2013 Contact Data Quality Benchmark Report:

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Buddy Reeves
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1 2013 Contact Data Quality Benchmark Report: The Top 100 Online Retailers

2 This fourth annual benchmark report provides insight into data quality trends as represented by the top e-commerce and m-commerce performers. In this edition, the research compares address and verification functionality, highlights emerging trends around m-commerce data quality practices, and points to the continuing importance of data quality in an evolving digital world. Research Methodology Experian QAS conducted a research study in December This study evaluated the top 100 online retailers, as ranked by online revenue in the 2012 edition of Internet Retailer s Top 500 Guide. Additionally, Experian QAS reviewed the top 100 mobile sites, as ranked by online revenue in the 2013 edition of Internet Retailer s Mobile 400 Guide. 1 At each e-commerce and m-commerce site, Experian QAS attempted to check out with incorrect address and information. Test addresses included an incorrect ZIP Code TM, city, street name and missing apartment number. Test s included a symbol and syntax or domain error. Retailers were assessed based on how their websites handled the incorrect entries. All responses were broken down by verification level. Descriptions of each category are listed later in this report. E-Commerce Findings Address validation continues to be an important component within the checkout process. However, retailers are now adding validation functionality at a faster rate. This trend likely represents the changing retail environment, as well as consumer communication preferences. Growth in address validation at checkout demonstrates that more and more retailers understand the business justifications for front-end address Secondary Level 44% No Active 31% ZIP Code Level Symbol Check 82% Building Level 7% Figure 1: Levels of Address Used by the Top 100 in E-Commerce Syntax/Domain No Validation 7% Check 3% Deliverability Check 5% Figure 2: Levels of Used by the Top 100 in E-Commerce 1. Data focuses on m-commerce sites within the U.S. 76 of the top 100 were included in this research.

3 validation. While retailers now understand the ramifications of incorrect shipping and billing information, they are still exploring the effects on marketing efforts. 44% of the top 100 retailers use secondary level address verification, which provides retailers with the highest level of data confidence and deliverability. This number represents positive growth and indicates that retailers recognize the value of secondary verification and are slowly moving toward this category of verification. 94% of the top 100 retailers see value in collecting accurate addresses, indicated by some form of front-end verification at checkout. This represents a significant increase in verification functionality compared to last year s report. 8% of the top 100 retailers have now implemented higher level verification standards at checkout. This number represents a new area of focus for retailers, as results from the 2012 study showed that no retailers were using higher level verification practices. Figures 1 and 2 (on previous page) depict the breakdown of verification practices among the top 100 retailers. M-Commerce Findings While retailers are still evaluating m-commerce, the U.S. consumer has already jumped on board. 116 million Americans own smartphones and 70 million own tablets (emarketer, April 2012). Moreover, m-commerce performance was set to reach $12.4 billion in 2012, according to Internet Retailer. M-commerce retailers are weary of investing in data quality technologies, as noted in Figures 3 and 4. However, by avoiding these necessary functionalities, retailers leave themselves vulnerable to the effects of poor data within this expanding channel. 59% of m-commerce sites have no active verification, whereas only 31% of e-commerce sites omit this functionality. In an environment where mistyping is extremely common, this lack of validation is likely to lead to significant problems. While the majority of m-commerce sites offer symbol validation, no site in this study provides higher level validation. This will likely lead to marketing effectiveness issues and deliverability concerns. ZIP Code Level Symbol Check 93% Building Level 3% No Active 59% Secondary Level 13% Figure 3: Levels of Address Used by the Top 100 in M-Commerce No Validation 7% Figure 4: Levels of Used by the Top 100 in M-Commerce

4 How Data Quality Drives Performance Customer data is essential to a retailer s success. It is, therefore, no surprise to see that the top performing retailers continue to deploy address and verification tools at checkout. It is also interesting to point out that the retailers ranked deploy address and verification at a higher rate than the top 50 retailers. This suggests that awareness of front-end contact data validation has grown across retailers of all sizes. Moreover, smaller retailers may use this functionality to gain a competitive advantage in the market. Address Address verification drives online revenue by increasing shipment deliverability rates, decreasing operational costs, strengthening marketing efforts, and enhancing the customer experience. When shopping at a site with weaker levels of verification, customers are more likely to check out with an incorrect address. Orders processed with an inaccurate address lead to multiple inefficiencies, including delivery delays and wasted resources if an order needs to be reshipped. Delayed orders frustrate customers, potentially even causing them to shop with another retailer in the future. Incorrect and incomplete customer address information also negatively impacts marketing efforts. If a customer record contains bad address information, that customer may never receive promotional offers, loyalty program materials, or targeted marketing communications. is now the preferred channel for most customer communications. The success of a retailer s marketing program depends on recipients seeing and responding to communications. However, nearly a quarter of all s sent never make it to the recipient s inbox (Return Path Deliverability Benchmark Report). Customer Success Story How one retailer increased deliverability and revenue This specialty retailer was experiencing high bounce rates from newly acquired addresses, which resulted in deliverability issues, damaged reputation with ISPs, and loss of potential revenue and customer engagement. In order to combat these obstacles, the retailer implemented validation into the POS acquisition process. The solution ensured that existing addresses and new s captured were valid and deliverable before any mail deployed. By leveraging automated cleansing after the s are acquired, the retailer has experienced a 9% increase in deliverable addresses and a 15% increase in revenue from the newly deliverable addresses. The 9% increase resulted in incremental opens, clicks, and transactions, both online and offline. The improved deliverability rate also mitigated deliverability issues and improved the retailer s reputation with the ISPs.

