Share it with your network!
Help your friends to new knowledge
We all know we need master data but an exact definition can feel elusive. What exactly is master data? And why exactly do e-commerce companies desperately need to master it? Bisnode’s experts break it down.
At its simplest, master data answers the basic set of “who what where when“ questions in order to provide context for business transactions. Information about a customer’s location, for example, or their purchasing power. The follow-up question is of course “why” and the answer is straight-forward: Because it’s valuable.
Within e-commerce, answering the question of “who” – getting to know your customer by inputting age, marital status, household type and size, for example, and tracking big life changes – can accelerate company growth by both tending to existing clients and finding new ones. The final question is “how” to access that value? “The key is to understand your company’s purpose and then make master data serve that purpose,” says Mohamed Beyan, Solutions Manager at Bisnode.
In 2017, the Economist claimed that data had surpassed oil as “the world’s most valuable asset”. Yet three years later, many e-commerce companies still experience teething problems with data, according to Beyan and his colleague Niklas Lindblom, Senior Analyst at Bisnode, who say the time for dawdling is over: The corona pandemic has created an unparalleled surge in demand for home delivery.
A company cannot serve its customers, nor build on the relationship, if it doesn’t know them. Beyan and Lindblom liken good data to the foundation of a new house. To keep on building safely, the data has to be:
Without these three qualities, master data won’t be helpful. “We’ve noticed quite a few times that companies ask us very specific questions about their customers, but we’ve realized that we need to go back to basics and help them with the master data before we can even attempt to answer their question,” said Lindblom.
Relevant milestones - one of main strengths of master data
Relevance requires discernment. Irrelevant data just takes time to acquire and gets in the way. “Five years ago, when data became really hyped, customers wanted to know everything about their customers and downloaded information that was meaningless,” Beyan recalled. “That’s why we nag and nag about relevance.”
For example, Bisnode links up to the population registry to update customers’ master data, which enables the e-commerce companies to identify customer milestones. Big life changes signal big purchasing potential. For an insurance company, for example, it’s invaluable to be alerted when a customer has married, moved from an apartment to a house or started a family.
Update how you update your master data
While e-commerce companies can, of course, ask a new customer to manually input information about their living situation themselves, it’s unnecessary when there are automated systems to do it for them, said Beyan, adding “Why put that burden on the customer when you could do it yourself?”
Furthermore, inputting and updating are two very different things. At what point would the customer think “Wait a minute, I should really tell that e-commerce company that I made a purchase from last year that I’m having a baby!” At no point, probably, which is why companies have everything to gain from updating the data themselves. ”Customers appreciate companies that understand them,” Beyan pointed out.
Correct data pays off
Incorrect data is not just a time-consuming nuisance, it poses actual risks. When marketing is based on bad data, it can lead to hit-and-miss advertising that irritates the customers. It might even scare them off.
But in this e-commerce world of potential pitfalls, is master data really the master of all data? Isn’t it enough to keep tabs on people’s browser behaviour and check the content of their check-out hamper? No, not always, pointed out Lindblom. “You might think I’ve had a baby if I’ve bought tonnes of diapers, but maybe it’s my sister who’s had the baby and I’m buying the diapers to help her out,” he said.
“Depending on what pool of data you’re looking at, the customer can look very different,” he added.
The value of customer understanding cannot be overstated, but to get there the house foundation, so to speak, needs to stand firm. “Bisnode's customers understand pretty quickly that without a good frame, that house will collapse pretty soon,” Beyan said.
Once the foundation is in place “we can start to add more floors,” said Lindblom, adding that the initial investment has a good rate of return. “How much time and money we have to spend on doing data analysis for our customers depends on the quality of their master data. Not having to do a lot of tweaking and tinkering will pay off quickly.”
A company that does not master its data might as well sign its own death warrant. “If you just keep on driving like nothing has happened and trust that your gut will get you to your destination… well, you’ll be overtaken pretty quickly by companies that have insights about their customers,” Beyan said. “The companies who have insights, who act on those insights, and who have put personalized marketing at the core of their business, they’re the ones who’ll get the furthest,” he added.