ShopSense, a grocery chain, is considering selling customer data from its rewards program to IFA, an insurance company. IFA wants the data to analyze shopping habits and correlate them with insurance risks. While IFA would pay ShopSense $1 million annually, there are significant privacy, ethical, and business risks. Selling personal data could damage customer relationships and trust. It may also decrease ShopSense sales if customers learn of the data sharing. The document concludes ShopSense should not enter the partnership due to the high risks compared to the single financial benefit.

1. Customer Analytics
ShopSense – IFA Partnership
Paul Apostolakis
Joseph Simonetti
Tushar Batra

2. The Case
 An insurance company IFA finds interesting
results through correlation studies.
 This data has to be acquired through a
grocery chain ShopSense
 How can both the companies leverage data
responsibly? Should ShopSense sell its data
from their rewards program to IFA?

3. Customer Analytics
 Customer analytics is a process by which
data from customer behavior is used to help
make key business decisions via market
segmentation and predictive analytics
 It helps to predict a customers buying pattern,
it can reveal information about customers
taste and preferences
 This data is gathered by ShopSense, and it
can be valuable to IFA

4. Value Created with Data
 IFA can analyze the data bought from
ShopSense to screen high risk clients based
on their shopping habits
 It can extend discounts to clients that they
consider low-risk
 Is this data accurate to make these
predictions?
Correlation does not imply causation

5. Should ShopSense and IFA enter into a Partnership ?
 Advantages from selling out
 If ShopSense provides their tapes to IFA they would
receive a million dollars of pure profit annually
 Disadvantages
 This deal is not without any risks. There are many
concerns for ShopSense to sell their data.

6. Argument against entering into
partnership with IFA
 The primary concern for retailers is to ensure
customer satisfaction and extend their
customer base and maintain their loyalty
 Selling client data to IFA could result in
 Damaged relationship with existing customers
 Customers opt out of loyalty programs
 Risk of consumer backlash is high for ShopSense

7. Ethical Concerns
 The information gathered should be
considered personal; therefore, it is not
ethical to sell this information or buy this
information. Also, an ethical issue arises from
deciding prices for personal information.
 Customers may not know that ShopSense is providing
Data to a health insurance company, and their shopping
history is being used to determine the premium they pay

8. Customer Privacy
 Consumers do not know where these records are
and they cannot be checked for accuracy
 Changing the data if inaccurate is difficult, if not
impossible
 Consumers do not know how this data is used and
what circumstances it will be used for
 Security of this information cannot be guaranteed,
and may be easily accessed by unauthorized people

9. Threats and Securities
 The wirelessly networked business environment
creates a high risk to information security
 Smaller, faster, and cheaper computers allows an
increase in stealing or losing data from people. The
skills necessary to hack computers are decreasing
 There is an increase in employee use of unmanaged
devices, which increases threats to information
ShopSense will have to bear the cost of protecting client
data

10. What about Corporate Culture?
 Employees at ShopSense maybe
uncomfortable and may have ethical
concerns with the business practices
 Corporate culture will suffer

11. Conclusion
 ShopSense should not enter into a
information sharing partnership with IFA
because the only gain they receive would be
a million dollars in profit, but the risks
involved are high

12. Conclusion (continued)
 ShopSense sales will decrease when customers
realize that their data is being sold to IFA
 Threatens future growth prospects of ShopSense
 Threatens current market standing
 Corporate culture will suffer
 In the world of retail loyalty is hard to win;
Customer data needs to be protected