Data Decay Explained: What It Is and Why Business Leaders Should Care
Accurate and reliable data is crucial for effective decision-making, strategy development, and customer engagement. Data decay—defined as a gradual deterioration of data quality over time—poses a significant threat to these efforts.
During a recent #USAMfgHour chat on X hosted by Manufacturers’ News, Inc., participants delved into the financial impact of bad data, the staggering speed at which data decays, and why business leaders need to understand and address this issue.
The Financial Impact of Bad Data
The chat began with host Manufacturers’ News, Inc. asking participants to estimate the annual financial impact of bad data on American businesses.
“I’m going to say somewhere in the billions of dollars. 🫠 ,” said Whitney Koch of Keystone Click.
“Before preparing this chat, I really only considered the cost in effort and time. Coming from Lead Gen, all the time spent to pull and find current data, cut into KPIs…” replied Kati “the Manufacturing Hype Girl” McDermith of Manufacturers’ News, Inc.
“The estimated annual financial impact of bad data is in the trillions because of wasted resources, compliance penalties, and indirect costs dealing with loss of customers,” answered Tracy St. Clair of Integrated Logistics Services.
“No idea. In the millions?” guessed Naomi Baasanjav of PENCOM.
“I remember seeing some information about databases losing 10% accuracy every 6 months because the person had moved jobs, been promoted or died. If you are using an old database then the time cost and resources lost could mount into billions and billions,” Nigel Packer of PelaTis Online said.
Responding to Packer, Host Manufacturers’ News, Inc. said, “This is an interesting study you might like by one of our associates, involving 1,000 business cards and how shockingly fast the info devalued: https://industryselect.com/blog/b2b-data-decay-and-its-impact-on-marketing.”
Before moving on to the next question, host Manufacturers’ News, Inc. provided the cost of data decay to American businesses: “$3,100,000,000,000 – that’s over 3 trillion (2016 Harvard Business Review).”
Inaccurate Data and Wasted Direct Mail Campaigns
One source of financial loss due to inaccurate data is direct mail campaigns. Host Manufacturers’ News Inc. asked participants how much money they think the average business wastes a year specifically on undeliverable direct mail.
“In the UK the price of postage has gone up considerably in the last 10 years,” commented Packer. “Sending direct mail has become rare with people using digital methods to contact prospective customers. It poses the question ‘If the world is getting smaller, why does the price of a stamp keep going up?’”
“I have to say around $175,000 a year,” St. Clair said.
“I’m guessing $500,000-$1 million,” ventured Koch.
“Turning up the stakes this time. Billions?” Baasanjav wondered.
“I am betting on a lot but will leave it up to the experts!” said Kirsten Austin of DCSC, Inc.
Replying to Austin, Koch added: “I am sure the amount keeps going up, as the price of postage continues to rise. (Shameless plug for @McAdamsGraphics – as your direct mail printing partner, they’ll help you keep your lists clean so you aren’t wasting so much $$.)”
“I was not following and now I am, we are here to help friends and partners Whit, great tip!” Austin responded.
“They’re unfortunately not active on Twitter right now, but definitely check them out if you do direct mail! http://mcadamsgraphics.com!” Koch exclaimed.
According to host Manufacturers’ News, Inc., “The average company wastes $180,000 per year on direct mail campaigns from items that never reach their destination due to inaccurate data.”
“That is a shame-especially with the availability of databases to check addresses,” Koch responded. “This is where having a direct mail partner who offers list management could really save your business some money.”
The Significance of Data Accuracy
The chat participants then shared how significant they think data accuracy is to businesses.
“There are 2 ways to look at this.
- The supplier of the data does not update their lists.
- The user is not aware of data decay.
The only solution is to run your own data, [and] keep it clean by removing the old stuff,” answered Packer.
“We have already seen the financial significance of inaccurate data,” Koch stated. “I can only imagine the operating ramifications of working with bad data. I imagine it would be very difficult for people to do their jobs effectively.”
“[A]nd info changes so fast!” McDermith declared.
“This is true, new employees, companies merging, etc.,” added Austin.
“Accurate data can help a company be successful,” said St. Clair. “Inaccurate data will destroy a business.”
“[A]gain, pulling from my history in call centers, I think the significance is missed outside of those actually on the phone/ in the trenches relying on it,” observed McDermith.
“Very significant!” Austin said adamantly. “Even when we pay for great lists, it’s still not always perfect. We do a lot of detective work to make sure we’re communicating with the right people!”
“[W]ord!” McDermith said, affirming Austin’s answer. “I love looking at websites to dive into what they are actually up to these days! Maybe they are opening a new location, or the shop manager just had a new grandbaby…anything you can do to personalize your message gives you an edge. Knowledge is 💪🏼.”
