September 25, 2013

The Cost of Bad Data

Everyone in the fundraising industry knows that fall is the busiest time of the year. Charities are gearing up for campaigns that will drive in a large volume of their year-end donations. Decisions are being made on which packages and audiences will drive the highest results. What these organizations may not be considering is how much bad data could be costing them.

Data quality issues are not limited to the fundraising industry. Leading information technology research and advisory company Gartner Inc. estimates that organizations will spend over $50 billion in IT resources driven by big data. As the amount of data available in the world continues to grow, the quality of that data is more important than ever!

A prospective client recently approached IDMI with concerns over the performance of their prospect mailings. We agreed to complete an analysis of the charity’s most recent prospect mailing by running the final mail file through some basic hygiene and our standard merge/purge processing. The results were pretty surprising. From over 1 million records that the organization had mailed in their campaign, we identified over 10,000 matches on the Direct Marketing Association pander file (which is the list of names of people who write the DMA indicating they do not want unsolicited mail), over 11,000 Deceased records, and over 13,000 Undeliverable/NCOA Nixie matches. That’s right, over 35,000 records that should not have been mailed!

The real question becomes, “What did this bad data cost the organization?” For this particular campaign the cost per piece (including postage) was $0.47; meaning that the charity spent over $16,000 to mail these records! Not only that, but these 35,000 bad records took the place of good records that could have potentially been mailed instead. With a response rate of 0.77% and an average gift of $24, that means that the organization missed out on a possible $6,600 in additional revenue!

Obviously completing the additional hygiene prior to the mailing would have cost the charity some additional money, but overall the organization would have seen a positive return on their hygiene investment (over $16,000!). Keep in mind that this simple case study only factors in the hard costs and doesn’t even consider the loss of goodwill with your donors and prospective donors.

Not only does this logic apply to prospect mail campaigns, but the same can also be said for house file mailings, telemarketing campaigns, email campaigns, and so on. Any fundraising campaign that is worthy of an organization’s hard earned money should be directed at the cleanest audience possible. A clean file is vital to an organization’s ability to communicate effectively with its donors; creating a personal experience and building goodwill.

There are numerous data hygiene options available, but here are some data hygiene best practices that every organization should be following:

  1. NCOA Processing – Your house file should be run through NCOA processing every 95 days so that you are in compliance with the US Postal Service’s regulations. In addition, you need to keep in mind how your house file mail schedule corresponds to your NCOA processing schedule. If you have a mailing with a longer lead time between the data pull and the drop date, you will want to make sure that NCOA processing was completed within 95 days of the drop date. In addition, you should complete NCOA processing on all acquisition mailings. Some rental and exchange lists have NCOA completed on a regular basis, but some do not. Ultimately it is in your best interest, as demonstrated in our case study, to have the cleanest data possible going out to your donors and prospects.
  2. Deceased Processing – Your house file should be run through deceased processing at least once a year. Not only does this keep you from wasting money on mailing to people who aren’t able to respond, but it also prevents the possibility of offending the deceased donor’s family. If you have an older donor base, you may want to consider running this processing more frequently. Again, you should complete Deceased processing on all acquisition mailings as well.
  3. DMA Pander File – The Direct Marketing Association’s Guidelines for Ethical Business Practices suggests that organizations should use DMA choice name-removal lists for all prospecting campaigns. Not only does this include their mail preference list, but also email and telephone lists.

Overall the message is clear, spending the time and money on performing the best possible hygiene for your campaign will pay off in the end!

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Sara Rowland
Currently serving as IDMI's Business Analyst, Sara Rowland is the liaison between the sales and account staff. She works closely with each team to onboard new clients and projects to ensure that all processes are set up correctly from the start. She has been with IDMI for 7 years and in that time has worked on their largest, most complex clients.
Interest Categories: Budget, Data
Tags: Data, Evaluation