Managing the Quality of Marketing Data: Cost/benefit Tradeoffs and Optimal Configuration

A large majority of work in database marketing deals with what to do with data when it is available. This paper focuses on an aspect of data that has not been visited frequently in the database/interactive marketing literature—managing the quality of data resources from a profit point of view. While costly to achieve and sustain, high data quality is essential for effective database marketing. The notion that “more is better” very often prevails in data quality management decisions, essentially with very little consideration, if any, of cost. This paper suggests that data quality management decisions should be driven by considerations of cost–benefit tradeoffs and profit maximization. It specifically addresses data quality decisions which are highly relevant in the database marketing area: the subset of data records managed, reflecting time-span coverage, and the targeted quality levels in this subset. Decisions of these types are routinely made based on satisfying technical and functional requirements. In this study, we propose a model that quantifies the benefits and the costs associated with these decisions, and permits optimizing them from a profit maximization standpoint. The paper describes the model development, discusses its implications for data quality management decisions, and highlights its potential contributions with illustrative examples.