When you build something, the final product is only as strong as the foundation it was built upon. Building a company is no different. It’s not uncommon for startups, in the pursuit of rapid growth and higher valuations, to accidentally allow the basics to become an afterthought.
As a student at Babson College, I had the opportunity to work in an entrepreneurial atmosphere, surrounded by like-minded students and faculty members. Startups were on the forefront of everybody’s mind and I got the chance to witness multiple startups get off the ground, as well as see several crash and burn. Additionally, I was fortunate enough to spend six months as the Director of Business Development at a company that has since taken off.
From my experience working with startups, there were three primary challenges that arose from collecting inaccurate data. These three challenges are the inability to connect with customers, an impacted customer experience, and the opportunity costs associated with poor data quality.
First and foremost, as a startup, it is imperative that you can connect with all your current and potential customers. The ability to effectively market to your customer base is the cornerstone of growth and setting the foundation to a customer base that you can build upon. Whether you’re reaching out to customers via email, phone, or direct mail, if you can’t reach the people you’re targeting, you’re missing out on the opportunity to promote your brand and generate leads.
Secondly, many startups see challenges with poor data quality negatively impacting their customer experience. When a customer purchases something from an organization, they expect to receive it in a timely manner. Many companies that aren’t taking steps to ensure accuracy of contact information at the point of capture suffer down the line with the headache of returned mail. Not only are there costs associated with this, but there can be irreparable harm done to a customer relationship if they don’t receive their package on time. As a startup focused on growth and expanding your customer base, this doesn’t only represent one lost customer; with a brand so young, the reviews that your customers leave can make or break whether future customers decide to purchase.
Additionally, when it comes to customer experience, we live in a world where we’re accustomed to instant gratification. Finding the balance between collecting additional information and creating a frictionless customer experience is difficult. Many companies try to create a customer experience that’s as seamless as possible to have a smooth order process and to reduce drop-off and cart-abandonment rates. In doing so, they sacrifice collecting additional pieces of contact information. Collecting accurate information is always important, but when you’re limited with the amount of information you’re collecting to start with, the quality of that data becomes paramount.
A third and final challenge that startup companies struggle with (albeit oftentimes unbeknownst to them) is the opportunity costs associated with poor data quality. I can vouch for this as I have personally spent countless hours sifting through bounced emails to identify inaccurate email addresses and remove them from the database. Additionally, I’ve spent hours trying to track down a customer’s correct phone number or address after taking down information on the phone and having made a mistake while transcribing the information. I was paid for hours of work spent doing mundane tasks associated with tracking down contact information for leads, and when you accumulate those costs over a yearly basis, they’re no joke.
At first glance, the costs associated with a bounced email or an inaccurate phone number aren’t as glaringly obvious as those associated with a poor address and the returned mail it causes. However, it’s important to think of the holistic view of the costs these issues bring to your business. A bounced email means that somebody is going to use paid time to replace or remove that email from your database. Right off the bat, there’s an opportunity cost associated with that bounced email since the employee could allocate his time elsewhere. Additionally, what if that bounced email was being sent to someone who would have been a customer if they hadn’t accidentally made a typo?
Lastly, bounced emails can affect your sender reputation and therefore your inbox placement for other customers. If your emails are bouncing you’re not only missing out on potential revenue from those individuals, but also on revenue from other prospects whose inboxes you’ll fail to reach due to a poor sender reputation. A bounced email may not seem like it would have a huge impact on your business but it’s only the tip of the iceberg; the consequences create serious business challenges to more companies than you’d think.
Overall, it’s important for startups to fully understand the importance of data quality. Poor data quality leads to issues establishing yourself as a trustworthy brand, causes you to miss out on potential revenue, and can cause operational catastrophes. Leveraging data is indisputably an integral part of growing a company. Make sure that your company is built on a strong foundation by ensuring the data you’re leveraging is as accurate as possible.
Are you interested in creating a solid data quality strategy for your startup? Check out our white paper, "Create your ideal data quality strategy."