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As a consumer, I know that my purchases and interests are tracked and I try to be mindful of what is being done with that data. I guess where I'm going with this, is that it'd be interesting to get an inside look at what companies do with this data. I want to emphasize this week that you don't necessarily have to answer the posed question... You may have thoughts or feelings around data privacy in general, and we encourage you to share whatever comes to mind :)
As an analyst, what insights have you or your company uncovered using personal/customer data?
Leah Knowles Manager, Global Community Engagement Alteryx
Every time you go shopping, you share intimate details about your consumption patterns with retailers. And many of those retailers are studying those details to figure out what you like, what you need, and which coupons are most likely to make you happy. TargetTGT -1.46%, for example, has figured out how to data-mine its way into your womb, to figure out whether you have a baby on the way long before you need to start buying diapers.
Charles Duhigg outlines in the New York Times how Target tries to hook parents-to-be at that crucial moment before they turn into rampant -- and loyal -- buyers of all things pastel, plastic, and miniature. He talked to Target statistician Andrew Pole -- before Target freaked out and cut off all communications -- about the clues to a customer's impending bundle of joy. Target assigns every customer a Guest ID number, tied to their credit card, name, or email address that becomes a bucket that stores a history of everything they've bought and any demographic information Target has collected from them or bought from other sources. Using that, Pole looked at historical buying data for all the ladies who had signed up for Target baby registries in the past. From the NYT:
[Pole] ran test after test, analyzing the data, and before long some useful patterns emerged. Lotions, for example. Lots of people buy lotion, but one of Pole’s colleagues noticed that women on the baby registry were buying larger quantities of unscented lotion around the beginning of their second trimester. Another analyst noted that sometime in the first 20 weeks, pregnant women loaded up on supplements like calcium, magnesium and zinc. Many shoppers purchase soap and cotton balls, but when someone suddenly starts buying lots of scent-free soap and extra-big bags of cotton balls, in addition to hand sanitizers and washcloths, it signals they could be getting close to their delivery date.
Or have a rather nasty infection...
As Pole’s computers crawled through the data, he was able to identify about 25 products that, when analyzed together, allowed him to assign each shopper a “pregnancy prediction” score. More important, he could also estimate her due date to within a small window, so Target could send coupons timed to very specific stages of her pregnancy.
One Target employee I spoke to provided a hypothetical example. Take a fictional Target shopper named Jenny Ward, who is 23, lives in Atlanta and in March bought cocoa-butter lotion, a purse large enough to double as a diaper bag, zinc and magnesium supplements and a bright blue rug. There’s, say, an 87 percent chance that she’s pregnant and that her delivery date is sometime in late August.
And perhaps that it's a boy based on the color of that rug?
So Target started sending coupons for baby items to customers according to their pregnancy scores. Duhigg shares an anecdote -- so good that it sounds made up -- that conveys how eerily accurate the targeting is. An angry man went into a Target outside of Minneapolis, demanding to talk to a manager:
Target knows before it shows.
“My daughter got this in the mail!” he said. “She’s 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 didn’t have any idea what the man was talking about. He looked at the mailer. Sure enough, it was addressed to the man’s daughter and contained advertisements for maternity clothing, nursery furniture and pictures of smiling infants. The manager apologized and then called a few days later to apologize again.
(Nice customer service, Target.)
On the phone, though, the father was somewhat abashed. “I had a talk with my daughter,” he said. “It turns out there’s been some activities in my house I haven’t been completely aware of. She’s due in August. I owe you an apology.”
What Target discovered fairly quickly is that it creeped people out that the company knew about their pregnancies in advance.
“If we send someone a catalog and say, ‘Congratulations on your first child!’ and they’ve never told us they’re pregnant, that’s going to make some people uncomfortable,” Pole told me. “We are very conservative about compliance with all privacy laws. But even if you’re following the law, you can do things where people get queasy.”
Bold is mine. That's a quote for our times.
So Target got sneakier about sending the coupons. The company can create personalized booklets; instead of sending people with high pregnancy scores books o' coupons solely for diapers, rattles, strollers, and the "Go the F*** to Sleep" book, they more subtly spread them about:
“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.
“And we found out that as long as a pregnant woman thinks she hasn’t been spied on, she’ll use the coupons. She just assumes that everyone else on her block got the same mailer for diapers and cribs. As long as we don’t spook her, it works.”
So the Target philosophy towards expecting parents is similar to the first date philosophy? Even if you've fully stalked the person on FacebookFB -0.57% and GoogleGOOG +0.07% beforehand, pretend like you know less than you do so as not to creep the person out.
Duhigg suggests that Target's gangbusters revenue growth -- $44 billion in 2002, when Pole was hired, to $67 billion in 2010 -- is attributable to Pole's helping the retail giant corner the baby-on-board market, citing company president Gregg Steinhafel boasting to investors about the company’s “heightened focus on items and categories that appeal to specific guest segments such as mom and baby.”
Target was none too happy about Duhigg's plans to write this story. They refused to let him go to Target headquarters. When he flew out anyway, he discovered he was on a list of prohibited visitors.
I think most readers of the excellent piece will find it both unsettling and unsurprising. With all the talk these days about the data grab most companies are engaged in, Target's collection and analysis seem as expected as its customers' babies. But with their analysis moving into areas as sensitive as pregnancy, and so accurately, who knows how else they might start profiling Target shoppers? The store's bulls-eye logo may now send a little shiver of fear down the closely-watched spines of some, though I can promise you that Target is not the only store doing this. Those people chilled by stores' tracking and profiling them may want to consider going the way of the common criminal -- and paying for far more of their purchases in cash.
I was previously the CFO of a car wash company with 8 locations in our area. Each car had it's license plate entered when placing their order with our service advisors. Using that customer data (license plates) we were able to track some of the following :
first time visit vs. returning customer, how many days since their last wash, how often they visit, do they use coupons, do they go to multiple sites, do they visit on the same day of the week, do they buy the same wash, are they a member of our rewards plan, have they responded to our marketing efforts, etc. Tracking this data help allocate our marketing dollars to what we saw was working. We were able to see positive results (attracting new customers, increasing spend) from direct mail and Groupon promotions. Additionally we were able to get better insights into our customer traffic and revenue by day of the week and hour of the day for different seasons. This helped us manage our labor scheduling to increase our overall profitability. All this from license plates :>