Sports Authority recently sold millions of customer records and email addresses at auction to Dick’s Sporting Goods for $15 million. In this era of customer loyalty, privacy concerns, and data collection, what impact could something like this have in the loyalty marketing industry.
Loyalty360 went to an expert, Frank Bradshaw, President of Ho’ike Technologies, for his thoughts on this very interesting development.
Considering that Dick’s Sporting Goods acquired 114 million customer files and 25 million email addresses from Sports Authority, what is your assessment from a data perspective of this transaction as far as it how could impact customer loyalty/customer engagement/privacy?
Bradshaw: This could have a deep impact on customer loyalty programs. The key thing to this is understanding how these accounts were purchased. Was the list just sold, or was it acquired as a part of an asset.
Besides the $15 million price Dick’s paid for this crucial information, how much do you estimate it could be worth to Dick’s over the long run?
Bradshaw: In the future, people are going to find it very hard to trust reward programs, especially if the asset can be sold so easily to anyone. The value to Dick’s is immeasurable. You have to understand it took a considerable amount of time for Sports Authority to acquire this number of customer files, email addresses, and other bits of data and suddenly it lands in Dick’s lap complete, intact, and ready for use.
How large an issue is privacy in this case? And is there any recourse that former Sports Authority customers have?
Bradshaw: There could be far-reaching impact in the issue of privacy. Customers signed up to work with Sports Authority only to have their information owned by a different company. Not knowing the legal implications, my only guess would be that Sports Authority customers are going to have to find a way to have their name removed from the list.
With all of this new customer data, what direction do you think Dick’s might take from a customer loyalty perspective?
Bradshaw: With Sports Authority out of the picture, that leaves Dick’s and Modell’s as the two large players. Dick’s is going to need to pore over all of that data to try and find a way to move in on some of Modell’s territory. That’s the big issue. What’s in Sports Authority’s lists can help them move into Modell’s markets? If Dick’s plans to expand into Modell’s markets, I can see a great push and direct marketing to Sports Authority’s customers.
What is your final assessment of this transaction?
Bradshaw: From a data privacy and data protection standpoint, this is going to be an interesting case. Companies selling client lists as an asset, once thought to be protected, are now being sold readily. From an information security standpoint, this opens what was once thought to be protected to the general public for open purchase. Legally, what happens to the consumer whose information was sold as a part of an asset (assuming this was sold as a part of an asset). My fear is that the list will be sold to nefarious people and they will then use that information. Entering into agreements with loyalty programs once made us feel secure about our name and information being protected, but now that information can easily be sold, particularly if it’s part of an asset.