Data Quality as Competitive Advantage

I always wanted to make the above headline, but unfortunately one of the hardest things to do is documenting the direct link between data quality improvement and competitive advantage. Apart from the classic calculation of the cost of returned direct mails most other examples have circumstantial evidences, but there is no smoking gun.

Then yesterday I stumbled upon an example with a different angle. A travel company issued a press release about that new strict rules requires that your name on the flight ticket have to be exactly spelled the same and hold the same name elements as in your passport. So if you made a typo or missed a middle name on your self registration you have to make a correction. Traditional travel companies do that for free, but low-cost airlines may charge up to 100 Euros (often more than the original ticket price) for making the correction.

So traditional travel companies invokes a competitive advantage in allowing better data quality – and the low-cost airlines are making profit from bad data quality.  

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13 thoughts on “Data Quality as Competitive Advantage

  1. John Owens Dunedin 23rd June 2011 / 08:22

    Hi Henrik

    Not sure that I agree with your logic here. The traditional companies are actually enabling and accepting low data quality.

    The low cost airlines are actually enforcing high data quality. Their actions are actually benefiting both themselves and their passengers.

    The airlines are getting the extra revenue for error correction and the passengers are not being prevented from travelling by errors in their documentation.

    This situation also gives passengers choice. If they want the right to give incorrect information then they have the choice of paying perhaps two or three times more for their ticket.

    If they do not mind being forced to give the right information, they can travel far more cheaply.

    An then the great Mr Ryan, the great leveller, makes all people equal by penalising those who dare make mistakes!!

    A wonderful video here on the true cosy of cheap flights


    • Henrik Liliendahl Sørensen 23rd June 2011 / 08:45

      Thanks for commenting John, points taken. I was actually also two-minded in the first place. So Mr. Ryan actually has made a scheme on how to extend data governance all the way to the customer’s living room.

  2. Richard Ordowich 23rd June 2011 / 11:07

    Paying for luggage that is then lost, then paying for hand carried luggage, blankets and some airlines considering pay toilets and now a charge to correct your name! I don’t think this is competitive advantage as much as degrading customer service.

    Following this progression, stores will refuse to sell you products if you don’t provide vital statistics like your birth date! Oh, too late. Some stores have already adopted this practice when customers are purchasing alcoholic beverages.

    If this practice is adopted by all companies, what will happen to the software vendors who sell name cleansing, matching and linking software? There will be no need for MDM or data quality professionals. We must rise up and revolt against this oppressive practice before it is too late!

    • Henrik Liliendahl Sørensen 23rd June 2011 / 11:32

      Right so Richard; to the barricades. We must defend the identity resolution.

  3. Teresa Cottam 23rd June 2011 / 12:00

    There is a difference between short-term commercial advantage and competitive advantage.

    So in your eg both have bad data quality due to the customer not filling it in right (it may be the company’s fault, but let’s assume there are not keying in errors as they have great staff and great processes). The issue is about customer service, so in the low-cost airline they grab the extra cash which is over and above the cost of fixing. In the traditional airline they concentrate on the customer relationship which is about building loyalty longer term, brand values etc.

    The question is if you are stung with a Euro100 charge to fix do you ever go back to that airline? You might learn the lesson to be careful but will that then benefit the low-cost airline if they alienate the passenger? A better strategy is to emphasise the need for accuracy, to maybe have a penalty to correct, but then to waive the charge for first time offenders etc. (A business rule is applied to a technical and operational process.) If someone has ongoing sloppy data quality sure they should be punished – because it will cost you to fix – but you have to use the penalty to guide the customer to improve their accuracy without alienating them (at least in the first place). That way you improve data quality, reduce operational costs and increase loyalty. We must remember loyalty = $$$ as it’s the opportunity to resell and upsell. And so much loyalty centres around data quality.

    My final point is the ultimate experience here is to be able to read the required name etc directly to avoid any possible error. Here automation would reduce risk and cost of human error and also make it easier to fill in the form. In fact the data set might include name, address, passport number, preferences, allergies – all the standard stuff. You get so sick of having to repeatedly fill in the same old stuff. Maybe that’s a new business idea for your Henrik?

    • Henrik Liliendahl Sørensen 23rd June 2011 / 12:22

      Thanks Teresa for the good and comprehensive feedback. I support your thoughts. I have actually worked with Thomas Cook Northern Europe in getting the needed single customer view and also been involved in the making of very advanced features for data quality support in self registration on the internet, which is the most frequent way of capturing passenger data today.

  4. Michelle Ross 23rd June 2011 / 15:54

    The data quality issue is only a competitive ADVANTAGE if the customers perceive it as a reason to do business with one airline over another. Honestly, the customer service aspect is still the most critical thing to the guy trying to make his flight. How much time, expense, and hassle will this data issue cost your customer? A true competitive advantage will state how getting passenger data right makes their lives easier in the terminal.

    • Henrik Liliendahl Sørensen 23rd June 2011 / 16:05

      Thanks Michelle for joining. Yep, the advantage through better customer experience was the original purpose for the travel company (a Thomas Cook brand) that made the press release bashing the low-cost airlines for high fees for correcting spelling mistakes that, if not corrected, will make your way through the terminal more miserable than usual.

      • Michelle Ross 23rd June 2011 / 16:30

        It looks like an opportunity to differentiate to me! With a little market research, the savvy airline could find just what they need to capture some market share.

  5. Marie Haggberg 24th June 2011 / 16:13

    Agree that a focus on data quality is an advantage. I do consulting programming in the travel sector, and have seen an increased focus on ensuring proper passenger naming, especially in the area of tickets matching passports. Ensuring the traveller will be able to board their flight is one element of an overall good customer experience.

    Thanks for a good post.

    • Henrik Liliendahl Sørensen 24th June 2011 / 19:30

      Thanks Marie for an inside industry confirmation on the subject discussed.

  6. Sophie at 8th July 2011 / 17:06

    In your example, the customers give the airline incorrect data. So OK, the quality of that data is bad. But it doesn’t need to stay that way, and the very essence of data quality in my eyes is the ongoing maintenance and improvement of the big 5 elements of DQ: accuracy, completeness, relevance, availability and timeliness.

    If the airline corrects the data for free, they have championed data quality by improving it with the minimum friction or resources. If the airline charges the customer for the correction, they are promoting data quality by tackling the source of bad data ‘upstream’. Either way the quality of the information grows, and the customer becomes more mindful of their responsibility to submit good data.

    The competitive advantage is in the hands of the customer to bestow. If they want a cheap flight, they will have to manage their own data quality from the outset, complete their forms with care and deprive the low-cost airline of the additional revenue. If they want the peace of mind that comes from knowing data quality can be improved without penalty, they will go with a more expensive airline.

    If, of course, the customer is both careless and cheap, then the budget airlines will profit from placing a negative incentive on data quality in customer submissions. But the customer is not for me to judge 😉

    • Henrik Liliendahl Sørensen 8th July 2011 / 18:32

      Thanks for joining Sophie. Cool tool you have up there in the cloud by the way.

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