How to Caculate the Value of Data
posted by Anna Mar, November 01, 2011Information is an business asset. However, it's almost always a futile effort to calculate the value of data.
What's a customer record worth?
Consider a customer record — it's only worth money if you can sell something to your customer. The sales processes that depend on customer data have value — not the records themselves.What's a sales lead worth?
Businesses need to understand their data acquisition costs. This is quite different from placing a value on the data itself.For example, a campaign to generate sales leads needs to understand what a qualified lead is worth. Let's say a business determines that a qualified sales lead is worth $50. This is a useful financial projection that can be used to optimize lead acquisition costs. However, projections of lead value are really estimates of the sales process (not data). To project the value of a lead you need to answer questions such as:
How many leads will convert to revenue?
What will be the average revenue per conversion?
What will be the net margin?
How long can we retain a customer?
Can we upsell to the customer with time?
All of these questions are related to your business — not your data. Insert a lead record into your database and let it sit there — it's never going to make you money.
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