Monday, August 24, 2009

Marketers Collecting Too Much Data?

Tom Lacki, a senior advisor with Peppers & Rogers Group, says in 1to1 Weekly that "The lack of having a data strategy is driving companies to collect more and more data needlessly.... Rather than thinking about what they'd like to know to support their marketing, or which touchpoints are most important, they collect everything."

The Peppers & Rogers Group viewpoint on customer data is that every piece collected should help answer one of two questions: what is a customer's value, or what are a customer's needs. "Anything outside of those two objectives may have a legitimate reason to be collected, but more likely than not it's superfluous," Lacki argues.

Data can expand in three distinct ways, the newsletter points out. The amount of detail on individual customers can expand, the number of total customers can increase, or the length of time the data represents can be extended. "That third piece is very important," Lacki says. "Data decays rapidly, so it's counterproductive to collect data if it's not current." When companies decide how much information to collect and store, they need to remember this increases over time.

It seems to me, however, that this ignores the value of tracking customer migration based on behavior over time. However, simple RFM/P migration summaries can reduce the amount of data maintained on a customer dramatically (down to just a few bytes) while still maintaining a record of historical behavior.

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