Improving data quality is at the heart of the upcoming General Data Protection Regulation (GDPR), writes Jim Conning is Managing Director of Royal Mail Data Services
However, ensuring that the information that companies hold on customers is as accurate as possible should not just be a legal issue – it’s a practice that makes good business sense too. After all, how can companies anticipate customers’ needs if they haven’t even spelled their names correctly?
The GDPR threatens to fine companies up to four per cent of global turnover or €20 million, whichever is greater, if they are found to be using inaccurate data or processing it without a recognised legal basis, such as consent. However, the regulation also creates a deadline for them to improve their customer engagements and marketing efforts, something which might ultimately turn out to be a major opportunity to change the way they do business.
How Data Quality Can Impact a Business
Collecting and storing poor-quality data is easily done. Data may be inaccurately recorded at several different points in the data-capture process: the point of data entry, database conversion or database consolidation. Alternatively, it may be that information simply isn’t being kept up-to-date or validated correctly. The latest Insight Report from RMDS – ‘The GDPR and its Implication on the Use of Customer Data’ – cites research from RMDS which shows that while 87 per cent of organisations use websites as their primary channels for customer data collection, only 44 per cent automatically validate it at the point of online entry. The research also indicates that the biggest contributors to poor-quality data are incomplete, out-of-date or duplicate records, with marketers complaining that this is one of the main reasons they are not able to do their jobs properly.
In short, many companies simply aren’t running effective data management programmes. This means inaccurate information can clutter up their systems, while the cleansing of databases is either irregular or non-existent. According to the RMDS research, over 60 per cent of companies either have no formal processes in place to cleanse data, only clean their data annually, or are unclear on how they keep their customer data clean and up to date. Overall, less than one in five firms addresses the issue of data quality with daily or continuous data cleansing.
Ultimately, this isn’t just about good practice – it’s about the bottom line as well. The RMDS research shows that the average cost of poor-quality customer data to UK organisations is now running at a staggering 5.9 per cent of annual revenue.
Consent is a Key Concern
However, such a figure could pale into insignificance compared to what flouting the rules of the GDPR might mean. There are various stipulations that organisations need to follow in order to be compliant with the regulation. Data accuracy certainly needs to be addressed, with any incorrect customer data erased or rectified as soon as possible. But it’s the ways in which the new regulation aims to put consumers in control of their own data that dramatically impacts how organisations are allowed to hold this information – and what they can do with it. Unless certain exceptions apply, customers may not be subject to automatic decision-making – for example, as carried out by profiling technologies such as CRM – and may request a copy of their data in an easily accessible format. They will also have the right to opt out of any type of direct marketing, while organisations will continue to require their opt-in consent for electronic marketing.
For those organisations that are not already efficiently managing their customer data, identifying and potentially deleting duplicate customer profiles across multiple databases presents a major technical and logistical challenge.
But perhaps the most far reaching of the GDPR’s stipulations centres on the requirements for valid customer consent. Organisations need to demonstrate that, where they are relying on consent as the basis for processing, they have permission to use a customer’s data, and that the customer understands how their data is going to be used. For those companies that haven’t previously sought consent which meets the GDPR’s standards, the implementation of an extensive programme of repermissioning may be required – yet the RMDS research shows that nearly half of all firms (48 per cent) either have no plans to conduct a repermissioning exercise or do not know whether they will seek fresh permission from their customers.
Those companies already handling customer information correctly for postal marketing purposes may, following a review against the requirements of the GDPR, determine that they can continue to claim “legitimate interest” for data processing and avoid this step. But again, this places the onus on maintaining data accuracy at all times – if customers aren’t being accurately communicated with, it’s difficult to claim that you have complied with the GDPR.
In addition, using third-party supporter data for marketing purposes presents a particular challenge under the GDPR. Companies must assess any external data to ensure that it is GDPR-compliant. Evidence suggests that marketers are already becoming increasingly wary of using data sourced from third-party providers. The RMDS research shows that nearly half (49 per cent) of organisations now rely solely on customer data they have captured themselves. This compares to just 39 per cent of organisations relying solely on their own data in 2014.
The GDPR Creates a Deadline to Personalise Communications
While the GDPR represents the biggest shake-up in customer data for over a decade, it would be wrong for organisations to merely regard it as a regulatory headache. At the heart of the GDPR is a push to improve the accuracy of customer data, something which should be of vital interest to organisations everywhere. As such, the GDPR should be seen as an opportunity to reinforce the strategic importance of building strong and sustainable relationships with customers.
After basic data accuracy has been achieved, the next stage of building trusted relationships with customers is to personalise communications in a meaningful way. Organisations may be reducing their use of third-party data providers in order to promote GDPR compliance, but this could also mean that new marketing opportunities arising from customer life events – such as moving house, acquiring a mortgage, getting married and having children – are being missed.
According to the RMDS research, 61 per cent of marketers believe that enhancing customer information with life-event data is useful for nurturing customer relationships, as it presents both a reason to engage with customers and potentially creates new sales opportunities. By using properly permissioned, GDPR-compliant third-party data sourced from reputable providers, marketers can improve the performance of their campaigns while, at the same time, ensuring that their data is up to date and of the highest-possible quality.
The GDPR should herald a new era of robust customer data management. By being compelled to capture, store and use data with sufficient rigour to be compliant with the new regulation, organisations can also enhance their marketing operations. Some companies may still be struggling to meet the GDPR standard, but ultimately, it presents an opportunity for organisations to re-shape their customer engagement and customer data management strategies as a means to improve overall business performance.
About the author
Jim Conning is Managing Director of Royal Mail Data Services (RMDS). High-quality customer data drives business growth. Research shows that the accuracy of customer data decays an average of 30% each year, with 70% of businesses suffering from out-of-date and incomplete data. No wonder maintaining accuracy is a top priority for marketers, especially under the General Data Protection Regulation (GDPR). Our trusted data solutions make sure you collect accurate data from the start, maintain its quality and help towards compliance.