HBR CASE STUDY AND COMMENTARY How can these companies leverage the customer data responsibly? The Dark Side of Customer Analytics Four commentators offer expert advice. by Thomas H. Davenport and….
Kudler Fine Foods Customer Tracking
Kudler Fine Foods is a specialty food store headquartered in San Diego California. With just 3 stores Kudler Fine Foods is experiencing rapid growth and is focused on increasing customer loyalty. (University Of Phoenix, 2009, ¶ 1) This paper will examine the requirements for a customer purchase tracking system to be implemented in the organization, to include the potential legal, ethical and security aspects of such a system that must be considered. Customer Purchase Tracking System
The purpose of the customer purchase tracking system is to track customer purchases, allocate loyalty points based on those purchases, and allow the customer to redeem their loyalty points for high end gifts, or specialty food items. (University Of Phoenix, 2009, ¶ 3) Legal And Ethical Gathering and maintaining customer data will generate many questions pertaining to the legal and ethical responsibilities of Kudler Fine Foods. Fortunately, on the legal aspects clear evidence exists that data thus gathered is the property of the company gathering the data. In fact, Winn and Wrathall state;
Under US law, individuals do not have property rights in information about them – although they may have certain rights to be free from invasions of their privacy (Winn & Wrathall, 2000). The implication of this is that although Kudler Fine Foods may collect and maintain information about their customers purchasing activity, they will still need to ensure that invasions of their privacy are not impacted. Nolo, a legal advice publisher in existence since 1970 (Nolo, 2009, ¶ 3), says that those invasions of privacy recognized by law are a) false light, b) disclosure of private facts, and c) intrusion.
False Light False light is the false portrayal of an individual in a highly offensive way (Nolo, 2009, ¶ 4). Disclosure of Private Facts Disclosure of private facts is an invasion that occurs when personal private facts are released about an individual without being related to a public concern (Nolo, 2009, ¶ 5). Intrusion Finally intrusion occurs when a person intrudes upon an individual in a situation where that individual has an expectation of privacy. (Nolo, 2009, ¶ 6) Examples could include wiretapping a telephone or opening a persons mail.
(Nolo, 2009, ¶ 6) Of these three major definitions of invasion of privacy the one which should be most closely monitored at Kudler fine foods is the disclosure of private facts, since the customer purchasing tracking system will contain private facts such as spending patterns and credit card numbers. Aside from the legal concerns involved in developing the customer loyalty program and system ethical concerns pertaining to the customer data also exist. Several ethical concerns become immediately visible in the light of the legal definition of property ownership.
Since, from a legal standpoint, Kudler Fine Foods owns the customer data, what access should they provide to that data to employees? These and other questions will certainly arise once the customer purchase data collection has begun. According to hr. com having an effective ethics program, including clear policies and procedures can lead to greater customer loyalty (HR. com, 2005, ¶ 3). Clearly if such a program generates increased customer loyalty, the opposite will negatively affect customer loyalty.
Instituting an effective ethics program within Kudler Fine Foods will help the customer purchasing program to be more effective. Security The security of the collected customer purchasing data is integral to the success of the customer rewards program. If data is lost, or inaccurate Kudler Fine Foods could suffer both financial difficulties, with the burden of supporting rewards purchases and perception difficulties through the loss of customer loyalty. Thus ensuring that customer data is secure is paramount to the ultimate success of the customer purchasing data program.
Security of data is so important that Rob Newby of Computer Weekly said; “Securing it is necessary to do effective business and we can now see that doing so can increase performance and trust, strengthening the security of the networks it is held in” (Newby, 2008). Several factors impact data security but in general almost all data security risks are related to a single problem; access to the data. Unfortunately, the network topology at Kudler Fine Foods, with its lack of firewalls, does not currently support a secure environment where data can be secured and random access prevented (University Of Phoenix, 2009, ¶2).
Secure Data Behind Firewalls Although Newby’s article points out that security is a combination of multiple strategies his clear statement is that firewalls are still key to data security, and are not likely to disappear (Newby, 2008). The lack of any firewall in any of Kudler Fine Foods’ networks will thus place all the data gathered under the customer purchasing program susceptible to loss. Minimally all access from the internet should be protected by a firewall to prevent data being exposed to random individuals not employed at Kudler Fine Foods.
Other data security measures such as access control-what employees may see the data- and data backup can then more easily be implemented. Conclusion This paper has covered the minimal legal, ethical, and data security needs to implement the customer purchasing data loyalty program at Kudler Fine Foods. This new information system will provide Kudler Fine Foods with a method to both retain and grow their customer base (University Of Phoenix, 2009, ¶ 10), but without implementing the policies, procedures, and system enhancements described in this paper the information system would be susceptible to multiple threats.