The 1-10-100 Rule of Data Quality for E-Commerce Retailers

Reading Time: 3 mins
By Published On: October 4, 20180 Comments

E-commerce retailers depend on accurate sales data, invoicing and customer address data as much as they rely on well-maintained websites and delivery vehicles. To stay healthy you need to immunise your business against contamination from bad data. The 1-10-100 rule explains why.

Any business asset can turn into a liability if it’s not looked after. Nobody questions the need to maintain, service and check physical assets like vehicles, office equipment and computers, but if you’re guilty of neglecting your less tangible assets you’re not alone.
As an e-commerce business, quality data is one of the most important assets you own. Yet, according to a report by Gartner, poor data quality cost global organisations an average of $15 million in 2017.
The 1-10-100 rule developed in 1992 by George Labovitz and Yu Sang Chang is a framework that suggests the cost of fixing bad data is far greater than the cost of stopping it from entering the system. Manual rework is constant, continuous and costs far more than getting the data right at the front end. Verification at the front end also increases the chances of achieving a zero defect level in your data.

1-10-100 Explained

Imagine that one represents a single unit of cost to your organisation. This cost can be in terms of money, time, or both.

Stage One – Prevention Stage

This is the stage where you’re capturing the data, so the focus is on making sure it’s accurate to start with. The average cost to accurately verify your data at the point of capture is only $1. This stage is the most critical, as it is the simplest and least expensive stage for ensuring the accuracy and validity of data. Some businesses will push for this cost to be reduced, but inevitably that creates additional costs down the track that outweigh any savings.

Stage Two – Correction Stage

At this stage, the cost of inaccurate data rises exponentially to 10. This represents the cost (and time) spent employing people and programming systems to trawl through your data to check, verify and cleanse it after it’s been captured. This is expensive, but if you just ignore the problem and do nothing about the data quality, you reach stage three.

Stage Three – Failure Stage

At this stage, the cost of the same piece of inaccurate data increases 10 times more to 100. This is where the implications of the poor data become real – through operational failures, non-delivery, customer service tasks, lost sales and customer churn. One hundred represents the proportional amount that businesses pay when they do nothing about their poor data.
How Did Stage Three Get So Huge?
Bad data has a tendency to breed like a virus if you do nothing about it. Symptoms in the form of repeated failed deliveries, missed marketing opportunities, sub-standard customer service and lack of compliance can be terminal to e-commerce retailers. By the time you reach the failure stage, bad data may have spread and already infected customer acquisition, retention rates and your reputation. Retailers in this position suffer the cost of treating the symptoms while also going back over their data to remove the cause and get their business back to health.
By using simple and inexpensive software tools like Harmony Hosted’s intelligent address validation at the Prevention Stage (Stage one), you are effectively immunising your business from being infected by bad data and avoiding the potentially huge costs of dealing with it. Get it right from the start and there’s no need for your business to progress to stage two, let alone stage three.
The suite of data quality and validation tools for e-commerce storefronts include:

  • Address validation: Verifies addresses against up-to-the-minute real-time data from Australia and New Zealand Post to make sure the correct information is captured, and your products go to the right place every time.
  • Email verification: Checks the address syntax and the existence of the domain address, email server and mailbox.
  • Phone verification: Checks in real-time if a phone number is active and identifies the current carrier.

Best of all, with Harmony Hosted’s subscription-based model you only pay for the number of validated address transactions you use. Harmony Hosted also offers easy credit card payment options.

  • Pay only for validated address transactions with scalable fees
  • Right now Power Retail readers save 50 percent on fees for a limited time. This means the service is available for as little as $6.25 per month
  • Try before you buy with a one-month free trial

Our Power Retail special offer ends October 31, 2018 so don’t miss out!
Don’t risk the health of your business. Ensure your data is healthy and accurate from the start so your e-commerce business can live a long and prosperous life.
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