“Dirty data impacts CRM Return On Investments” May 2013
Article Published Nex Media Vol. 1 Issue 2 - submitted by Darryl Joubert C.E.O. Intimate Data (Pty) Ltd
Many organisations fail to address the most essential component of the CRM initiative: accurate, reliable customer information. ""Ensuring that high-quality customer information is reliable requires constant effort, and can often shift management's focus from a company's core business,"" says Joubert. ""CRM is meant to allow companies to communicate precisely and cost-effectively with their customers to build customer loyalty, expand market share and increase sales. And yet, millions of rand later, many organisations are still waiting for their substantial investment in CRM software to deliver the promised results.""
If one had to focus, as a start, on one important data element, Joubert suggests “the addressing element of each customer”. In South Africa poor contact ability of a company’s customer’s addresses impacts their return on investment and their bottom line. Joubert estimates that 3% of a company’s customer’s addresses are incorrect, and that this has an effect in the following way;
1. Incorrectly captured address or out of date address (moved). By mail being undelivered and returned by SAPO as a NIXIE, this effects each single wasted mail item in the following way;
1.1. Postage Loss of the stamps @ R2.80,
1.2. Wasted Laser/Printing costs @ R0.20,
1.3. Wasted Paper that it was printed on @ R0.15,
1.4. Wasted Envelopes purchased @ R3.75,
1.5. Wasted mail room manipulation @ R0.18,
1.6. Totals R7.08 per wasted mail item,
Calculation of potential loss:
(number of customers mailed x number of times they are mailed a year) x 3% (Nixie) x R7.08 (cost of wasted mail item)
IE: number of customers mailed = 100,000
number of times they are mailed a year = 14 (12 statements & 2 marketing)
100,000 x 14 * 3% x R7.08 = R297,360 wasted annually
2. Loss of potential cross sell or up sell business??
2.1.1. Look at your own marketing activities and calculated conversion (sale) percentages (response rates), then
2.1.2. Use your calculated Rands Value of such conversion or life time value of the customer (sale ROI), and then
2.1.3. Calculate additional potential lost opportunity by, multiplying NIXIES (mailed quantity x 3% potentially undelivered), against the mailing Response Rates, by Rands Value:
ie: Potential response rate to existing customers = 15%
Potential Rands value of a sale = R200
So (NIXIES x RESPONSE RATE) x Rands Value of sale
(100,000 x 3%) x 15% = 450 Sales x R200 per sale = R90,000 loss on a single marketing campaign.
3. Potential Postage discounts loss if Address Quality is so bad the mailing does not make the SAPO PAMMS 97% grade has a potential of losing out on up to 24c on standard DL postage or up to 39c each on non-standardised mail depending on mail lodgement criteria. If a company takes full advantage of mail lodgement processes;
3.1.1. This equates up to R24,000 loss on 100,000 standard DL items mailed, or R336,000 annually (x14), or a
3.1.2. R39,000 loss on 100,000 non standard items mailed or R546,000 annually (x14).
So to summarise on poor postal addresses. On a customer base of 100,000 doing monthly Standard DL mailings, plus 2 additional Cross or Up Sell marketing campaigns to their customers, the wasted costs are:
R297,360 on NIXIES
R 90,000 on lost sales
R336,000 on potential loss of Postage Discounts
R723,360 on poor quality addresses alone.
Joubert says “All is not lost, because if a company only spent 15% of this annually, on an address quality strategy, they could eliminate this wastage, help turn their CRM initiatives around and start saving a fortune, thereby uplifting their bottom line.” All you need do is talk to the professionals.