Developer's
Corner
 The
Real Cost of Bad Data: The 1-10-100 Rule
Author Bud Walker is a Data Quality Product Specialist for Melissa
Data.
Customers are the foundation of your business.
Ensuring that you have accurate information to reach
them makes sense and will save you money. Imagine a
scenario where you have many helpdesk personnel
submitting address information from live callers to
a database. Did you know that up to 20 percent of
this contact data is flawed when saved?
In fact, industry analysts have studied the
long-term costs of inaccurate data entry. Their
conclusions about the real cost of bad data are eye
opening. They systematically studied costs from
point-of-entry to the shipping of products,
invoicing, and aggregation of customer statistics
for data mining..
It was determined that it costs on average $1 to
verify the contact information when it is originally
submitted to the master database. This works as a
safeguard and does not allow the address entry to be
saved until it is parsed and compared against the
U.S. Postal Service national database, thus ensuring
clean addresses right from the start. This $1
includes the address validation solution, as well as
the cost of the hourly employee, and the cost of
running the computer equipment for each record.
When the address solution was implemented in batch
to cleanse and deduplicate contact data after
submission, it was calculated to cost around $10.
The explanation is that some addresses were usually
entered so malformed that no intelligent validation
software could correct the address. These were
simply dead entries and could not be counted as
sales leads or billable customers.
The experts also took into account the additional
costs of computing time, transforming the data from
proprietary formats, and the setup time to process
each new batch.
Finally, the cost of doing nothing was shown to be
$100 per record. Due to misplaced shipments,
returned mail and lost marketing opportunities, it
simply costs too much money not to have a solution
in place to verify, cleanse and guarantee that you
have valid customer contacts.
Another benefit of real-time address validation is
to enhance or enrich your customer data. By
appending valuable information like the ZIP+4,
latitude and longitude, county name, FIPS, delivery
points, carrier routes, MSA, PMSA, and more, you can
pinpoint customers, send out targeted mail
campaigns, and earn postal discounts. In addition
you can mine important lifestyle and segmentation
data to increase sales.
The bottom line is this: It’s cheaper to implement a
cleansing solution at the beginning of your data
collection chain. So budget for it as a necessary
cost of doing business in the digital information
age.
Bud Walker is a data quality product specialist
for Melissa Data.
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