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The Dark Side of Customer Analytics

In:

Submitted By endnev
Words 489
Pages 2
To: Jason Walter, IFA CEO
From: John Doe

Issues:
• Potential damage to IFA’s reputation and legal consequences if customers and/or regulatory bodies determine IFA is applying profiling practices
• ShopSense’s customers may stop using their loyalty cards or even stop shopping at ShopSense entirely
• IFA’s customer analytics process could result in the discovery of correlations they did not want to know

Problem/Decision:
You must determine if purchasing ShopSense’s customer data and using it to profile customers will provide you with a competitive advantage with minimal legal implications. ShopSense’s customer relationships could be compromised if they are made aware that IFA is setting insurance rates based on shopping purchases.

Alternatives:
1. Do not purchase ShopSense customer data
2. Purchase ShopSense customer data with exclusive rights and do not disclose partnership to ShopSense’s or IFA’s customers
3. Purchase ShopSense customer data with exclusive rights and disclose partnership and use of customer analytics. Announce healthy lifestyle initiative.

Criteria:

• Legal Considerations- must consider laws prohibiting legal exchange of customer data and use for customer profiling. If mitigated, reputational risk can be reduced.
• Timing - IFA must obtain exclusive rights to the customer data to establish a competitive edge or another insurance company will buy the grocer’s data
• Customer relationships – IFA’s and ShopSense’s may be compromised if customers become aware that IFA is correlating grocery purchases with insurance rates Recommendation:

Setup a healthy lifestyle initiative with ShopSense and announce the partnership disclosing that IFA will be applying customer analytics to identify customers that make ‘healthy choices’. Customers who opt-in will be provided with grocery discounts and potentially lower insurance

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