Industry news

Regulation and reward

Experian QAS UK Managing Director, Stuart Johnston, looks at the range of incentives that organisations have to improve data quality, from those that punish bad practice, to those that reward good practice.

Strong customer relationships are the foundation of good business, and data quality is crucial for any organisation that wants to get to know its customers and establish these long-term relationships. In the current climate, smart organisations realise that paying care and attention to their customers helps protect revenues and ensure stability. However, good customer relationships don't happen overnight; rather, they rely on an effective communications strategy that is underpinned by accurate data.

Targeted communications

Organisations that invest in contact data management have a greater ability to send out targeted communications that are relevant, make customers feel valued, and encourage them to build a sense of loyalty to a brand. Good data quality also improves ROI on marketing campaigns as they are better targeted, and reduce an organisation's carbon footprint by minimising direct mail wastage.

Despite this, many organisations still have an inconsistent approach to contact data management. Experian QAS's 2009 global research study into the data practices of organisations found that only 45% of organisations in the UK and Ireland have a documented data quality strategy. Only two thirds went on to say that they clean their data on at least an annual basis. To address this and move data quality up the corporate agenda, a number of initiatives have been launched by governments and industry bodies. There are two main approaches emerging. The first is regulation, the second, reward.

Decaying data

Last year in the UK, updated Consumer Protection from Unfair Trading (CPUT) legislation put pressure on organisations to review decaying data. As a result, organisations that persistently contact customers and prospects who have registered with the Telephone Preference Service and Mailing Preference Service could find themselves with a maximum £5,000 fine or up to a two year prison service.

This move is unsurprising, as unwanted mailings frustrate consumers and have a negative impact on the environment. Compliance with the CPUT rules is fairly straightforward if the right data tools are in place. Suppression technologies can be easily implemented to highlight customers that have registered with the Mailing and Telephone Preference Services and outreach can be tailored accordingly.

Proposed legislation in Ireland is financially much tougher. The Irish government has announced that businesses could face fines of up to €250,000 (£243,000) if management of their customer database is not up to date. The tightening of the law will again crack down on organisations that send unsolicited mail to households.

Data quality strategy

Both pieces of legislation underline the importance of a data quality strategy that lowers duplicate records and misdirected mailings. And with many feeling the pinch of tightening marketing budgets in 2009, financial penalties are certainly one way to make organisations take action. But cracking the whip to improve contact data management is not the only approach being used to improve data quality.

The Royal Mail and the Direct Marketing Association (DMA) have been heavily involved in initiatives to improve data quality and reduce the environmental impact of direct mail. The Royal Mail has launched a scheme to reward organisations for their green approach to mailing. To qualify for mailing discounts, organisations must meet green standards to reduce unnecessary direct mail production. This is to be achieved through the use of data services, such as suppression of addressees who do not wish to receive direct mail, and switching to sustainable material to encourage recycling. In parallel, the DMA is launching an environmental standard, PAS 2020, for direct mail. The main benefit of PAS 2020 is that it will allow marketers to display their planet-friendly credentials as targeting and suppression, while the major impact on data quality and the effort to make direct marketing's waste production lower will be invisible to recipients.

Data quality on the map

Data quality regulation, like data quality reward incentives, has advantages and drawbacks, but more importantly both approaches are helping to put data quality on the map. At present, marketing departments and data quality are often overlooked in CSR audits. As data quality gradually moves up the corporate agenda, it is possible to imagine a time when data quality will form part of a wider corporate social responsibility (CSR) initiative.

Good data quality has many widespread benefits, such as improved customer perception of the organisation's brand, reduction of waste and protection from fines. But to take advantage of the benefits, organisations need to move away from an ad hoc approach to database management. Both from a regulation and a reward perspective, there is no shortage of incentives to do so.