How valuable is your customer data?

Davefrankland
[Posted by Dave Frankland]

I was asked a very interesting question by a client recently about how firms value their marketing database and the consumer data stored in it. I’ve asked a lot of marketers during engagements and we surveyed our Direct Marketing Council – we found that while some marketers point to incremental value that they help generate, they do not necessarily have a value on the database itself.

So are any of you out there assigning a monetary value to your database?  Is anyone accounting for it on your balance sheet? Or is it simply seen as a cost center/cost of doing business?  I’d love to hear your thoughts.

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Comments

re: How valuable is your customer data?

Strange- this is a new niche that MarketingSherpa is getting into, valuing customer databases.It's tough to enumerate because so many corporations are not maximizing opportunities with their database- and so do you judge by the average usage of any given corporation, or by the potential?

re: How valuable is your customer data?

Here is how we think about valuing a database at Marketsmith, Inc.:We value a database by the combination of the efficiencies achieved through its use and the incremental increase in revenue from improved response rates due to the availability of more accurate and reliable data to inform a contact strategy. Based on our observations of our clients’ experiences:* The cost to contact year over year goes down by 5% a year because we have a better view of what is driving purchase.* Marketing efficiencies - a 15% reduction in mail costs by reducing the number of nonproductive contacts while revenue remains flat because we have a complete view through segmentation and backend analysis of purchase channel preference and buying habits.* The health of the data improves through quality control, reducing the number of records with incorrect information by 1% every year.* Response rate is up 5% in year two due to clear tracking of merchandise buying patterns which informs merchandising strategy for future books.* Opt–out rates decline by 8 to 10% every year.

re: How valuable is your customer data?

a quick comment; customer data can be seen as an asset, and therefore something with value, only if it (1) has value and (2) is maintained to maintain that value. Looking at (1), what would it cost you in additional spend (in acquisition, retention, cross selling or cost to serve), and what earnings (profit) would be lost if you didn't have the data? Also, two other key areas; does having the data help you exclude the competition, for instance by communicating to them with offers when a competitor challenges; does it help you negotiate with suppliers (retailers). With (2) the data ages as soon as it is acquired (sometimes before). We don't place a value on data unless we see evidence of a data maintenance plan.

re: How valuable is your customer data?

I agree with Neil's post above, customer data is an asset and definitely has a value. Determining that value can be very tricky with a whole lot attributes to consider. There is almost always some amount of cost for maintaining that data which should also factor in and finally, customer data has a shelf life with a good part of it becoming 'not reusable' with every passing year. Would be interesting to see the point of view of some company who has actually been through this exercise and come up with a value.

re: How valuable is your customer data?

I agree with Neil's post above, customer data is an asset and definitely has a value. Determining that value can be very tricky with a whole lot attributes to consider. There is almost always some amount of cost for maintaining that data which should also factor in and finally, customer data has a shelf life with a good part of it becoming 'not reusable' with every passing year. Would be interesting to see the point of view of some company who has actually been through this exercise and come up with a value.