What are the biggest customer data management challenges in 2018?

Disparate efforts are no longer enough argues Jim Conning of Royal Mail Data Services

Customer data is the lifeblood of businesses, and ensuring that it is successfully collected, managed, stored and deployed involves deep collaboration between the IT and marketing teams.

To underline its importance, poor-quality customer data can cost firms the equivalent of six per cent of annual revenue, equating to millions of pounds for major brands. That's one of the key findings of new research from Royal Mail Data Services which also highlighted the pressure that the General Data Protection Regulation (GDPR), which comes into effect in May, is applying to company data strategies. This pressure can be intensified by questions over where responsibility for data sits within the corporate structure.

Given the role of technology in running the systems that monitor and gather key data, IT always has a role to play. But the level of IT's executive responsibility for the quality of this data can vary widely, depending on different corporate cultures.

IT departments also need to understand what constitutes poor quality data, when it can compromise key business objectives, and when it can give rise to operational and reputational crises.

The research uncovered key trends in three areas:

Data management involves multiple departments

No one team or function is solely responsible for managing customer data. The research found that in 37 per cent of companies it was down to marketing, while for 37 per cent, central data management had this role. IT/IS was in charge in 30 per cent of cases.

Just over half (51 per cent) of marketing teams set their companies' data strategies, while other groups such as central data management (26 per cent) and the board (25 per cent) were also involved. Unsurprisingly, legal and compliance teams were heavily involved in decisions around privacy and permissions, taking lead responsibility in 38 per cent of organisations. Forty-four per cent of marketing departments led in this area, compared to 20 per cent of IT/IS teams.

Data management is made complicated by the technology that companies possess. Nearly four in ten (37 per cent) brands said that dealing with legacy systems was their biggest challenge. These can be inflexible and difficult to use, and act as blocks on using data to effectively meet wider marketing challenges.

All of this means that cooperation between different departments is increasingly vital if companies are to meet the challenges of managing their growing volumes of data and effectively reaching customers.

GDPR is the biggest issue

No-one in IT needs to be reminded about the forthcoming GDPR implementation date of 25 May 2018. Compliance with the GDPR was the number one concern for respondents as a whole, cited by 29 per cent as their biggest worry. This number has more than doubled since the 2016 study, when 12 per cent listed it as a concern, which demonstrates the rapid rise of GDPR compliance as a major business issue.

Looking in more detail, the study asked how confident respondents were that their internally held and third-party customer data was GDPR compliant. The positive news is that 78 per cent of all marketers were either "very" or "reasonably" confident that their internally held customer data complied with the new regulation - although worryingly, 11 per cent were not confident, including two per cent who didn't know if they were compliant or not.

Ensuring data quality through automation

Nearly one in five (18 per cent) of respondents said poor quality customer data was their biggest challenge. But what leads to this state of affairs? When asked to prioritise the causes respondents cited out-of-date information and incomplete data as themain problems. Duplicate data, spelling mistakes and data in incorrect fields tended to rank lower when it came to data-quality issues.

Validating data as it is collected is key to maintaining good quality data. Although this is becoming an increasingly automated process, both on websites (for which 46 per cent of people automatically check address data) and in internal systems (40 per cent automatic checks), nearly one in five (19 per cent) of survey respondents said they didn't validate website data, and 16 per cent didn't check data coming into internal systems at all. An additional 25 per cent relied on manual address checks in internal systems. At a time when good quality customer data and operational efficiency are high on the marketing agenda, there is clearly a need for companies to find new ways to automate the continuous cleansing and validation of customer data.

Data is a living entity and quickly becomes out of date. This is leading to a focus on more formal, regular data cleansing - 22 per cent of companies this daily or continuously, and just 11 per cent annually (down from 14 per cent last year). However, one third (33 per cent) still have no formal processes in place to clean customer contact data, although this has dropped from 37 per cent in 2016. This means a sizeable minority are putting themselves at risk of data-quality issues - and potential GDPR investigations over non-compliance.

The looming GDPR implementation date highlights the importance of ensuring that your customer data is well managed and compliant. But as the Royal Mail Data Services research shows, it also provides an opportunity. IT and marketing teams need to work together in order to improve overall performance and therefore drive greater revenues by ensuring that their customer data is both good quality and used effectively.

Jim Conning is managing director of Royal Mail Data Services (RMDS)