The 1-10-100 Rule

  

The 1-10-100 Rule

You may be familiar with Benjamin Franklin’s adage that “an ounce of prevention is worth a pound of cure.” Franklin couldn’t have foreseen how this would apply to data nearly 300 years later, the axiom is still valid today in the form of the 1-10-100 rule.

What is the 1-10-100 Rule?

The concept of the 1-10-100 rule was developed by George Labovitz and YuSang Chang in 1992. Put simply, the 1-10-100 rule states that it costs exponentially more money to identify and correct data entry errors the longer it takes to find them. According to the 1-10-100 rule, it costs $1 to verify data as its being entered. It costs $10 to clean the data after the fact. And it costs $100 if you do nothing.

  • $1: Verifying and correcting data at the start is the least expensive way to make sure your data is clean and accurate. This is the prevention cost.

  • $10: Identifying and cleaning data after the fact is time consuming and resource intensive. Organizations may have to set up a team to validate the data and correct any errors, which costs money and can lead to lost productivity. This is the correction cost.

  • $100: Bad data may flow between sources, creating a waste of time and resources. This is the failure cost.

What the 1-10-100 Rule Means to Your Dealership

The basic concept is simple. If you fail to verify and maintain the data in your CRM system, the duplications and errors will snowball and create larger problems down the road, ones that are more expensive to fix the longer they’re ignored. Spending time and resources to clean data after the fact equates to paying twice to capture the same data. Bad data can also lead to poor communication with customers, as well as missed sales opportunities.

Think of your CRM system as a new car. You advise customers to bring their vehicles to your dealership’s service center for scheduled maintenance, because you understand that a small problem can turn into a larger and more expensive one down the road. A customer may fail to bring in a vehicle for scheduled maintenance, believing it will save time and money. But failing to properly maintain a vehicle can lead to a breakdown, which is ultimately more expensive and time intensive to deal with than a simple maintenance visit. The longer the vehicle is neglected, the greater the chances are it will result in a larger problem, such as damage to the engine, requiring even more costly repair work, or even the need to replace the engine.

Putting It All Together

While the numbers shouldn’t be taken literally, the 1-10-100 rule is useful for visualizing the hidden costs that result from delaying or failing to clean data. It’s a good model to use to help dealerships think about ways to reduce costs.