What is data cleansing and why is it so important?

Is your business suffering from dirty data? Data cleansing is a business-critical part of data management. This article will explain what data cleansing is and why it is so important. 

Old email addresses, missing postcodes, duplicate customer details, misspelt names – a customer database can quickly be filled with inaccurate and outdated information. 

Even if you start with the correct data, it is prone to decay - data degrades by up to 20% yearly. This means if your database is only a few years old, a large proportion of data is likely to be outdated, and your budgets are being wasted on inaccurate contacts. 

The problem is around 27% of business leaders aren’t sure how much of their data is accurate. 

That’s why a solid data cleansing strategy should be a key priority for any business. 

In this article, we’ll answer your questions about what data cleansing is, how the data cleansing process works, and why it is so crucial for businesses.

What is data cleansing?

Data cleansing is fixing or removing incorrect, incomplete, duplicate, irrelevant or wrongly formatted data to ensure your data is accurate, trustworthy and consistent. 

The objectives of a data cleansing strategy are typically threefold: 

1. Maintaining information for existing customers to enable relevant communication.
2. Managing information that supports business functions like collecting payments and making deliveries.
3. Supporting the compliance requirements of many industries, including data protection legislation.
   
   

Data profiling vs. data cleansing

What’s the difference between data profiling and data cleansing? The two terms can be interchangeable, but they are distinct processes. 

Data profiling is examining and reviewing the structure, interrelationships and content of your data to understand what you have and how you can use that data across the business. In short, data profiling helps you create a digital inventory of your datasets.

On the other hand, data cleansing is cleaning and standardising the data. Often, data profiling is the step before data cleansing. 

Why is data cleansing important?

Dirty data, which can be duplicate, inaccurate or incomplete, is a significant threat to businesses. According to Forbes, it can cost organisations a staggering 12% of revenue. 

And they’re losing more than just money. Without data you can trust, you cannot make informed business decisions. 

In order to ensure the data you’re holding is actionable and accurate, it has to be clean. Otherwise, you risk making bad decisions based on bad data, which can be costly.

Poor quality data can result in inaccurate customer targeting, lost customers, lost leads, reduced productivity, and wasted marketing budget. 

A solid data cleansing strategy can have wide-reaching benefits across an organisation:

1. Avoid costly errors
Data cleansing is the best solution for avoiding costs that crop up when organisations are busy processing errors, correcting incorrect data or troubleshooting. For example, data cleansing ensures deliveries are made to the correct address the first time so the business can avoid costly redeliveries and customer complaints. 

2. Make data work across different channels
A data cleansing strategy clears the path for the successful management of multichannel customer data. Accuracy across customer data, including phone, postal and email channels, allows your marketing and communication strategies to be successfully executed across channels.

3. Enhance customer acquisition
Organisations with clean, well-maintained data are best placed to develop accurate and up-to-date lists of prospects. This increases the efficiency of their acquisition and onboarding operations and leads to higher acquisition rates. 

4. Speed up the decision-making process
Clean data is essential for a fast, reliable decision-making process. Accurate data supports market intelligence and other key analytics that provide organisations with the insights they require to make well-informed decisions.

5. Increase productivity of internal teams
Data cleansing improves data quality, which fuels productivity. When incorrect data is removed or updated, organisations are left with the highest quality information, so teams can save time wading through irrelevant and incorrect data. It also means less time is spent correcting mistakes made due to poor data quality. 

6. Build customer loyalty
If customers continually have poor experiences because the organisation is holding the wrong contact information, it can cause frustration and, ultimately, loss of the customer. Therefore, customer data cleansing can help you keep them loyal. 

7. Stay compliant
The cleaner your data, the more compliant you can be with legislations such as Anti-Money Laundering (AML), Know Your Customer (KYC), and the Data Protection Act. This helps you reduce fines and reputational damage. 

How to carry out data cleansing

The process of data cleansing includes four key stages:

1. Dealing with missing data

Plugging missing values in a data set is an essential element of quality data management. 

For example, missing postcodes could mean undelivered goods, and missing forenames can lead to important communications being misdirected. 

2. Validating existing data

Reviewing existing data for consistency and accuracy means your communications are more effective, and your customers are able to pay on time. You will also be able to fulfil any legal obligations around AML and KYC. 

3. Removing duplicate data

Duplicate records can be created by inconsistent data entry or multiple channels collecting the same data. 

For example, data might be blended from spreadsheets, websites and databases or when a customer has submitted contact forms on numerous channels. 

Deduplication, or de-deduping, keeps your database clean, healthy and accurate. 

4. Handling structural errors

Structural errors can include unusual naming conventions, inconsistent punctuation, abbreviations and capitalisation, and other errors resulting from non-standardisation. 

You should address mistakes arising from processing, such as measurement and data transfer. Inconsistent punctuation, typos and mislabelled classes are the most common problems. 

Why automate data cleansing?

With so much data to manage, it can be challenging, or even impossible, to manually cleanse your data. It’s time-consuming, resource-intensive and expensive – not to mention human error is the most common cause of dirty data in the first place. 

That’s why it’s worth investing in an automated data cleansing service. A data cleansing service will automatically sift through masses of data, such as email and address data, to detect anomalies, gaps and duplications. 

For example, Loqate’s Bulk Email Data Cleansing service checks your email data against highly trusted local and international data files to provide correct, complete and deduped data. This reduces email bounce rates and spam labels so that organisations can establish a strong sender reputation. 

Automated data cleansing can also check data against government death records. For example, Loqate’s Data Cleansing service uses the Australian Death Check to check against over 3 million official government death records and identify and remove deceased individuals from the database. This helps businesses to adhere to privacy legislation, verify customer identities, and protect against identity fraud.

How often should you carry out customer data cleansing?

How often organisations should cleanse data depends on multiple factors, such as the volume of data they hold. It’s crucial to regularly perform data cleansing while not wasting resources by performing cleanses too often. 

Data cleansing creates data quality

Quality data should be the glue that holds processes together to deliver a superior customer experience, gain a competitive advantage and move your business forward. 
The team at Loqate is here to help you build lasting customer relationships by correcting, suppressing or appending data with our intelligent data cleansing services. 

Take control of your data today

Jump-start your data quality initiatives with Loqate’s wide range of data quality and enrichment services. We’ll tailor an individual data cleansing solution for your business, so you can trust your data is complete, clean and compliant. 

Get in touch to speak to one of our data experts.