Master Data Management (MDM) is the practice in which a business or other entity connects all of its essential information to a single, master file which serves as the authoritative data source for all data operations. MDM is advantageous to businesses because, when done right, it can allow for tremendous operational efficiency and accuracy by integrating departments, personnel and even different software applications. This can help keep your client profiles organized, preventing confusion and redundancy.
For example, let’s say you run a mid-sized car dealership and a new customer buys a car from you. With a good MDM process in place, your different departments will all be on the same page when it comes to dealing with that customer in the future. If the sales data is linked to a single, common file, your marketing department will know that the customer already bought a car and can therefore solicit them with service offers (such as a discount on winter tire installation), rather than offers on new cars. In dealerships without MDM practices, marketing departments often only have direct access to the customer’s name and contact information, and thus bombard these customers with generic marketing strategies, a practice that is annoying to customers and futile in terms of generating revenue.
Just how costly can bad data management be? In 2014, an Ovum Research study revealed that poor data quality can reduce business revenues by 30% or more. A 2016 TDWI report reveals that poor customer data costs businesses in America $611 billion per year. While these numbers reflect businesses of all sizes and scope, they do reveal the importance of good data management.
Is MDM right for your business? The answer depends on your specific needs. MDM solutions tend to be more useful in larger operations with several employees and a large customer base, where data is dispersed across different systems or departments. On the other hand, even smaller businesses can benefit if they have a lot of data to manage and if that data is particularly crucial to the success of their business. A good question to ask yourself is whether your business is being negatively affected by data management issues (including redundancy, inaccuracy and incompleteness). Are there times when the left hand doesn’t know what the right hand is doing? If so, you may want to consider a software solution.