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The Dark Side of Customer Analytics

The document summarizes a case study about a potential data sharing partnership between ShopSense, a supermarket retail chain, and IFA Insurance Company. ShopSense collects extensive customer data through loyalty programs, and IFA is interested in accessing 10 years of ShopSense's customer data. Both companies see the potential benefits, but also have concerns about customer privacy and how the data will be used. Experts advise that the companies need to ensure transparency with customers and protect data integrity to maintain trust and avoid potential backlash. Any partnership should have clear purpose limitation for data use and follow ethical data protection principles.

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145 views13 pages

The Dark Side of Customer Analytics

The document summarizes a case study about a potential data sharing partnership between ShopSense, a supermarket retail chain, and IFA Insurance Company. ShopSense collects extensive customer data through loyalty programs, and IFA is interested in accessing 10 years of ShopSense's customer data. Both companies see the potential benefits, but also have concerns about customer privacy and how the data will be used. Experts advise that the companies need to ensure transparency with customers and protect data integrity to maintain trust and avoid potential backlash. Any partnership should have clear purpose limitation for data use and follow ethical data protection principles.

Uploaded by

jayantascribe
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Group - 5

Bhuvan & Mano

The Dark Side


of Customer
Analytics
Thomas H.Davenport and Jeanne G.Harries
HBR Case Study

ShopSense IFA Insurance Company

Dallas-based superMarket retail Founded in year 1972


store chain in the US One of the largest life and health
In-house analytics, employed insurance company in the US
pattern-based approach to issue Among the best in the industry at
coupons evaluating external sources of data
Collected customer data through
loyalty programs
George L.Jones
President & CEO
How can these Borders Group, Michigan

companies
Katherine N.Lemon
leverage the Associate Professor
Boston College of Management
customer data
responsibly ? David Norton
Vice President of relationship marketing
Four commentators offered expert
Harrah's Entertaining, Las Vegas
advice

Michael B.McCallister
President & CEO of Humana
health benefits company, Louisville
IFA Personnels

Geneva
Laura Brickman Archie Stetter O.Z. Cooper Jason Walter
Hendrickson
Regional Manager for West Senior Analyst General Counsel Chief Executive Officer
Coast operations Senior Vice President, Ethics
and Corporate Responsibility
ShopSense
Personnels

Steve Alan Atkins Denise Baldwin Donna Greer


Worthington
Chief Operating Officer Head of Human Resource Chief Executive Officer
Chief Analyst
Current Scenario
Shopping at local
ShopSense Laura trying to seek Steve Worthington
supermarket; flying to IFA management hoping to persuade
Cincinati to meet IFA's approval to buy ShopSense CEO and
senior team more ShopSense senior team to approve
data terms to data sale

14 months earlier, IFA &


ShopSense joined into
Both management teams
venture - 10 years' worth
see potential in the deal but
ShopSense data sharing
some members have
inhibitions
IFA Management View ShopSense Management View

Should we be charging
If IFA comes up with
more? Selling the
proprietary health
Jason Walter information may dilute
indicators, that would Donna Greer
customer relationships.
be a huge hurdle for
Insurance premium can get
competitors
priced more accurately.
ShopeSense info
could be pretty rich
source of insights, - Company currently
eg. households Archie Setter makes more money by
CFO
purchasing bananas selling scanner data
and cashews have than by selling meat
lower Parkinson risk

Laura Brickman Steve Worthington

Already buying data


from information Customer find out, they stop
Rusty Ware Alan Atkins
brokers for specific using loyalty cards and we
drugs and products stop getting information

IFA can position programs How will IFA use the data? Will
developed using ShopSense it identify individual customers
Denise Baldwin
data as opt-in (if customers OZ Cooper as employees of particular
pay higher premium, that's companies
not a legal problem)
Is the proposed
collaboration a good
deal?
ShopSense perspective
IFA perspective
ShopSense Perspective
Pros Cons
Deal legal in all the US states Customer relationships may be harmed
ShopSense operates in - concerns around data sharing

Data monetization - $1bn Customers may opt out of loyalty


additional annual profit programmes preventing the company
. from getting further data
Data could be used to develop
wellness programmes by the Risk to company reputation; no control
insurer over any customer programme

Expert Opinion:
Customers may lose trust; transparency and value
proposition should be disclosed
Look at whether some data should be excluded,
programmes may be marketed jointly
IFA Perspective
Pros Cons
Data could provide insights into drivers Accuracy of data and correlation
of disease and thereby ability to price with health unproven - people may
products better buy for others

Deal is legal and public understands Battered customer syndrome


that insurers perform risk anlayses
. Uncertainty on insights that may be
Data could be used to develop wellness gained - find something that it is
programmes/offer discounts better of not knowing

Expert Opinion:
Integrity of customer data should be protected;
needs to be 'win-win'
Risk of public backlash; customers may reconsider
the relationship with IFA
Ethical behaviour needs to be inculcated
Trustworthiness Perception

Source: McKinsey - 2019 survey of Consumers on Data Privacy and Protection


Ethical Data Purpose Limitation
Personal data may be processed only for the purpose for which it was

Protection
collected

Principles
Transparency requirement
Customers should be able to recognize the purpose for which data is
being processed and decide about their personal data

Data minimization
Collect only necessary data as required for processing

Source: Article 5, GDPR


Thank you!

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