The Financial Impact of Bad Data and How to Mitigate Risks

In small businesses, customer data plays a pivotal role in identifying trends, potential leads, and operational efficiencies. Therefore, maintaining accurate and well-organised data is crucial

CREDIT: This is an edited version of an article that originally appeared on Business News Daily

Accurate and clean data is essential for businesses to prevent costly incidents related to data quality. Research from Gartner reveals that poor data quality can lead to significant financial impacts, costing businesses an average of nearly $13 million annually.

Moreover, the consequences of using unreliable data, such as making decisions based on incorrect insights, can worsen over time if undetected. Therefore, ensuring data accuracy is critical for mitigating risks and optimising business operations effectively. Furthermore, by ensuring data accuracy and clarity, businesses can enhance their decision-making processes, leading to improved outcomes for both the organisation and its customers.

Another survey highlighted additional concerns: after consulting 300 IT and data analytics professionals, it was found that they encounter up to 100 data quality incidents each month. Additionally, over half reported witnessing poor data quality resulting in bad decision-making.

How to manage your data

While data management might seem time-consuming and labour intensive, businesses can implement simple actions to clean existing data and maintain the organisation and efficiency of new data.

Synchronise your teams

Mitigating disconnect between various departments and teams is crucial for maintaining productivity and efficiency. One of the simplest ways to improve data management is by ensuring that all areas within your business understand how specific data sets should be utilised within each department. For instance, when other department leaders understand how the sales team plans to use any information gained, it can lead to a more informed process from the initial stages.

Focus on improving processes

While it might be tempting to go through existing data to fix errors, this approach doesn’t ultimately add value to your business and will only cost you time and money. Instead, implementing standardised processes for handling new information across the entire company makes data improvement much easier in the long run. This approach addresses the root causes of incorrect and mismanaged data, helping to improve processes moving forward.

Utilise automated workflows

Many businesses rely on content management systems or basic contact management software to organise customer data in a searchable format. However, customer relationship management (CRM) software offers a more robust, cost-effective, and efficient solution. CRM platforms not only track lead, prospect and customer data but also provide business tools that enhance various aspects of operations.

In conclusion, maintaining clean and accurate data is essential for small businesses aiming to optimise their operations and decision-making processes. By synchronising teams, focusing on process improvements, and utilising CRM software, businesses can effectively manage their data, mitigate risks and enhance overall productivity. Investing in robust data management practices not only prevents costly errors but also ensures that businesses remain agile and responsive to emerging trends and opportunities.