Every business, be it big or small, can gain great benefits by collecting information on their customers. This information can then be used to better understand customers shopping habits, and in turn, create more effective marketing campaigns (if used correctly).
Charles Duhigg, a reporter for the New York Times, wrote an article in 2012 after investigating the second-largest discount store retailer in the US, Target. Duhigg wrote about the baby marketing campaign Target ran which effectively revealed a young woman was pregnant before anyone else knew.
This post will summarise the how Target collected and used information on their customers, and the creepy marketing which followed.
Like most businesses, Target runs loyalty programs which help them to gain a wealth of information on their customers (such as a baby shower registry). However before looking at this let’s take a look at a well know loyalty program most people in Australia will be familiar with, Woolworths Everyday Reward Card.
The rewards you actually gain from using these cards are normally quite small, however the rewards Woolworth gain from you using the card are much greater. When you sign up for the card, Woolworths receives (at minimum) your name, location, age & any other information you give them. From this, they can then guess things like your income (based on location) & how far you travel to shop.
Then, every time you use the card, be it on groceries, fuel or alcohol, Woolworths is able to see what type of people are shopping with them and what type of products they purchase.
The final result? Woolworths is able to target products to people who have a higher chance of purchasing them.
Target stores in the US are much larger than here in Australia. In the US they sell everything from groceries to toys to clothing to furniture to electronic and so forth.
The problem Target was trying to solve was that although they offer everything a shopper needs in one store, most of their customers would buy groceries at the grocery store and toys at the toy store, and they visit Target only when they need certain items they associate with Target.
Target knew that once a customer’s shopping habits are set, it’s incredibly difficult to change them. However one of the few exceptions to this, which others had discovered over time, was around the birth of a child. During this time parents are often exhausted and overwhelmed, and their shopping patterns and brand loyalties fall apart. This would be a perfect time to encourage these customers to do all of their shopping at Target, such as by offering them discounted baby products.
The only issue with this is that, because birth records are public, as soon as a child is born every other company selling baby products is also offering new parents discounts and incentives. So Target needed to find a way to reach new parents earlier, before the baby was born and before any other retailers knew a baby is on the way.
To find this, Target looked at data on their baby-shower registry program and saw that women on the registry were buying lots of unscented lotion and soaps. These pregnant women also bought more supplements like calcium, magnesium and zinc, and extra-big bags of cotton balls and washcloths.
After looking at this data, they identified about 25 products that, when analysed together, allowed them to assign all of their customers a “pregnancy prediction” score. Target was now able to market baby products to all customers (even those not on their baby registry) they thought might be pregnant before any other retailer could get to them.
Once these customer were in the store, the aim was to capitalise on these customers as they thought “stuff it, I’ll just buy everything I need here so I can get home sooner”.
Not long after Target started sending out coupons and advertisements for baby-related products to these customers, an enraged father entered one of their stores demanding to speak to the manager. He said “My daughter is still in high school and you’re sending her coupons for baby clothes and cribs? Are you trying to encourage her to get pregnant?”.
The manager apologised and even followed up the next week with a phone call to apologise again. But when he called, the customer interrupted him, “It seems I was wrong” he said. “My daughter is due in August. I owe you an apology.”
Target quickly realised customers would get creeped out if they received a catalogue that said ‘Congratulations on your first child!’, when they have never told Target they are expecting.
To fix this, Target started mixing seemingly unrelated product offers to potentially pregnant customers. Along with coupons for nappies and formula, pregnant customers would also receive a coupon for discount wine or a lawn mower.
The baby ads now looked random, and Target was able to increase sales by changing their pregnant customer’s shopping habits and getting them to buy more of what they needed all in the place.
Click Here to read the full New York Times (NYT) article.
The NYT article and this blog post also tie into my other posts, ‘Habit Insights – Cue, Routine, Reward’ & ‘Finding the Right Audience – Febreze’.