The four key challenges to building a data-driven business

Successful data strategies require close collaboration across the business, particularly between the IT and marketing teams. That’s particularly true at a time when the forthcoming General Data Protection Regulation (GDPR) is highlighting the importance of transparent and compliant management of customer data.

 

Given these factors, how well are companies managing customer data? What are their major pain points and concerns? New research from Royal Mail Data Services found that there are four areas that brands are focusing on:

 

1              The GDPR is the number-one issue

The GDPR implementation date of 25 May 2018 is approaching rapidly. Unsurprisingly, compliance with the GDPR was therefore the number-one concern for respondents as a whole, cited by 29%. This number has more than doubled since the 2016 study, when 12% listed it as an issue, which demonstrates the rapid rise of GDPR compliance within businesses.

 

The study then went on to ask how confident respondents were that their internally held and third-party customer data was GDPR compliant. The positive news is that 78% of all marketers were either “very” or “reasonably” confident that their internally held customer data complied with the new regulation – although worryingly, 11% were not confident, including 2% who didn’t know if they were compliant or not.

 

However, when it comes to third-party data the levels of confidence drop dramatically. Just 43% of respondents were “very” or “reasonably” confident when it came to compliance, which demonstrates the difficulty of gathering evidence that the right permissions are in place when data has come from other sources.

2              Balancing legacy systems and acquiring new skills

Successful data management is complicated by the technology that companies possess and are using on a day-to-day basis. Nearly four in 10 (37%) 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 and business challenges.

 

Demonstrating the importance of using data effectively, 24% of respondents said they needed to boost their analytics skills. This was a new option in the 2017 research survey, showing that boosting analytics capabilities is a fast-emerging priority in an increasingly data-driven world.

 

Brands also struggle to embed data cultures within their businesses. More than one in five (21%) said that a better understanding across the organisation of the importance of good-quality customer data would improve performance.

 

3              The need for a holistic approach to data management

Given its importance and the fact that it crosses multiple departments, it is no surprise that no one team or function is solely responsible for managing customer data. The research found that in 37% of companies it was down to marketing, while for another 37%, central data management had this role. IT/IS was in charge in 30% of cases.

 

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

 

These findings show 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. Businesses need to take a holistic approach that ensures data flows efficiently around the organisation, with teams working together.

 

4              Automation is essential when it comes to data quality

Poor-quality customer data was seen as their biggest challenge by 18% of respondents. They understood its impact on the bottom line, stating that it could cost firms the equivalent of 6% of annual revenue, which equates to millions of pounds for major brands.

But what leads to poor-quality data? When asked to prioritise what caused it, respondents cited basic errors as the main culprits, specifically out-of-date information and incomplete data. The research found that problems such as 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% of people automatically check address data) and in internal systems (40% automatic checks), nearly one in five (19%) survey respondents said they didn’t validate website data, and 16% didn’t check data coming into internal systems at all. An additional one-quarter (25%) 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.

 

Without careful management, data quickly becomes out of date, which reduces its effectiveness. This is leading to a focus on more formal, regular data cleansing – 22% of companies said they did this daily or continuously, and just 11% annually (down from 14% in 2016). However, one-third (33%) still had no formal processes in place to clean customer contact data, although this had dropped from 37% in 2016. This means a sizeable minority are putting themselves at risk of data-quality issues – and potential GDPR investigations over non-compliance.

 

The GDPR may be dominating the headlines, but as the Royal Mail Data Services research shows, it is just one of the data challenges that businesses face if they are to successfully digitise. To transform themselves and become data-driven, IT and marketing teams therefore need to work together to ensure that information is successfully collected, managed and deployed across the organisation.

 

To download a full copy of the report “The use and management of customer data”, click here.