Estimating the cost of poor data quality and customer data cleansing
Estimating the cost of cleaning dirty data is a real challenge for the
reasons you cited in your answer to an earlier
. Do you know of any studies that show how much "unclean" data costs Fortune 1000
companies? Or do you have a general sense of the average annual cost of poor data quality to
businesses? Is it $1 million, $10 million or more? Any insight into this topic would be very much
Our company has participated in a number of data
in which we considered various areas of business impact that rolled up into
real money. The conundrum is that few, if any, organizations would be willing to publicly admit to
any type of deficiencies in their data or data management processes, let alone publicize their
costs that are attributable to unclean
. In addition, the negative impacts on a company may be hard costs or "lost opportunities"
whose scope is difficult to assess.
However, let's do a quick thought experiment: What is the cost of a lost customer? There are
direct costs, such as the loss of an immediate revenue stream (i.e., subscription payments) or the
loss of future revenue from product upgrades, purchases of accessories, service contracts, etc. In
addition, there are indirect costs, such as the loss of purchasing influence, word-of-mouth
advertising or even communications via social networks advocating on behalf of the product or
service. Clearly, there are computable costs for customer attrition; in turn, the next question is
what percentage of customer attrition can be attributed to unclean data? That provides a baseline
framework for addressing the cost issue, at least for one impact vector.
This was first published in April 2010