Understanding the cost of bad data on your business and how you can ensure customer information is accurate, relevant, and comprehensive.

For many franchise dealers, a dealership management system is at the core of your business. It touches all areas of operations and serves as the center of your business technology ecosystem. That’s why your DMS should be the system of record where employees can trust that the data is accurate and up to date. But that’s not always the case. Here’s why dealerships experience bad data, how it impacts your business and what you can do about it.

The Cost of Bad Data

The cost of inaccurate, incomplete, non-conforming, or duplicate data is high. According to Gartner’s research, organizations lose $10-14 million every year due to bad data. The study also reveals that the typical cost of one record is $1; the average resolution cost is $10 per record, and the cost of correcting bad data is $100 per record. CIO.com research showed that about 80% of companies believe they lost revenue due to data challenges. Pragmatic Works research identified bad data causes 20-30% of operating expenses.

In addition to operating costs, employee productivity and customer satisfaction issues can arise from poor data. Your salesperson may lose time pursuing phantom prospects because of duplicate or redundant accounts. Your marketing and advertising efforts may be misdirected and costly when targeting the wrong customers. Your service advisors may provide inaccurate follow-up diagnoses during subsequent maintenance visits due to incomplete information. Your staff may have to keep asking customers for basic information that they’ve already provided time and time again. All of these consequences negatively impact the customer experience by creating frustration and reducing trust.

Why Bad Data Happens

As with any database, duplicate records are inevitable. There are several reasons why this can occur.

• Multiple ways to create a customer. They may be an online, phone, or walk-in prospect converted to a customer through a new vehicle sale. They may also come through the service lane or accounts receivable. With so many ways a customer can be created and through many different employees, there are higher chances of non-conforming, incomplete, or duplicate records.
• Lack of process for record entry and maintenance. Like most companies, dealerships start small and grow, so there may not have been a process to ensure data integrity as the business expands. Over time, however, insufficient data also increases as the business grows. Even when there are processes, it may be tough to enforce. As employees come and go, new team members continually inherit poor data from their predecessors.
• Customers are dynamic. People’s lives change, which results in changes to addresses, phone numbers, emails, last names from past marriages and divorces, etc. Name preferences versus legal names bring additional complexity when different documents indicate different things. These details are difficult to track, even when they are regular customers.

How to Ensure Data Integrity

The good news is that there are ways you can ensure data integrity and maintain it as your dealership continues to grow. Here are some best practices to implement at your dealership.

• Always “search” before adding new entries. Always assume the person already exists in your database before adding new records. That’s why VUE DMS has the Ultimate Search functionality on every screen to reinforce that behavior. The platform also automatically searches for an existing record whenever you try to add a new entry; this helps prevent duplication issues in the future.
• Routinely clean and merge records. Identify someone in your dealership who will be responsible for regularly going in and cleaning up the data. Your DMS should have a find-and-merge functionality, so you can easily combine duplicate records. Doing these data accuracy checks on a routine basis will ensure a high-integrity DMS, allowing you to maximize the value of customer insight to deliver the best experience and make the best business decisions.
• Verify information upfront. Within your DMS, you may have one customer related to sales, service, accounts receivable, etc. To reduce friction for employees, dealerships often don’t put any guardrails for inputting data. However, this can lead to chaos down the road as other employees have to chase the customer for correct information or lose the potential sale altogether. It’s more efficient to put effort upfront to ensure the customer’s contact information is accurate; it’s even better if the customer can input their information themselves to reduce potential mistakes with data entry.
• Take control of your data. Given that your DMS is the source of truth, it’s crucial to have a platform that integrates all of your other systems, such as the CRM, fixed ops, website, marketing, etc. Make sure that your data within those third-party applications are also accurate before the integration. This will help prevent the headache of having to clean up bad data in multiple systems afterward.
• Select a comprehensive DMS. Your DMS likely includes modules for accounting, parts, service and sales. Ensure that all modules in your system talk to each other in real-time, so you always work with the latest data. For example, when a repair order is done and payment is completed under the Service module, the transaction data should be immediately posted in your Accounting journal under that specific customer. This ensures every department has what they need to do their work effectively while offering a complete picture of that customer’s journey with your dealership.

Benefits of Good Data

Clean, accurate data contributes to your dealership’s profitability. It can provide you with a clear view of your customer base, so you can better understand their needs and personalize services to improve satisfaction and retention. It also enables more efficient business operations, so your employees are more focused on their job and spend less time chasing phantom prospects.