change and error are both constants in life, and they make customer data management seem like a hopeless cause.

In fact, The Data Warehousing Institute (TDWI) estimates that poor data quality costs U.S. businesses more than $600 billion each year. Perhaps more alarming is the rate at which TDWI claims data deteriorates: up to 3% every month! Gartner's projections are equally as discouraging – it believes that 25% of critical data within Fortune 1000 companies will continue to be inaccurate through 2007.

Part of the problem is that CRM enables and encourages access to customer information across the enterprise. While that sounds like a benefit, it can also be a hindrance. The potential for errors increases exponentially with each additional person who enters or uses the data. Hence, the familiar saying "garbage in, garbage out" (a.k.a GIGO) – the quality of a company's customer-related decisions is as good (or bad) as the data they are based on.

And if internal data mishaps aren't detrimental enough, consider the damage that online customers can do when they intentionally enter false data in an effort to protect their privacy. (So much for the Internet as a tool for improving customer intimacy!) But herein lies the dilemma: if personalization tactics and loyalty programs are ever going to work, they must be based on reliable customer data. Trying to make CRM work without it is simply impossible.

There is hope. Forward-thinking companies appoint customer data stewards – individuals who are responsible for data management and data quality from a business perspective. Typical data steward tasks might include determining data security measures and working to resolve data integration issues. Some really forward-thinking companies tie incentives to the integrity of the data – the higher the data quality, the more the data steward is compensated.

For more information

Learn why some companies have hired data stewards

See just how bad the problem of dirty data is

Vendors are also stepping up to the plate. There are a growing number of firms who specialize in providing services such as customer data integration (CDI), data cleansing and data management. And many of the traditional CRM providers, recognizing the critical importance of data integrity, now embed data quality tools into their technology.

Bad data is just bad business. But good, clean and accurate data will assuredly save money and fuel customer growth. Really, data quality is a competitive strategy – and smart companies will treat it as such.

I say the CRM blame game is over. If failure is not an option, then neither is dirty data.

Kerry Glance is editor of SearchCRM.com.

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