The “Domino Effect”: a compounding repercussion or chain-reaction, which originates from what many consider an innocuous event.
Maybe the best way to illustrate this is by example. Here’s how the “dominoqq pkv Effect” can adversely impact a business. Granted, this example may seem a bit of a stretch, but it’s intended to illustrate how costly dirty data could actually become. Agreeing with the dollar amounts is insignificant. Understanding the devastating impact, which dirty data has on your organization, is.
A large national financial institution, using its proprietary database of 4,500,000 high value domestic retail customers sent out, via US mail, a $250,000 pre-qualified 3.5% home-equity line of credit offer. The campaign’s cost: $5,240,000 (postage, paper, printing, power, people). The strategy behind this marketing tactic was to build a tighter bond with these customers while generating incremental revenue. However, the inverse actually occurred.
Nearly 23% of the database, which the marketing department used, included individuals no longer meeting the institution’s specific criteria necessary to receive the offer. Here’s the hitch: the offer stated the named recipient on each piece of mailed collateral was already guaranteed to receive the $250,000 line of credit based on their prior credit activity. So, the financial institution’s exposure was $1,035,000 in wasted marketing funds for mailing to the wrong individuals-right? No exactly.
THE DOMINO EFFECT
“Injured” mail recipients (those no longer meeting the qualifications) file a class-action suit against the institution citing discriminatory and unfair business practices.
Investigations started by FTC, FDIC Bank Examiners and the USPS mail fraud department.
DM agency was saddled with the blame for using dirty data prompting the relation between the financial institution and the agency to be terminated.
A contractual breech occurs in the employment contract between the institution and its CMO as a result of all the bad press surrounding this matter. The senior executive immediately seized the moment to extricate herself from the relationship and promptly joins a competitor, taking with her all the “first-hand knowledge” of the financial institution’s business strategies she had amassed during her 5 year tenure.
Several of the terminated marketing department employees file a multi-million dollar suit against the financial institution, citing discriminatory employment practices.
Individuals in the marketing department, not fired from their jobs as a result of the direct mail debacle, and being fearful for their jobs, begin to suffer post-traumatic-stress-syndrome and seek counseling or take extended leaves of absence. In effect: a paralysis occurs in the marketing department as a result of the anemic leadership direction trickling down from the executive suite after the departure of the CMO.
Employees file worker’s compensation claims or disability insurance as a result of headaches and neck problems brought on by excessive job stress and mental anguish directly related to an increase in customer service issues stemming from the offer.
Customer Service quality levels plummet as a result of reductions in staff.
The financial institution’s HR department becomes over-whelmed by employee attrition as a result of employees pursuing alternative employment.
Stockholders demand immediate action to resolve the multiplying issues and restore stock value and brand equity.
High profile “captains of industry” who sit on the institution’s board, seeking to distance themselves and their companies from the troubled financial institution, resign their board of director posts.
Merger discussions with a multinational financial institution are put on “temporary hold” citing a need for reevaluation.
Financial institution’s property becomes a focus for vandalism by disgruntled employees and irate citizens.
The media promptly begins to follow the institutions misfortune and fuel all the collateral hemorrhaging as it evolves.
Reprinting and re-mailing a retraction offer for prior direct mail material?
(Cost: $5,240,000) Plus, production rush charges (Cost: $900,000)
Institution hiring consultant to manage new ad agency selection process; securings the services of a PR firm for “brand damage control” and to manage the mounting negative press coverage at $150 per hour for an initial 90 days?
Brand damage causing BDI and CDI to fall more than 40 points, mirroring an 18% loss in market cap?
The institution hiring outside council specializing in advertising law at $170 per hour; securings outside council specializing in class-action suits at $250 per hour to address a suit brought on by “injured” mail recipients; retaining law firm specializing in employment law at $225 per hour; contracting with council specializing in executive compensation law at $300 per hour?