“Drill beneath the surface!” replied Rick Gunnarson of DCSC, Inc. to emphasize McDermith’s comments.
Interestingly, “41% of companies point to inconsistent data across platforms as their biggest challenge, while only 16% of companies say the data they are using is ‘very good,’” host Manufacturer’s News, Inc. shared.
How Fast Does Data Decay?
Given the financial impact of decayed data, the next logical question to ask is, “How fast does information change, anyway?”
“I am sure there is some information that changes every second!” Koch said confidently.
Austin agreed with Koch. “It can change in a second!” she said.
“I just read a stat the other day that only 14% of millennials will stay at their job for more than 3 years 🤯 and 4 million Boomers should be retiring in 2024!!!” McDermith shared.
“My guess is that the information changes very quickly,” said Baasanjav. “There are so many factors that could change the information and before you know it, you end up with outdated/inaccurate information.”
“Information is always changing,” St. Clair added. “I see a high turnover rate when calling businesses about warehousing and transportation. Dealing with this can be frustrating but can also be good if the lead was dead to begin with. Always great to periodically check back.”
To illustrate the speed with which data can decay, host Manufacturers’ News, Inc. provided these statistics: “In the next HOUR… 59 addresses will change, 11 companies will change their name, and 41 new businesses will open – not to mention the ones that close!” (Source)
Why Data Accuracy Matters
Aside from avoiding financial losses, why should business leaders be concerned about data accuracy?
“Bad data leads to bad decisions,” Packer said.
“Accurate data allows businesses to make informed decisions so the business can run efficiently and build trust with customers,” said St. Clair.
“It completely helps everyone in business,” asserted Austin. “It streamlines your efforts, helps you make better decisions, makes better use of your time and resources … the list goes on and on.”
“If you’re working with inaccurate data, you’re essentially wasting effort, time, and money,” Koch maintained.
“That’s really what it boils down to more or less!” McDemith said in reply to Koch.
“Data accuracy matters because companies make tons of decisions based on data to make the most of their efforts and resources,” said Baasanjav. “If it is inaccurate it could be a big blow for companies.”
“See my answer to question 1: 10% loss of data every 6 months as people move jobs, retire or die,” added Packer.
Host Manufacturers’ News, Inc. shared this list highlighting how accurate data helps businesses:
“Improved customer relationships,
More effective campaigns,
Competitive edge,
Better decision-making,
Better audience targeting…”
What to Look for in a Data Provider
If your business requires data from outside providers, it is important to vet them before selecting a data provider to partner with. Chat participants named specific characteristics and factors they would take into account when evaluating data providers.
“They need to be constantly researching and updating their information,” Austin said. “I’ll give you a hint, IndustrySelect is a good source.”
“Credibility and cybersecurity,” Baasanjav said.
“Good call on cybersecurity!” Koch commented on Baasanjav’s response. “I have gotten 2 letters recently about data breaches.”
“1. Data accuracy and quality. 2. Data security and privacy. 3. Flexibility and scalability,” listed St. Clair.
“[D]ang – you know exactly what you want! I like all of those too!” McDermith shared with St. Clair.
“I would want to know (1) where they get their data, (2) how often they update it, and (3) how they communicate the updates,” Koch said.
“Go with a data company that is part of a professional body. One that has standards and codes of practice,” said Packer.
“Niche! That’s huge for me!” exclaimed McDermith. “I always want to be aligned with the specialist in the industry I am working in.”
In addition to participants’ replies, host Manufacturers’ News, Inc. added these factors they recommend taking into account when evaluating data suppliers:
“Data that’s relevant to your market,
Data that’s people-powered,
Dynamic and live,
Comprehensive,
Customizable…”
Combatting Crippling Data Decay
Understanding and addressing data decay is not just a technical or financial concern—it’s a strategic imperative for businesses to stay competitive. As the chat participants emphasized, bad data leads to bad decisions, wasted resources, and missed opportunities. By recognizing the importance of data accuracy and taking proactive steps to mitigate data decay, business leaders can safeguard their operations, improve customer relationships, and maintain a competitive edge in an increasingly fast-paced market.
About #USAMfgHour
Anyone who champions U.S. manufacturing can join in on a new conversation each week on Twitter using the hashtag #USAMfgHour. The chat starts at 11 a.m. Pacific Standard Time/2 p.m. Eastern. Share positive blog posts, helpful articles, news, important information, accomplishments, events, and more with other manufacturers and supporters from throughout the country.
Are you interested in hosting a #USAMfgHour chat? Contact organizers @DCSCinc, @SocialSMktg, and @KeystoneClick.
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