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Wednesday, March 07, 2012

How and what companies know about you

When you shop usually you don't buy everything you need in one only store. You buy groceries at the grocery store, toys at the toy store, and you visit certain shops only when you need certain items you associate with them.
May be those companies sell everything from milk to lawn furniture, to electronics, so one of the company's primary goals is convincing customers that the only store they need is their.
This isn´t a message easy to get across, even with the most ingenious ad campaigns, because once consumers' shopping habits are ingrained, it's incredibly difficult to change them.

What are most likely the periods in a person's life when old routines fall apart and buying habits are suddenly in flux?
It seems that one of those moments is right around the birth of a child, when parents are exhausted and overwhelmed and their shopping patterns and brand loyalties are more likely to change.
That isn´t difficult to find out because birth records are usually public, infact the moment a couple has a new baby, they are almost instantaneously barraged with offers and incentives and advertisements from all sorts of companies.
That means that the secret is to reach them earlier, before any other retailers know a baby is on the way.
The marketers should send especially designed ads to women in their second trimester, which is the moment when most expectant mothers begin buying all sorts of new things,such as prenatal vitamins and maternity clothing.
If you can identify them in their second trimester, there's a good chance you can capture them for years.
As soon as you get them buying diapers from you, they're going to start buying everything else too.
If they are rushing through the store, looking for bottles, and pass orange juice, they will most likely grab a carton.
And may be there's that new DVD they would like.
Soon, they will be buying cereal and paper towels from you, and keep coming back.

The desire to collect information on customers is not new for any large retailer, of course.
For decades, they have collected vast amounts of data on every person who regularly walks into one of their stores.
Whenever possible, they assign each shopper a unique code - known internally as the Guest ID number, which keeps tabs on everything they buy.
If they use a credit card or a coupon, or fill out a survey, or mail in a refund, or call the customer help line, or open an e-mail they sent them or visit their Website, they will record it and link it to their Guest ID.
They want to know everything they can.
Also linked to their Guest ID is demographic information like the customer´s age, whether they are married and have kids, which part of town they live in, how long it takes you to drive to the store, their estimated salary, whether they have moved recently, what credit cards they carry in their wallet and what Web sites they usually visit.
Shops can buy data about their ethnicity, job history, the magazines they read, if they have ever declared bankruptcy or got divorced, the year they bought (or lost)their house, where they went to college, what kinds of topics they talk about online, whether they prefer certain brands of coffee, paper towels, cereal or applesauce, their reading habits, charitable giving and the number of cars they own.
All that information is meaningless, however, without someone to analyze and make sense of it.
That's where the Marketing Analytics department comes in.

Almost every major retailer, from grocery chains to investment banks to the U.S. Postal Service, has a "predictive analytics" department devoted to understanding not just consumers' shopping habits but also their personal habits, so as to more efficiently market to them.
But in a golden age of behavioral research it is amazing how much they can figure out about how people think.
Over the past two decades, the science of habit formation has become a major field of research in neurology and psychology departments at hundreds of major medical centers and universities, as well as inside extremely well financed corporate labs.
The push to understand how daily habits influence your decisions has become one of the most exciting topics in clinical research, even though most of us are hardly aware those patterns exist.
One study from Duke University estimated that habits, rather than conscious decision-making, shape 45 percent of the choices we make every day.
This research is also transforming our understanding of how habits function across organizations and societies.
The Obama campaign has hired a habit specialist as its "chief scientist" to figure out how to trigger new voting patterns among different constituencies.

Researchers have figured out how to stop people from habitually overeating and biting their nails. They can explain why some of us automatically go for a jog every morning and are more productive at work, while others oversleep and procrastinate. There is a calculus, it turns out, for mastering our subconscious urges.
For companies the exhaustive rendering of our conscious and unconscious patterns into data sets and algorithms has revolutionized what they know about us and, therefore, how precisely they can sell.

Liberally taken from NYT
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