5 Deliverability and inbox placement are highly dependent on the sender s reputation with Internet Service Providers (ISPs) and the accuracy of the subscriber list. Retailers who leverage verification at checkout ensure data quality, which in turn reduces bounce rates and boosts the sender s reputation with ISPs. validation tools help marketers improve list quality by catching and correcting syntax errors, confirming that domains are active, and verifying whether mailboxes exist. The ideal verification tool will also flag or suppress known complainers, honey pots, and spam traps. By removing typos, common errors, and other flagged addresses, these services ensure that opt-in subscribers receive the s they want to receive. Higher deliverability leads to higher open and click-through rates which translate to a greater ROI for senders. Levels of Contact Data It should be clear that address and verification greatly impact success for online retailers and that the most successful retailers recognize this fact. However, not all verification is created equally. The matrices on the right and on the next page depict the levels of Real-Time Address Level Definition Results ZIP Code Level Building Level Secondary Level This is the lowest level of active address verification. If the city, state and postal code do not match, the customer is prompted to correct the error. The building number, street, city, state and ZIP Code are all checked to ensure accuracy. If errors are detected, the customer is prompted to correct them. The strongest level of address verification available. This checks every element of an address, including the apartment/suite number. If an error is detected, the customer is prompted for the missing address element or provided with a corrected address for confirmation. While ZIP Code verification usually allows an order to reach the carrier s local distribution center or post office, there is no guarantee that the order will reach the end destination. If the address contains a mistake with the street, house/building number or apartment/suite number, the order may be undeliverable. Correcting an undeliverable order requires additional labor as well as extra shipping expenses. This ensures that an accurate address is captured for each order unless the address is an apartment or office building. Since the address is not checked to the apartment/suite level, the package could be delivered to a lobby or left at a building s front door. In this situation, packages are vulnerable to theft or loss. This practice ensures that the address on every single order is verified before submission. Retailers using secondary level verification are able to achieve the highest operational efficiency and consistently satisfy their customers with on-time delivery.

6 Real-Time Level Definition Results contact data verification used in this research study and the impacts they have on retail Symbol Syntax/Domain Deliverability This is the lowest level of verification. In this instance, retailers create their own algorithm to seek out symbols within addresses. It is important to use a validation tool that can accept the full range of valid addresses and also catch s that on the surface look acceptable, yet in fact will never work. For example, some domains have been registered, but servers have not been set. The most accurate way to validate a mailbox without actually sending an message is to "ping" the mailbox. This is done by pretending to an address without actually doing so. While this form of verification ensures that a retailer avoids many simple mistyping errors, it does not catch the majority of typing errors. In these instances, bad addresses are still entered into the database and used within marketing campaigns. Correcting addresses with syntax, domain, and spelling errors helps recover otherwise invalid s and ensures the deliverability of future communications. This provides the highest confidence in accuracy and deliverability. Additionally, these solutions may check for known complainers, honey pots, and spam traps. Customer Insights Customer data is critical to decision making, whether that be at a board level meeting, behind the scenes in a marketing review, or in front of clients in store or over the phone. Given the rise in validation and the continued interest in address validation, retailers appear to leverage data quality for more than just customer communications. At a basic level, contact data validation helps standardize data for single customer view initiatives. This in turn helps identify shopping trends and customer profiles for future marketing. Make the Most of Each Transaction A single customer view is an aggregated, consistent and holistic representation of the data known by an organization about its customers. And while most businesses have been considering this strategy and working toward data integration for some time, the process is ongoing.

7 Businesses may struggle to create a single customer view for many reasons. First, many organizations house several databases, such as an e-commerce site and an m-commerce site, which collect unique data. This siloed approach leads to duplicate database records, inconsistent data entry, and less tailored customer interactions. Leverage address and validation to ensure data accuracy and data standardization. This consistency helps when consolidating data and enables a truly single view into your customer database. About Experian QAS Experian QAS is an address data quality software pioneer. The company s products capture, validate, cleanse, standardize, and enrich customer contact information. Experian QAS provides data validation software and services to more than 10,000 customers worldwide in retail, education, healthcare, insurance, finance, government, and other sectors. The company was established in 1990 and has offices throughout the US, Europe, and Asia Pacific. For more information, visit

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