Boosting the Bottom Line with Master Data Management

If you haven't heard of master data management (MDM) yet, you will. If you didn't realize that you use master data every day, you do. If you didn't know that MDM can help boost your company's bottom line, it can.

MDM is the process that organizes, unifies, and eliminates duplication of customer, product, and logistical records, as well as other key pieces of information that businesses have to track every day. And it does this across different departments, platforms, and systems. Simply put, master data is the core customer and operational data that gets used in virtually every significant process and transaction that a business conducts.

So what does this mean for an organization in practical terms? MDM enables companies to boost their bottom line by

  • reducing the cost of mailings, marketing campaigns, and lead acquisitions
  • allowing for faster sales lead processing
  • improving the quality of service in customer service departments and call centers
  • strengthening sales and marketing functions

Download this informative podcast featuring Lyndsay Wise, senior analyst at Technology Evaluation Centers (TEC), and Anurag Wadehra, vice president of marketing and product management at Siperian, a leading MDM and customer integration solution provider, today. You'll find out more about MDM, including how to get started, what strategies to bring to the table, and all the benefits you can expect.

Click here to download Boosting the Bottom Line with Master Data Management now!

This podcast examines the following questions:

  • What is the importance of master data management (MDM) to your organization?
  • How can you cut costs through the use of MDM?
  • How can MDM help you improve your company's sales and marketing efforts?
  • What should you be aware of from a technical point of view before implementing an MDM solution?


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Podcast Transcript

Hi, and welcome to TEC Radio. My name is Lyndsay Wise, and I am the senior research analyst for business intelligence [BI] and performance management here at Technology Evaluation Centers. Today I have [with me] Anurag Wadehra, the vice president of marketing and product management at Siperian. Siperian is a leading master data management [MDM] and customer integration solution provider. I will be discussing with Anurag what the importance of master data management is, and how organizations can use MDM solutions to improve their sales and marketing efforts, and how MDM can affect the bottom line and increase profitability within an organization.

Lyndsay Wise: Anurag, thank you so much for taking the time to be with us today.

Anurag Wadehra: You're welcome.

LW: What is MDM?

AW: That's a very interesting question, Lyndsay. Today, there's a lot of coverage of master data management, and essentially what it is, is a management of a certain kind of data. It is a data that defines the core business descriptions of customers, products, locations, and other key entities that [businesses] have to track. That's a very simple way of saying that master data management is managing your key business entities.

LW: How do organizations use master data? Can you give us an example?

AW: What's interesting about master data and the management of it, and the use of it in companies is that nobody uses it exclusively. Nobody wakes up and says, "I'm going to use master data today." It gets consumed in every business process and every business transaction. Let me give you an example. If you go to the bank and withdraw 10 dollars from an [automatic teller machine] ATM, in that transaction is implied who you are: what's your name,... your account number,... your address,... your location. Those aspects of the transaction are attributes of master data, and they get used, derived, or accessed during that transaction. And that's true for other business processes that involve customers, products, the relationship among customers and products, or other classes of what is called master data. So, in a nutshell, master data gets used in virtually every significant business process and transaction.

LW: How can MDM actually help a company improve its sales and marketing efforts?

AW: That's a very tricky question because companies have been trying to improve their business performance, including their sales and marketing processes, for a very long time. And for sales and marketing, companies have been trying to reduce the cost of mailings, cost of marketing, to different segments of their customers.

In sales, the cost of acquiring the leads and processing the leads … is an area of focus for many companies to improve their effectiveness. Master data is critical because very often the reason why costs are very high is because companies do not have good control over their master data. And therefore by controlling the quality and reliability, and very often, very simply, the definition of master data around customer product accounts, companies can significantly improve the business performance and business processes associated around this data.

Perhaps an example will help. If you consider a mailing that is sent to 10 million customers by a large bank announcing either a credit card offer or some other product offer, a significant amount of money can be spent on incorrect addresses, incorrect duplicate names, similar names, multiple mailings sent to the same household, very often not recognizing that spouses might actually belong to the same institutions as customers.

All of these issues result directly in higher cost and lower profitability. The root cause of many of the problems I've just described was poor quality of master data, lack of understanding of the relationships among master data.... By improving the quality and control of master data, you can improve directly the bottom line of your sales and marketing processes by reducing the cost of mailings, by improving the quality of services at call centers, and by improving the time it takes to process leads for sales.

LW: What kind of strategies should organizations use to help them implement MDM?

