The Real Cost of Bad Data

Customers are the foundation of your business, so ensuring that you have accurate information on them makes sense and will save you money. Imagine a scenario where you have several telephone service reps submitting address information from live callers to a database. Did you know that up to 20% of this contact data is flawed when saved?

In fact, industry analysts have studied the long-term costs of inaccurate data entry, from point-of-entry to the shipping of products, invoicing, and aggregation of customer statistics for data mining. Their conclusions about the real cost of bad data are eye opening.

It was determined that it costs an average of only $1 per record to verify the accuracy of the contact information when it is originally submitted to the master database. Validation works as a safeguard and does not allow the address entry to be saved until it is parsed and compared against the U.S. Postal Service national database, thus ensuring clean addresses right from the start. This $1 includes the address validation solution, as well as the cost of the hourly employee, and the expense of running the computer equipment for each record.

When the address validation solution was implemented in batch to cleanse and de-duplicate contact data after submission, it was calculated to cost around $10 per entry. The explanation is that some addresses were usually entered so malformed that no intelligent validation software could correct the address. These were simply dead entries and could not be counted as sales leads or billable customers.

The experts also took into account the additional costs of computing time, transforming the data from proprietary formats, and the setup time to process each new batch.

But, the cost of doing nothing was greater $100 per record. Due to misplaced shipments, returned mail, and lost marketing opportunities, it simply costs too much money not to have a solution in place to verify and cleanse data and guarantee that you have valid customer contacts.

Another benefit of real-time address validation is to enhance or enrich your customer data. By appending valuable information like the ZIP + 4, latitude and longitude, county name, delivery points, carrier routes, MSA, PMSA, and more, you can pinpoint customers, send out targeted mail campaigns, and earn postal discounts. In addition you can mine important lifestyle and segmentation data to increase sales.

Bud Walker is data quality product manager for Rancho Santa Margarita, CA-based database marketing services firm Melissa Data Corp.

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