Data hygiene may not be the most exciting topic, but depending on how good a job your organization is doing on it, it can have exciting — or horrifying — impacts on your bottom line. A study by Demand Metric showed that companies with clean data are three times more likely to experience revenue growth than those without.* How dirty is your data? And what’s the opportunity cost of doing nothing to clean it?
Recently I helped a new client look into just this situation. This client was experiencing poor results in several areas and believed that data issues were contributing, but was having difficulty convincing management of the need for a data hygiene program. I realized that the client’s analysis of the situation focused simply on what data was missing, and not on the cost to the business, which is often a more effective approach to project justification.
This firm wasn’t performing lead scoring. At this company, 10% of the leads that Marketing sent in the last six months converted to pipeline, and of those, only $1M was closed/won. According to the Aberdeen Group, best-in-class companies using lead scoring average 28% conversion. It seems like a no-brainer to implement a lead scoring program. But this firm can’t currently execute on lead scoring because limited data has been collected for a model: annual revenue, number of employees, industry, job title, or purchase timeframe. Using Aberdeen’s statistic, we could project that lead scoring would at least double their lead conversion rate, thus potentially doubling the closed/won revenue to $2M. So at the moment, the lack of good data could be costing this firm $500K per quarter. For a marketer seeking budget justification for data cleansing/appending, that’s a very compelling story for management: much more so than reporting that 15% of the database has no job title.
Right Lead, Right Rep
A less obvious impact area of dirty data is often lead management. Here, lead assignments for sales were based on geographic territory, and poor data quality for state or country was making rules-based lead assignment impossible. It’s been said that time is the enemy of all deals. If the velocity of leads sent by Marketing to pipeline was typically 30 days, how much of that time was being wasted in manually ensuring the right lead got to the right rep? What if that could be shortened to 15 days, as a result of having proper data that would allow leads to be immediately assigned to the correct rep? That’s a softer metric, but if you can correlate shorter cycles to larger deals, you can demonstrate a true financial impact if even a portion of those slow-moving leads could be sped up. Discovering that 32% of leads had no owner was critical information for this client, but for her management, the better case is made in efficiencies and incremental revenue.
Transparent Lead Status
According to Forrester Research, companies that excel at lead nurturing generate 50% more sales leads at 33% lower cost. Depending on where the lead is in the buyer’s journey, nurture programs can provide key education about your solution or even help the lead start to justify selecting your product. At this firm, key data needed to target the appropriate messaging, such as industry, product interest or stage in the buyer’s journey, was not always available. As a result, nurtures were in a one-size-fits-all format, and therefore had little effectiveness. Rather than stating the Industry field has only 17% completion, as this client did, find your current benchmarks, calculate what 50% more sales leads looks like in revenue for your organization, and put that number in front of your management.
Keep Only the Good Stuff
At this firm, we estimated that dirty and incomplete data made 35% of the database potentially useless. Calculate 35% of your current contract with your marketing automation provider – that’s money wasted. You should ask to either re-negotiate your contract, or work to replace those useless leads with new potential business.
The Next Step
By examining each of the topics mentioned and tying actual costs to them, my client was able to demonstrate that the firm’s lack of a solid data management plan was significantly impacting revenues, and she got approval to move forward. And from this exercise, she has some very real target KPIs, which she can use to demonstrate progress against the plan.
Of course, it’s not realistic to tackle all these initiatives at the same time! So I am working with her to design a phased roadmap: which initiatives will deliver the biggest financial return? which will be the quickest to implement?
Could your database benefit from any of these efforts? Do you need to make a business case for fixing your dirty data? If so, and if you need support in doing that, talk to DemandGen.
*Demand Metric, Sales & Marketing Data Quality Benchmark Report, November 2013
Gaea Connary, Director of Consulting Services, focuses on helping organizations strengthen their lead management processes, lead scoring, nurturing strategy, and reporting and analysis to get the best return on their technology investment and meet their marketing objectives.