BrainTrust Query: Of Habit and Target
Through a special arrangement, presented here for discussion is a summary of a current article from the Tenser’s Tirades blog. This column was originally published on the blog TradeInsight CPG Chatter.
The New York Times Magazine made people nervous with its February 19th cover story by author Charles Duhigg. Its chilling headline, How Companies Learn Your Secrets, seems to have compelled readership as a matter of personal protection.
The article described how Target Stores applied data mining techniques to shopping baskets to infer which shoppers were most likely pregnant, then sent them promotional offers for pre- and post-natal products. Motherhood is pretty personal business, so I can’t say I disagree with the folks who were offended.
Focusing on this creepy surveillance was a pretty crafty editorial decision by the editors at NYT Magazine, who used the cover line: Hey! You’re Having A Baby! The analytics behind pregnancy detection was actually just one example from Mr. Duhigg’s just-released book The Power of Habit: Why We Do What We Do in Life and Business. Having a baby, as it turns out, is one of a handful of predictable moments in life when our consumption habits change big time. For eager marketers that information is, well, mother’s milk.
Even if we look past the intrusiveness of offering coupons for cocoa butter lotion to stretchy young mothers-to-be, Mr. Duhigg’s larger thesis about the enduring nature of habit remains compelling in a different, less sensational way.
It tends to strengthen my own observations of long-lasting retail shopper behaviors, such as trip planning, coupon clipping, list-making and response to promotional cues within the store. In Shoppers’ Perspective, research I helped co-author for CPG manufacturer Henkel USA in 2009, we learned that shoppers could be sorted into fairly stable groups based on these enduring habits. It took the pain of the subsequent economic downturn to disrupt the patterns. As a result, coupon redemption statistics turned upward to what we may hypothesize to be a new norm.
The central example of Mr. Duhigg’s article—Target’s effort to target "new natals" in its promotion marketing—is interesting too, but it offers little, truly new insight about the buying traits of new and soon-to-be parents.
More personalized offers and services may be welcomed by opt-in frequent shoppers, but not when they seem to be the outcome of cyber-stalking.
For us retail pros, divining the nature of repeat behavior is solid stuff—part of our every day thought work. It reminds us that when we try to influence purchase behavior positively, we also take on the challenge of overcoming pre-existing habit.
Discussion Questions
Discussion Questions: Is the power of habit underrated by marketers? How should retailers and brands scope out the right moments to influence shoppers for the long haul? What does this say about the way we go about promoting products and introducing new ones?
Data Scientist meet the Social Scientist!
Retailers probably know more about individuals than most individuals realize. With all the digital connectivity (i.e. social media, smartphones) and sensors (internet of things) this trend is only accelerating for the next several years. HOW to use the information to be effective (let alone not creepy), will be a bigger challenge for retailers than the data and analytics.
There are two themes in this article. One has to do with “cyber stalking”. The other has to do with influencing behavior.
If I am not mistaken, marketers have always been trying to influence purchase behavior. That is the purpose of marketing.
While cyber stalking may be a new technique there has always been the attempt to use information about customers to develop marketing strategies and tactics.
If you think “always” is too strong, let me remind you of the door to door salesman. He developed a relationship with the customer, mostly the woman of the house. He tried to sell her his products. Let’s say it was a vacuum cleaner. If he knew she cherished her free time, he would focus on how fast the vacuum cleaner cleaned. If he knew she wanted the cleanest floors in the neighborhood he touted the effectiveness of the machine.
His research was based on conversations he had with the woman and her neighbors. Today marketers still rely on conversations…that they listen to through social media or collect through surveys and buying behavior data. So what’s new?
Habit is what marketers try to create. If they underrate it, they must not be doing a very good job. The best predictor (in CPG businesses) of what you’re going to buy next time is what you bought last time. Much of what we do is designed for the long haul (even though we are often caught up in short-term impact).
In some sense, marketing can be defined as “establishing and reinforcing specific habits in consumers.” The reason marketing is so difficult is that the messages and media required to do that for different shoppers vary widely.
Here are a few key habit-influencing opportunities every marketer should be ready to jump on:
1) First purchase follow up – when a consumer shops your store for the first time or buys your product for the first time, be ready to reach them again with a thank-you or a targeted offer to re-buy and start to build that habit.
2) Lapsed shopper re-engagement – when a shopper misses a purchase or two of your products, there is a critical opportunity to rescue the habit by engaging them with the right offers or messages.
3) Non-consumer conversion – a high-value (or free!) offer is often required if you want to convert a non-buyer into a consumer. Even if you can get them to buy once, to establish your product as a habitual purchase, expect to need one or more follow-up offers or messages.
This is not new news. Insightful for some to know that this is happening, but from the dark ages of new mover programs getting an early jump on changes in lifestyle or lifecycle in order to optimize customer acquisition and share of wallet is nothing new. The challenge is, this level of personal tone of voice and positioning of product/offers — what if you are wrong? What if the husband doesn’t know his wife or significant other is pregnant and gets to the mailbox first? This parallels the old saw story of the jewelry chains that would thank a customer for their last purchase of a diamond necklace and come to find out that the wife never received it…ooopps!
I believe that “habit” should be defined to truly understand its significance. Habit is not ingrained, habit is learned! One usually develops habits based on experience. Now let’s explore which experiences might encourage the formation of what the author calls habit. If I am a teenage girl, I may shop somewhere and buy something because I believe it will help me fit in or be perceived as cool by my peers. If I don’t get this reaction from my peers I will not form a habit for that shopping pattern. Habits are formed based on the favorable fulfillment of expectations. Retailers and marketers need to understand that a habit only last as long as the habit is meeting the consumer’s needs. To promote an activity knowing that it won’t meet the consumers needs is akin to committing retail suicide. Target and others might follow Amazon’s formula and create a moms club which offers special discounts on items of interest to new or expecting moms. Not nearly as invasive and since it’s public, would get some word of mouth. I’ll bet it would be quite a bit cheaper than using cameras to chart shopping patters and feeding data into a Cray supercomputer to tell Target if someone is expecting. Why not just ASK? I’ll tell you why, because Target would rather be cute than smart!
Although this problem has plagued retailers since the dawn of retailing, we seem to have learned little, overall on how to market products. Failure rates of new product introductions exceed 70% today. And yet, with the flood of Bog Data, what is being captured, and what is truly analyzed?
The question posed, “How should retailers and brands scope out the right moments to influence shoppers for the long haul?” must lead toward predictive modeling, the kind of technology that is available today from many vendors. Analytics of this 80%+ unstructured data precludes the ago old “gut” feel of marketing that too many companies still employ. Even many more innovative retailers and manufacturers don’t achieve the promotion success that is now possible with these new tools.
I believe the faster that companies employ the consumer modeling techniques available today, the sooner profitable growth will return to the marketplace.
Thanks for the thoughtful comments, fellow BrainTrusters.
Joan is right — this is a two-track story. I’m more fascinated by the resilient nature of human habit than the threat of cyber stalking by marketers.
Ben correctly notes that there are (forgive the pun) pregnant moments when shopper habits may be more susceptible to change. Success in actuating these moments requires more than mere determination — it also demands wit and tact.