In an increasingly customer-centric world, the ability to capture and use customer data to communicate effectively, shape products and solutions, and orchestrate the buying experience is becoming increasingly important. Research from McKinsey prior to the global pandemic showed that organizations that leverage customer data outperform peers by 85 percent in sales growth and more than 25 percent in gross margin. The report concluded, therefore that customer data is one of an organization’s most valuable assets and must consequently be treated as strategic. With the advent of Covid-19, this is now more important than ever.
It goes without saying that Covid-19 has had an irrevocable impact on every facet of society – mainly negative, but in some cases, positive ones too. For instance, research published in the British Journal of Sports Medicine shows that people are now taking more exercise on a weekly basis than they did prior to the pandemic and another study shows that greater awareness about the importance of mental health has led to more people accessing help. Also, it has been reported that there hasn’t yet been a single case of flu confirmed by a GP in England this year!
Business has obviously been impacted too. On one hand, you have organizations that have literally been crippled, unable to open for huge swathes of the year; whilst on the other, you have companies that have successfully pivoted and are reaping the rewards or organizations that naturally suit a locked-down, socially distant society – Amazon clearly being one and Perspex manufacturers, another.
However, one impact that hasn’t yet been reported is the effect that Covid-19 has had on customer data. Our latest study reveals that the pandemic has accelerated the rate of data decay by an average of 0.5 percent per month resulting in annualized rate of 37.5 percent. This is a direct result of the pandemic on the UK’s rate of mortality and the number of people now moving house.
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Investing into CRM
In July 2020 the Chancellor introduced the Stamp Duty Holiday to reignite the UK economy following Lockdown 1.0. This has led to the most buoyant property market since 2008 with a 10 percent year-on-year rise in the number of homemovers. Recently, in the latest Budget, the stamp duty holiday was extended meaning that the rate of homemovers will remain high well into Q3 of 2021. Currently, there are over 700,000 households moving now or moving soon and a further 400,000 households say they want to move soon which is a 35 percent year-on-year increase.
Tragically, the pandemic has also led to a significant rise in the UK death rate which according to ONS is currently running 15 percent higher than average. Typically, around 1,200 people in the UK pass away each day, however, on the 20th January 2021 the bleakest day of the crisis so far, the pandemic claimed the lives of 1,820 additional people.
With more people passing away and more people moving house, this means that customer data held by organizations is becoming obsolete more quickly than usual. This is important for a number of reasons, but one of the most critical is the recent lockdown alleviation roadmap outlined by the Prime Minister at the end of February. Figures from last year show that whilst marketing spend was well down during the first lockdown as the economy started opening up again in July marketing activity was once again ramped up. And there is no reason to believe that there will be any difference after Lockdown 3. As a result of an albeit slow road back to business as usual, it is likely organizations will turn to marketing in an attempt to make up for lost time and missed profits.
Further indications of the importance of customer data is the investment into CRM. CRM is the biggest software market in the world currently valued at USD 40.2 billion with an expectation to expand at a CAGR of 14.2% to 2027.
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Data hygiene a top priority
Moreover, according to a recent survey by Workbooks the number of organizations looking to adopt a CRM system rose by 16 percent from the previous year and a 30 percent increase from two years ago. Such a change has been driven by the need to have better information about their customers and to make it more readily available. During the pandemic, many businesses had radically changed their priorities – the study found that nearly 60 percent of businesses have been significantly transformed by the pandemic and had changed their focus to concentrate on customer retention and acquisition.
Customer data and CRM will therefore likely be at the heart of many organization’s economic kick start as it is the lifeblood of the business. Information about previous customers and potential customers provides valuable insight, which in turn leads to engagement and ultimately incremental revenue.
However, the old adage is true: rubbish in, rubbish out. Analytics, no matter how smart can only ever be as good as the data that informs them. If the data is flawed; i.e. much of it out of date, then the resulting insight will also be flawed. It is critical therefore that at this ‘crunch-time’ for businesses that customer data is as up to date as possible.
The DMA recommends that organizations clean their data every three months and just before any campaign. To do this it is possible to use what are known as suppression files which help identify customer records that are out of date; flagging people that have moved house or have passed away. In the past, data hygiene could be time-consuming, inefficient, and risky. However, over the past few years, the processes have been shifted to the cloud making it more secure and faster. Also, for the hundreds of thousands of organizations that store data in CRM systems in the case of Microsoft Dynamics 365, it is now possible to clean customer data within the safety of the platform. With suppression now being more accessible, more secure, and more cost-effective than ever before data hygiene must be a top priority!
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Martin Rides, Managing Director of The Software Bureau and Clean Contacts (opens in new tab)