Shopping Habits

I recently read an excellent article from the NYTimes called How Companies Learn Your Secrets in which the author describes how retailers try to understand and shape our shopping habits.  Its a rather long article, so I'll do a bit of summation.

Recall when you first learned to drive how much concentration was required to back out of the driveway.  But now it's a fairly simple task that takes little thought.  That's because the brain has been taught this task, and it's very repeatable without expending tons of effort.  In other words, it's become a habit.  Habits are composed of three steps: cue, routine, and reward.  A large portion of the shopping we do is habitual, like grocery shopping.  There's very little complex decision making, and much of the in-store marketing is ignored.  Enter the toothpaste aisle, snag your brand, and check it off the list.  So how is a retailer to grab a shopper's attention to break out of the habit loop?

One trick is to identify "teachable moments" when a shopper is out of their routine and susceptible to influence.  It turns out that Target is very good at this.  They analyze their customer data to determine when events such as a new job, graduation, home purchase, and marriage have occurred and then do target marketing (pun certainly intended).  After all, those life-changing events can extend change to shopping habits, which will pay off handsomely over time.

Of course the big kahuna of life-changing events is the birth of a baby.  That information is available from public records, so many retailers use the opportunity to mail lots of diaper and formula coupons to new mothers.  If they can establish a relationship with Mom first, they have a better chance of retaining her and her family for a long time.  So to beat the competition, Target wants to market during the second trimester before the other retailers pile on.  But how the heck can that be done?

Diapers and formula are dead give-aways that there's a newborn, so work backwards and examine the products purchased by women leading up to the big event.  It turns out they buy lots of lotions and start switching to scent-free versions of detergent and soaps.  They buy vitamin supplements, cotton balls, and nursery furniture.  Target has gotten so good at their pregnancy prediction scores that they can often determine the due date and sex of the yet-to-arrive baby.

The article goes on to relate a story about an angry father walking into a Target store demanding to see the manager.  He was upset that Target was sending his teenage daughter coupons for baby supplies.  The manager apologized, and followed up a few days later to apologize once again.  However, it was the father that ended up apologizing because his daughter was in fact pregnant.  Oops.

As you can see, this has the potential to be a public relations nightmare, so Target wisely mixes in other coupons alongside the baby products.  This hides the fact from pregnant women that they're being targeted, and doesn't raise alarms with the boyfriends and husbands that are still in the dark.

Oracle plans to release the second module of our Retail Analytics family this year.  Its called Oracle Retail Customer Analytics.  'Nuff said.

Comments:

Nice post. There's more involved to a coupon than sending them out to people on a list.

Posted by Stellios on February 20, 2012 at 06:18 AM CST #

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David Dorf, Sr Director Technology Strategy for Oracle Retail, shares news and ideas about the retail industry with a focus on innovation and emerging technologies.


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