The Behavioral Science of Retail Sales

The New York Times has a monster article in their Magazine section this weekend that is up online, titled “How Companies Learn Your Secrets.”  They don’t bury the lead:

“Andrew Pole had just started working as a statistician for Target in 2002, when two colleagues from the marketing department stopped by his desk to ask an odd question: “If we wanted to figure out if a customer is pregnant, even if she didn’t want us to know, can you do that? ”

The article is a fascinating look at how companies use your shopping habits and purchase data to profile you.  Pregnancy is one example:

“There are, however, some brief periods in a person’s life when old routines fall apart and buying habits are suddenly in flux. One of those moments — the moment, really — is right around the birth of a child, when parents are exhausted and overwhelmed and their shopping patterns and brand loyalties are up for grabs. But as Target’s marketers explained to Pole, timing is everything. Because birth records are usually public, the moment a couple have a new baby, they are almost instantaneously barraged with offers and incentives and advertisements from all sorts of companies. Which means that the key is to reach them earlier, before any other retailers know a baby is on the way. Specifically, the marketers said they wanted to send specially designed ads to women in their second trimester, which is when most expectant mothers begin buying all sorts of new things, like prenatal vitamins and maternity clothing. “Can you give us a list?” the marketers asked. “

But it’s about much more than just what you buy at Target:

“The desire to collect information on customers is not new for Target or any other large retailer, of course. For decades, Target has collected vast amounts of data on every person who regularly walks into one of its stores. Whenever possible, Target assigns each shopper a unique code — known internally as the Guest ID number — that keeps tabs on everything they buy. “If you use a credit card or a coupon, or fill out a survey, or mail in a refund, or call the customer help line, or open an e-mail we’ve sent you or visit our Web site, we’ll record it and link it to your Guest ID,” Pole said. “We want to know everything we can.”

Also linked to your Guest ID is demographic information like your age, whether you are married and have kids, which part of town you live in, how long it takes you to drive to the store, your estimated salary, whether you’ve moved recently, what credit cards you carry in your wallet and what Web sites you visit. Target can buy data about your ethnicity, job history, the magazines you read, if you’ve ever declared bankruptcy or got divorced, the year you bought (or lost) your house, where you went to college, what kinds of topics you talk about online, whether you prefer certain brands of coffee, paper towels, cereal or applesauce, your political leanings, reading habits, charitable giving and the number of cars you own. (In a statement, Target declined to identify what demographic information it collects or purchases.) All that information is meaningless, however, without someone to analyze and make sense of it. That’s where Andrew Pole and the dozens of other members of Target’s Guest Marketing Analytics department come in.”

They know “what kinds of topics I talk about online!”  I can’t believe they haven’t been sending me coupons for Immodium or something – after all, I am the mutherf*cking AXE when it comes to diarrhea!

There’s too much good stuff in the article, including a study of Proctor and Gamble’s marketing of Febreze, and why it first failed.   I could copy and paste excerpts all day, but you’d be better off sitting down for 20 minutes and reading the full article.

I do want to mention one more tidbit:  the article notes that people get annoyed if you start sending them ads for pregnancy products based on conclusions that you’ve deduced from your data – they feel like they’re being spied on and violated.   Target has a solution for that:

“We have the capacity to send every customer an ad booklet, specifically designed for them, that says, ‘Here’s everything you bought last week and a coupon for it,’ ” one Target executive told me. “We do that for grocery products all the time.” But for pregnant women, Target’s goal was selling them baby items they didn’t even know they needed yet.

“With the pregnancy products, though, we learned that some women react badly,” the executive said. “Then we started mixing in all these ads for things we knew pregnant women would never buy, so the baby ads looked random. We’d put an ad for a lawn mower next to diapers. We’d put a coupon for wineglasses next to infant clothes. That way, it looked like all the products were chosen by chance.

“And we found out that as long as a pregnant woman thinks she hasn’t been spied on, she’ll use the coupons. She just assumes that everyone else on her block got the same mailer for diapers and cribs. As long as we don’t spook her, it works.”

Fascinating.   The conclusion is the Holy Grail  goal of all advertisers:

“Just wait. We’ll be sending you coupons for things you want before you even know you want them.”

New York Times:  How Companies Learn Your Secrets

-KD

disclosure: no positions in $TGT or $PG

 

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