How Companies Learn Your Secrets

As the ability to analyze data has grown more and more fine-grained, the push to understand how daily habits influence our decisions has become one of the most exciting topics in clinical research, even though most of us are hardly aware those patterns exist…

This is a fascinating New York Times piece that explores how stores monitor shoppers’ behavior and then market to them accordingly, with the hope they come back to the store and spend more money. The NYT piece focuses on Target, and in particular, pregnant shoppers… The central question: how could they get their advertisements into expectant mothers’ hands without making it appear they were spying on them? How do you take advantage of someone’s habits without letting them know you’re studying their lives?

First, the background of how Target monitors shoppers in stores using a unique Guest ID:

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.

Much of the piece focuses on human behaviors, and how these behaviors become habits if they’re consistently repeated:

The process within our brains that creates habits is a three-step loop. First, there is a cue, a trigger that tells your brain to go into automatic mode and which habit to use. Then there is the routine, which can be physical or mental or emotional. Finally, there is a reward, which helps your brain figure out if this particular loop is worth remembering for the future. Over time, this loop — cue, routine, reward; cue, routine, reward — becomes more and more automatic. The cue and reward become neurologically intertwined until a sense of craving emerges. What’s unique about cues and rewards, however, is how subtle they can be.

My favorite part of the piece is about Febreze, a product that P&G initially marketed to combat orders. Unfortunately, it was a dud. Turns out, P&G was marketing Febreze as a *way* to remove odors, but what made it more effective was convincing people to use the product as a reward after the routine of cleaning (i.e., it was re-marketed as a reward):

And so Febreze, a product originally conceived as a revolutionary way to destroy odors, became an air freshener used once things are already clean. The Febreze revamp occurred in the summer of 1998. Within two months, sales doubled. A year later, the product brought in $230 million. Since then Febreze has spawned dozens of spinoffs — air fresheners, candles and laundry detergents — that now account for sales of more than $1 billion a year. Eventually, P.& G. began mentioning to customers that, in addition to smelling sweet, Febreze can actually kill bad odors. Today it’s one of the top-selling products in the world.

A note on how Target sent ads and coupons to expectant mothers without making them upset:

“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.

The conclusion is startling: your favorite department store will be (if it isn’t already) sending you coupons for products you desire before you even know you want them…