It's a story almost too good to be true. A man walks into a Target store outside Minneapolis and angrily confronts the store manager. He shows him an advertisement that was sent to his high school daughter, filled with maternity clothing and baby items. The perplexed manager apologizes and even calls the man at home the following week to further apologize for the advertising faux pas. However, when he does the man sheepishly admits he's found out that his daughter is, in fact, pregnant. So, how did Target do that?
The answer is through statistician Andrew Pole, and others like him, employed by Target to sift through the mountains of data Target either collects or purchases on customers to find meaningful trends. This entire episode, plus Pole's influence on Target's marketing analytics department, is outlined in Charles Duhigg's fascinating NYT Magazine article.
First, all Target customers are assigned a Guest ID. Associated with this ID is information on “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.” Pole found that by analyzing this data combined with purchasing history on 25 products – things like unscented lotion and certain types of vitamins — he could determine the likelihood that a woman was pregnant. He quantified this information by assigning women a “pregnancy prediction” score; his data analysis was so good that he could estimate, within a fairly small window of time, a woman's due date. This further allowed Target to send the women coupons targeted at different stages of pregnancy.
But why did Target care so much about finding pregnant women? The importance of the pregnant demographic really boils down to the importance of habit formation, specifically retail habit formation. Any habit, good or bad, becomes, in a sense, hard-wired into your brain. You have a cue, a routine, and a reward. You work really hard on some task, say, writing an article. You finish. You smoke a cigarette. You do it every day. The cue (finishing the article) leads to a routine (taking a short break) leads to the reward (smoking a cigarette). Consumers generally shop habitually. You're out of cereal so you go to the store and you buy Lucky Charms. You might have some sort of brand loyalty associated with Lucky Charms; you might love the taste or the advertising or neon marshmallows. Whatever the underlying reason, this behavior is typically fairly well engrained.
But market researchers discovered that at key transitional phases in a person's life they lose their traditional brand loyalties and their consumer habits aren't firmly in place. If your company can be the first one to establish those habits during this phase, then you can make millions. Think about common pregnancy purchases: a crib, baby clothes, decoration, baby food, etc. The expectant mother, especially if it's her first pregnancy, doesn't have any real consumer habits to speak of. She's the holy grail of the advertising world, because if she begins her purchasing career as a mother at Target, she'll likely remain there.
In the NYT Magazine piece Pole explains:
We knew that if we could identify them in their second trimester, there's a good chance we could capture them for years. As soon as we get them buying diapers from us, they're going to start buying everything else too. If you're rushing through the store, looking for bottles, and you pass orange juice, you'll grab a carton. Oh, and there's that new DVD I want. Soon, you'll be buying cereal and paper towels from us, and keep coming back.
It’s doubtlessly unnerving to receive baby food coupons before you’ve even told your extended family that you’re expecting. So, how does Target keep from skeeving out women? They just fake it. They take all their baby advertising and intersperse it with meaningless advertisements for things like lawnmowers and light bulbs. Thus, the targeted pregnant women assume that everyone received the same advertisement in the mail: Anti-stretch mark cream just happened to be on sale this week.
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Follow Kelly Bourdet on Twitter: @kellybourdet