The Divided Data Nation

Data quality projects are now widespread and most companies use prospect data. Yet gaps still exist and there are limits to how much customer data has been integrated. David Reed reports on findings from this year’s survey into readers’ data habits.

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Half of you reading this enjoy the benefit of a single view of your customers. The other half are still unable to create this strategic resource. What is striking is that the proportion of companies claiming a SCV remains relatively stable year-on-year. Among the 125 responses to this year’s online State of the Nation survey, 50.4 per cent have a unified customer database. Combine these with last year’s respondents and the proportion edges higher, but only to 53 per cent.

Despite this continued split between haves and have-nots, there is plenty of evidence of a healthy data culture within most businesses.

Significantly, this year three quarters of respondents said they have a data quality programme in place. That suggests a greater awareness of the importance of maintaining the health of data in order to leverage its value. So the one quarter of respondents currently tackling data quality, but who do not yet have SCV, do at last have the right culture and approach already in place.

Using prospect data from third parties is also widespread, with seven out of ten companies buying-in files. This is a very mature model of how to run customer acquisition marketing. So the only surprise is that three out of ten companies – rising to four out of ten when last year’s sample is included – are not benefiting from external data sources.

Despite the downturn, there has been continued investment into data projects. Innovation among service and data providers has also been extensive. If you work in one of the minority businesses which has yet to embrace data as a business critical resource, there has never been a better time to make the change.

A singular view of the customer database
To justify the creation of a single customer view, there has to be a clear business benefit. In 95 per cent of companies that have built one, marketing is the principal beneficiary. That department has access to the data and is often also the principal funder of the SCV.

Yet this access is not exclusive – and nor should it be. Sales has access to the SCV in 75 per cent of cases, followed by customer service (65 per cent). Finance is also a significant user in 57 per cent of companies that have this resource and the board is also able to get a unified view of customers in 44 per cent of businesses.

The rapid growth of customer insight as a value-adding function that really leverages the investment into SCV is clear from the fact that 60 per cent of SCVs are accessed by analysts. Even so, that means four out of ten unified customer databases are not being fully exploited to deliver key insights to the business.

An even bigger gap exists which suggests ongoing siloing between conventional business channels and newer routes to market. Just 24 per cent of dot.com units in companies that have integrated their customer data actually have access to that view. Given the growth and importance of e-commerce, this has to be viewed as a major gap.

Not surprisingly, the purposes to which SCV is put mirror the access available. As Chart 2 shows, marketing activities and customer relationship management are the major outputs from customer data. It is worth noting that customer insight as a use of this data is higher than the number of companies with a customer insight function – in many cases, either through resource or culture, analytics is not yet a standalone unit, but something which is carried out by skilled practitioners within other departments.

The expected alignment between marketing and risk management does not appear to have happened, however, with only 22.2 per cent of SCVs used in this way. It may be that the way marketing and risk view customers is so profoundly at odds with each other that they can never be expected to work together from a common resource. Even so, business planning is now central to the way SCV is being exploited.

Economic turbulence also appears to have done little to dent belief that SCV is a strategic asset that will continue to be maintained. Among companies already having this data view, 70 per cent say it is extremely important to their business and 24 per cent that it is very important. None were negative about its role.

As a result, investment plans continue to be positive or holding station. Increasing investment in SCV this year was predicted by 41 per cent, with 38 per cent saying they will continue to invest the same amount. Only 9.5 per cent are having to cut back their expenditure.

The only cloud on the horizon is around satisfaction with the information held on the database. While 12.7 per cent say they are very satisfied, 66.7 per cent are only reasonably satisfied. A small group – 11 per cent – are somewhat unsatisfied with the data held (and one respondent described themselves as very unsatisfied).

If the SCV does not serve its true purpose of providing an holistic view of the customer, then it is failing in its main task. This relatively soft level of satisfication may be down to the way data is captured – only half of SCVs are built with financial data included, for example. Totality is a hard thing to achieve and only a handful of databases will ever get there.

Economic turbulence has not dented belief that SCV is a strategic asset.

Among companies that have not built a single view, the main solution is for individual departments to go it alone. Half of companies lacking SCV are using data in spreadsheets, although 61 per cent have got an externally-built customer database. This is likely to be oriented solely around marketing and, while delivering valuable support and outcomes, is a long way off being an enterprise-wide strategic resource.

Companies are starting to recognise that they could do things better if they only had a better understanding of their customers. Among non-SCV users, improving the customer experience would drive the creation of this resource for 61 per cent of businesses, closely followed by improving the performance of sales and marketing (58 per cent each).

Databases are not something to be built for their own sake – there needs to be a clear business goal in mind. Only if it becomes obvious that things could be done better will the half of companies currently lacking integrated customer data be persuaded to adopt SCV.