AW: So, what we've discovered is that a lot of companies understand the importance of high quality master data and the management of it, yet struggle with getting started because master data is so pervasive and is part of every major transaction and business process. Therefore, our recommendation has been that you start by looking at one specific business problem, such as cost of marketing, or high cost of sales, or improving customer service levels, and then drill down within that problem to the root cause of high costs, and very often those are driven by poor quality of master data.

By limiting the business problem, you are trying to attack and [narrow] in on the master data issues in that area. You can actually implement a solution rather quickly, very often within 60 days or less. And therefore you can start getting the benefit of having fixed the master data issue in one particular business area, such as marketing or sales, very quickly.

That's what we advocate. Don't try to boil the ocean. Don't try to attack master data across the entire enterprise in a single project. Identify a business problem that is very contained, and solve the problem by implementing a solution for master data. The dark side of that approach is that if you solve the problem and then go on to address a different problem—let's say, with product data—and now you implement a completely different solution for that, how do you make sure that all these solutions are actually, in fact, connected, because your common definition of a customer for marketing needs to be the same common definition of customer for, let's say, tracking products that are being shipped to the customer.

Connecting the master data solutions and making sure that all the master data solutions in the company are based on a common set of definitions is a very important consideration as you attack master data problems.

LW: In your previous question beforehand about sales and marketing, you actually did mention some of the challenges that customers face when they are trying to implement or use master data management solutions for their sales and marketing efforts. But can you also describe some of the challenges that customers face who don't use MDM, either additionally within sales and marketing or other areas of the organization?

AW: I think what has happened is that people who don't think that master data management is a new problem that needs to be addressed in a new way, usually end up having to address the problem in the old way.

Let me give you an example of that. A lot of companies might say, “I have a CRM system,” whatever the back office application they have purchased for managing sales leads, or “I have a call center application,” whatever system they might use to train their customer service reps to take the calls and support them. They might believe that those systems are adequate for providing a coherent view of the customers—their addresses, their locations—and that might be true for just that narrow process. However, business processes and customer processes span across sales and marketing and support. So, it's very important that the customer service rep knows that a sales call has been made to this customer the day before, or what state of marketing offer might have been sent out two days before.

Business processes that span sales and marketing and customer service should acquire a common, standardized definition—a common, standardized view of your customer's core profile information, be it their address, their location, their preferences for e-mail, their privacy preferences, etc. And if companies do not have master data management or do not believe they need master data management, they end up spending a lot of time handling data inconsistencies, data quality issues. Ultimately, these are customer retention, customer loyalty issues because customers get frustrated; they say, “You, the company, do not understand me,... that I have already given you my new mailing address six times, and yet you keep sending me stuff to the old address,... that I've told you not to e-mail me at this particular e-mail address, and yet you keep e-mailing me back at this particular e-mail address”—these kinds of customer loyalty, customer experience issues stem from not addressing master data.

LW: Do you have any examples of how the use of MDM has increased profitability within an organization?

AW: Actually, several examples.... If you break it down from unprofitably, we advocate that you should be able to justify master data management success and investment in master data management technology on pure cost savings alone. That's a very specific, immediate bottom line effect. We believe that over time … having better quality of customer data and product data in your sales and marketing processes will improve your revenue as well. But we'll leave that for now because that can be a challenge to measure.

On cost side alone, we've seen customers reduce their mailing costs because they have a better, clearer, more recent definition of [customers' names, addresses, locations]. We have seen customers reduce the cost of generating a lead and of managing a lead through their inside sales process because they now know exactly how to take a customer or a lead, and map it more accurately to the various sales territories or sales reps, and we have seen companies reduce cost on customer service levels because they have been able to directly bring in customer preferences from other sales and marketing systems in their call center environments. These are specific illustrations and examples where companies have improved their bottom line by reducing costs associated with customer data.

LW: Anurag, what's your advice to an organization who is implementing an MDM solution from a technical standpoint? What should they know when going in to this?

AW: There are a lot of technologies out there that are being billed as solutions to address master data challenges. I think the biggest [piece of] business advice [I can offer] is that companies should be able to start small with the technology, and be able to prove and demonstrate that in a very short time—in 30 to 60 days—by implementing it in a very well-contained business problem area, and then be able to expand that technology to other areas rapidly without having to undo or reimplement the earlier solutions.

Starting small and incrementally adding solutions on top of that, of other areas of master data over time, is, we think, the prudent approach. The alternative approach sometimes can be a technology that appears fairly provocative, but it takes, let's say, 12 months to implement over the entire enterprise, or more. That is a risky strategy, even if it appears technically exciting.

LW: Thank you, Anurag.

AW: Thanks …, Lyndsay. Have a good one.

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