Do Retailers Trust the Data That Drives Them?

Retailers today are driven by data. It affects everything, from the way campaigns are personalized to inventory selection and website navigation, and more. It almost seems like the top retailers don’t breathe without checking the data first. But what if all of that data wasn't trusted? What if retailers didn’t have the processes in place to manage data properly, even as one of their most valuable assets?

Unfortunately, that seems to be the case. According to a new Experian Data Quality study, more than half of retailers don’t trust their data to make important business decisions. In fact, they believe that, on average, 25 percent of their customer and prospect data is inaccurate. That leads the majority of them to rely on educated guesses and gut instincts to make decisions, rather than credible insight.

The lack of trust is having a big impact. Sixty-nine percent of retailers believe data quality issues impact customer trust and perception of their brand, and over half say it's undermining their ability to provide an excellent customer experience. With the market only getting more competitive, retailers can’t afford to lose customers from a bad decision that was avoidable with high-quality data.

Retailers today suffer from legacy data management practices that aren't taking into account the way data is leveraged and structured. Oftentimes, organizations are reactive to data issues, only making corrections once data causes a problem. In addition, retailers are still segmented by channels, having multiple databases or data warehouses that create silos of information. Data linkage is particularly important for retailers that are trying to achieve a single customer view and connect data across channels. In fact, Experian Data Quality’s report found that 96 percent of retailers do not have a single customer view, though one in four are looking to achieve it this year.

In order to gain better customer insight and recover trust in data, retailers need to start improving their data management strategies, but in the right way. Most are investing in new technology. In fact, 93 percent of retailers have a data management project planned in the next 12 months, primarily centered on data cleansing, data integration and data preparation.

While those one-off projects can be very helpful and provide a return on investment, they often will not fix the root of the issue. In order to really modernize practices around data, retailers need to make investments in staffing and bring in data experts centrally.

One potential solution is hiring a chief data officer (CDO), who are often brought into businesses, especially those in regulated industries, to help with compliance and add value around data through monetization or new data initiatives. Retailers would benefit greatly from having a central owner of data who can be an advocate and make sure information is consolidated and trusted. That individual can also then lead an effort to make sure that data is of the highest quality and governed. The CDO will implement processes to make sure data is well managed and find new technology to help gain insight and monitor data for inaccuracies over time. He or she can also help blend organizational data with third-party data to provide more complete insights on the consumer.

For the majority of retailers today, that centralized data ownership is lacking. Most have departments that adopt their own strategies, leading to inconsistency and clearly a lack of trust. Only 23 percent of retailers said their data quality strategy is reviewed and maintained by a single director.

In order to make sure data is trusted and actually driving the business forward in a positive way, retailers should look to invest in not only technology and processes, but more importantly experts in data that can treat data as an important business asset. Without a more modern data infrastructure, retailers are going to continue to rely on data that isn’t giving them the valuable insights they crave.

Thomas Schutz is senior vice president, general manager at Experian Data Quality, a provider of data quality software and services.