Why Great Data is the Foundation of Great Customer Experiences

We’re kicking off the Customer Experience stream at this year’s Festival of Marketing in London with a panel discussion on how great customer data creates great customer experiences.

The Impact of Data Quality on Customer Experiences

Last year, Royal Mail (a postal service and courier company in the UK) research showed the average cost of poor quality customer data is almost 6% of annual revenue. The average small business has turnover of ± £2.8M (equivalent of $3.46M US), so poor data is costing around £165K per year. Average profitability is ± 12.5%, so fixing poor data could boost profit margins by almost 50%. And for medium and large enterprises, the numbers are much bigger.

The impact of data quality (such as its impact on customer experiences) is felt in different ways, and we’ll be talking more about these in our session:

Getting Delivered

Return Path’s 2019 Sender Score Benchmark report shows the average Unknown Users rate for best-in-class senders (91-100) is 9% while the next tier down (81-90) is 3.2% (a 2.3% variance). The resulting difference in Delivered rate is 20% (91% vs 71%). The impact on deliverability is clearly an exponential one – degraded sender reputation creates a halo effect, meaning for every 1 bad address, 7 good addresses fail to deliver.

When building customer relationships, these senders are falling at the first hurdle because their customers aren’t even receiving their messages! This directly impacts the bottom line. Cheetah Digital’s quarterly benchmark report quotes revenue per email sent at $0.08 (~£0.064), so poor data quality costs senders ± £11,200 for every 1M emails sent!

Panel discussion data quality and customer experiencesBuilding Relationships

Validity’s 2019 State of Email Marketing report examines tactics used by marketers to drive more effective email programs. Top approaches include personalization; subject line optimization; A/B testing; and re-activation campaigns. Learning what content and offers customers like most, the tone of voice they respond to best, and letting them know you care when interactions become less frequent, are all important building blocks for establishing trusted and long-lasting relationships.

These tactics require good data. You need to know how to reach your customers, what to call them, their specific needs and interest, and how to measure levels of engagement. It’s also important to use this data correctly. We’ve seen before how bad personalization (wrongly spelling your customer’s name, for example) can have a big negative impact!

The State of Email report also makes a clear connection between improved effectiveness and improved revenue. Where respondents considered email an effective channel, they were also 4X more likely to report increasing revenue than those who don’t, and 3X less likely to report declining revenue.

Observing the Law

High-profile breaches at British Airways (£183M recommended fine), Marriott Hotels (£99M) and Facebook ($5Bn) have all made headlines recently. But data privacy isn’t just about breaches. There are 7 fundamental principles, and some of them touch directly on data quality:

  • Accuracy: Data controllers are responsible for ensuring personal data they hold is correct, up to date, and that it is corrected/erased if these requirements are not met.
  • Transparency: This includes the right to be informed how personal data is used, especially when that use changes, or a new use is introduced. If an updated privacy policy notification is sent by email and fails to deliver successfully, there is a strong argument this requirement has not been met.
  • Lawfulness (Legal Basis): Until last year, rules on consent, soft opt-in and right to opt out did not apply to electronic marketing sent to companies. However, ICO guidance now states: “if you have the name and number of a business contact on file, or their email address identifies them… the GDPR will apply.”

The 7 principles are the foundation stones of the new regulations. When they are breached, the maximum penalties (4% of global turnover/€20 million) will be considered, bringing the importance of good data quality into sharp focus.

Focusing on the Future – Artificial Intelligence

AI is the hot topic in data marketing, and marketers are already benefiting from better attribution; automation; content selection; deliverability; engagement prediction; journey mapping; and personalization (to name a few!). These are proven tactics that previously happened manually, and effectiveness is increasing as machine learning picks up the heavy lifting.

But there’s a catch! Data is the lifeblood of AI, and if it isn’t fit for purpose, the old truth of GIGO (“garbage in garbage out”) comes into play. A Forrester Research report found data quality is one of the biggest AI project challenges. Primary issues include: not enough data; data not in a usable form; and bias or errors in the data.

This has implications for privacy by design. Not only do data architects have to square the adequate/relevant/necessary circle for today’s requirements; they are also attempting to predict future uses for the data. And it carries a cost. Research from Altimeter shows AI is a top-3 digital transformation priority for businesses this year, and around 80% are committing at least $1M to their AI initiatives in 2019.

Better Data, Better Relationships, (and Better ROI!)

When GDPR was introduced in 2018, forward-thinking industry commentators predicted an opportunity for marketers to build better relationships with their customers. Stronger consent, greater transparency, and improved choice would create better trust, and encourage consumers to provide better data about themselves (primary email addresses for example). In turn this would enable marketers to create more personalized offers, generating higher engagement and extended life cycle.

This is now becoming reality. The DMA’s 2019 Marketer Email Tracker report shows big increases across all major metrics (opens, clicks, conversions) and reductions across the negative KPIs (opt-outs, spam complaints, and list churn). The latest benchmark report from GetResponse also provides a striking illustration – average click rates for EU senders are now 4.4% compared with 3.0% for US senders.

This virtuous circle of data, trust, and engagement means big £/$/€ benefits, too. The DMA report shows average email ROI is now £42 for every £1 spent (up 27% from 2018), while average email CLV is now £37 (up 31% from 2018).

Learn More About the Role Data Quality Plays in Creating Customer Experiences

As you’ll have gathered, we’re massive advocates for the role data plays in creating better customer relationships (and delivering enhanced ROI). Learn more by joining us at 10 am on October 10 at the FoM’s Customer Experience stage.

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