Pitching for prospects
Using external data to target prospects is nothing new. Direct marketing is a decades-old discipline with highly developed techniques and service providers. So it is not unusual for 69.6 per cent of companies to be buying in prospect data. More surprising is that 30.4 per cent do not do so.

The volume of data bought reflects the 50:50 split among survey respondents across B2B and B2C businesses. Just over half (56 per cent) use from 10,000 to 100,000 records in a year, undoubtedly those targeting other businesses. At the high end, consumer-facing companies using from 500,000 to 5 million-plus records made up 30 per cent of the sample.

There is also a huge spread in the annual budget spent on prospect data. For 12.6 per cent, third party data is a minor budget line at just £1,000 to £5,000. At the other end of the spectrum, 13.8 per cent are spending over £500,000 annually. Pricing of prospect data can vary hugely, both in terms of volume discounts and also to reflect the purpose.

The emergent lead generation market can deliver super-premium data that would rapidly eat up small budgets, but equally would drive high conversion rates. Deciding how much to spend on prospecting has therefore to come out of business goals first, rather than an arbitrary budget figure.
Typically, users of prospect data work with multiple providers – six on average. With no single source able to provide the universe of either consumers or businesses, it makes sense to be looking at what different suppliers have to offer. Price is the main driver in how they are selected, however, with 55 per cent of companies saying this is what they base their choice on. But reputation mattered just as much to 54 per cent, indicating that clients are getting better at due diligence.

So how well are suppliers meeting these demands? The performance of prospect data is probably the most significant area of dissatisfaction. Just under 7 per cent were very satisfied with how their rented files worked and 37 per cent are reasonably satisfied. While just as many were neutral, 18.4 per cent were distinctly unimpressed. In a year when the behaviour of markets was extremely hard to predict, it is not surprising that prospect data sources had variable levels of success for marketers.

Data governance is emerging as a strategic driver of data quality.

Prospect data quality held up for just over half of users, but one in ten revealed themselves to be dissatisfied. Again this is likely to reflect the challenges faced by data owners in maintaining their information bases without the usual stream of activity from a normal market. At least they can be reasonably pleased about the service levels delivered, since the majority of clients were satisfied by this dimension.

And what of those who do not rent prospect data at all? Two-thirds say they have an in-house targetbase which in many cases has been built from salesforce records, online search, cold calling or business directories. Going it alone is all very well, but most companies using these approaches were just neutral about how well they worked. Price remains the biggest barrier to their adoption of third party data.

A lot of quality
Having a data quality programme in place is not only best practice, it is mandatory. Even so, one quarter of companies do not have this process active and among the three quarters that do, one quarter do not say it is for compliance purposes. With the Information Commissioner’s Office having acquired sharper teeth and demonstrating a keenness to test them out, this is not a smart attitude.
In two thirds of companies tackling data quality, it is the operational benefits that result which are the driver, together with CRM and the integration of customer data. That reflects a more strategic position for data across their companies, which is also closely aligned to a business case.

Less easy to persuade the board about is the role of data quality within environmental or corporate social responsbility policies – only one third said this was a driver. Surprising, customer service (49.5 per cent) and performance improvement (39.8 per cent) are not the big drivers of quality projects that might be expected.

Given the central role of marketing as owner of the single customer view, it is no surpise that this department also manages the data quality programme in 83 per cent of companies where one exists. Other departments lag behind in recognising that they need to engage with cleaning and maintenance of data. Dot.com is the most obvious laggard – just 5.4 per cent of companies say this division manages data quality, despite the high frequency of contact (and therefore potential for data capture and refresh) which this channel offers.

Data governance is starting to emerge as a coherent strategy, however, with one third of data quality programmes run centrally by this function. In a further 27 per cent of companies, the data quality programme has a corporate strategy that individual departments follow. However, the same proportion of companies leave it to individual functions to follow standalone projects.

Co-ordination between departments continues to be patchy and only 9.7 per cent of programmes have an integrated working party. This may reflect the fact that just over one third of data quality programmes get reported on at board level. In more than half of cases, there are no business-level or individual-level KPIs.

Closing the data gaps
If there is a glaring gap within the emerging data culture of UK business, then it is here. Who takes responsibility for data and owns its quality and performance? Marketing is used to answering for the latter, but often ducks the former, pointing upstream and downstream for any faults.
Yet the reality is that the benefit of data, whether integrated into a single customer view or just rented in for prospecting purposes, can only be fully realised if it is fit for purpose. That means setting a standard and ensuring everybody knows what it is and conforms. It has been a hard year to make the case for data investments. But nobody should be putting money into an asset that is not properly maintained.

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