Dark Side of Customer Analytics

Advantages
The IFA – ShopSense partnership
Concerns
What is Customer Analytics?
Tesco Club Cards:
Tesco boss Philip Clarke admitted that the retailer also uses Clubcard data to target consumers
according to their wealth.

Concerns
Ryanair customer recently claimed that he looked up a fare on a particular day, which was £123. The next
day he checked the fare again and it had risen to £237. Once he had “flushed cookies” the fare returned
to £123, he said.
Club card website it states that “the [current] privacy policy replaces all previous versions... Tesco
reserves the right to change the policy at any time”.

How Responsible Are Enterprises With Customer s Data?

 Portrayed by companies as “win-win”.

 Customer gains deals and offers by signing up and business gains valuable data and insights.

 Clear positives, but what happens when this trust is broken and ethics come into play?

ShopSense and IFA

A child support officer in Rock County, Janet Patten, has allegedly made more than 4,000 photo queries
of the Driver and Vehicle Services database in 2010 and 2011. The Insurance company was sued for $2
Million.

Does shopping represent consumption?

Privacy enhancing technologies (PETs):

 Communication anonymizers
 Shared bogus online accounts
 Access to personal data

Content and structure mining

Usage mining
Disallowing-mining standard

How Responsible Are Enterprises With Customer s Data?

Opt In
How Responsible Are Enterprises With Customers Data?
An ethical issue may arise for deciding the prices for personal nformation
For IFA, it could become a case of too much knowledge doing more wrong than right
On March 24, 2013, there was a break in at the Vudu office and a number of items were stolen, including
hard drives which had:
Email addresses
Mailing addresses
Account activity
Dates of birth
Encrypted passwords
Morals & Ethics
ShopSense was known to possess the best customer data
IFA’s Laura Brickman and ShopSense’s Steve Worthington tried to form a lucrative partnership for both
firms
ShopSense agreed to give IFA ten years information from Southern Michigan
Transparency is a critical component to any loyalty scheme
David Norton
Trust issues

Consumer Analytics

 In retail this is done by loyalty and reward programs

 Customer analytics used to predict customer behaviour

 This presentation will focus on the negative side of analytics

The Dark Side of Customer Analytics

If customers get to know about the deal, ShopSense was worried they might stop using their card
If customers feel their premium is going up, this could hurt ShopSense’s sales in the long run
There can be a backlash if public views this transaction as unethical

Trust
Expert commentary & our views
For ShopSense, the only advantage was easy profit worth millions
For IFA:
More precise premiums
Privileged access to ShopSense’s rich database
Knowledge about the buying patterns of the customers
Drawing correlation between buying patterns and diseases caused

What Can Customers Do From Being Exploited

George Jones
Who is the food for?
Is all shopping done in the same shop?
A customer who injured himself after slipping on a wet floor in an American supermarket. He tried to sue
the store only to be told that the company’s records of his shopping habits suggested he was a heavy
drinker and this, claimed the store, was the real reason he had fallen over
A former state senator has expanded his lawsuit over the hacking of millions of South Carolina tax returns
to include a separate state agency and private data security company.
The Daily Telegraph reported
Whitehall unit dubbed the “Behavioural Insight Team” & was in talks with supermarkets over using their
databases of customers’ shopping habits in a bid to improve the nation’s health .

 ShopSense
 Dallas-based national grocery chain.
 One of few that still carry out analytics in-house.
 IFA
 One of the biggest sellers of life and health insurance in the United States.
 Looking for innovative ways to price premiums and plans.

How Responsible Are Enterprises With Customer s Data?

Michael McCallister & Katherine Lemon
Positive spin
Encourage healthy living