An angry man walks into his neighborhood Target store clutching a handful of coupons that had been mailed to his daughter. His anger, he explains, is because his daughter is just a girl still in high school and he fears the store’s many coupons promoting maternity clothes, baby furniture, and other items related to pregnancy might encourage her to want a baby. The manager apologizes.
A few days later, the manager phones the father to apologize again but the father ends up doing the apologizing. Seems his daughter is, in fact, pregnant.
How did Target know before the girl’s father did?
Target, like so many other major retailers, makes more money when they can predict the products a consumer will buy, entice the consumer to buy even more products, and encourage the consumer to make buying routine items plus new types of purchases a mindless habit. In Target’s case, a marketing statistician named Andrew Pole developed a pregnancy-prediction model that works so astoundingly well it led to a skyrocketing sales increase of $44 billion in 2002 to $67 billion in 2010. Gregg Steinhafel, president of Target, attributes that revenue growth to “heightened focus on items and categories that appeal to specific guest segments such as mom and baby.”
Each retailer uses a unique set of factors to “read” each customer. They then use human behavioral science to determine how to lure a customer to buy certain products at their stores. They bank on the science of habit formation, which has become a major field of study in the psychology and neurology departments of some of the most prestigious universities and colleges in the country. Corporations have their own style of think tanks where they apply these scientific findings to their customer base.
In Target’s case, every shopper is assigned a unique Guest ID number. It stays with the individual customer when they pay at the check-out counter, engage in Target’s online social network, read email ads, mail in refunds, visit Target’s website, phone customer service, or fill out a survey. Even that isn’t enough, though. Target, like so many other retailers, buys information that covers just about every conceivable aspect of an individual’s life from the many data-mining companies that exist for exactly this purpose.
This data is collected, collated, and analyzed by the computers and the statistical and mathematical scientists hired by these retailers to make sense of it all. They then apply a customer’s purchases to a cue-routine-reward habit loop to predict what’s going on in that customer’s life and how the store can make life so easy for the customer the customer wouldn’t think of shopping elsewhere.
With all the data Target collects and analyzes, it knows women start buying baby clothes, maternity clothes, and prenatal vitamins in their second trimester. Women switch to unscented lotions and soaps about the second trimester, too, and they stock up on mineral supplements such as calcium at about week 20. Big purchases of cotton balls, hand sanitizer, wash-cloths, and unscented soap signals a rapidly approaching delivery date. As her pregnancy progresses, so will the promotions and coupons she receives.
By quantifying purchases like these, Target knew the young girl was pregnant before her father knew.
Lifestyle changes accompany buying habits. Target’s pregnancy-prediction model indicates there is no time in life when one’s buying habits change as dramatically as they do when a new baby is expected. Target hopes to make shopping easy for the expectant mother so she’ll continue to shop at Target after the pregnancy and for years to come.
Source: Duhigg, Charles. "How Companies Learn Your Secrets." The New York Times. 16 Feb 2012. Web. 4 Nov 2013.