Why retailers care if you are getting married, divorced, moving house or having a baby.
For the most part we humans are creatures of habit. We like familiar surroundings, we like what we know and we like to go places where everyone knows our name. This tendency to habituality can be both a good or bad thing for retail marketers. If you can get a consumer to buy from you then you have a great chance of keeping them loyal. Conversely, if that same consumer buys from someone else first then you have a tough job on your hands.
For even the most habitual of consumers however this rule becomes much less robust when they are going through a major life event, as during these periods of upheaval we are much more susceptible to changing our habits. Getting married/divorced, moving house, changing job and of course the mother of all life changing events – having a baby! To put it bluntly for many retail businesses pregnant woman are goldmines.
One survey in 2010 estimated that the average parent spends over €5,000 on baby items before the child’s first birthday (I lost count myself but I’m confident we easily amassed that spend before our first born’s 1st birthday).
If there are any mothers reading this post they might remember being offered ‘gift bags’ while still in hospital, stuffed with free sample products from every conceivable producer of baby related products like wipes and nappies. These product marketers were not just being kind of course, they simply knew how vulnerable you were to new products as well as how much money you would be spending on baby related items over the next few years.
Of course not only are all pregnant woman easy targets for marketers but sleep deprived parents are too, because above all else ‘easy’ matters to them most of all. If one supermarket chain convinces them to purchase nappies at some discounted price they will end up buying everything else there also because it’s easier to do that than to buy different items in different shops. The new baby market is huge and believe it or not some retailers knew you were pregnant even before many of your closest friends did!
Target’s Predictive Analytics and Baby Direct Mail Programs
For decades retailers have relied on age old tricks (like making fresh fruit and veg the first thing you see when you enter the supermarket) in order to exploit our subconscious to drive basket size and profits. When you think about it, it makes zero sense to have products that bruise easily sitting at the bottom of our baskets and trolleys… but of course once we have loaded up on apples and oranges we are far more likely to pick up a high margin tin of Cadbury Sensations on our final approach to the checkout counter. Because ya know it’s perfectly fine to shove four pounds of refined sugar down your throat as long as you ate an apple beforehand!
Of course in the age of big data these old tricks can no longer drive the competitive advantage they once did and savvy retailers have begun to realise that they must track each consumer’s habits and then market to them on a 1 to 1 and highly targeted basis. One great (and maybe slightly creepy) example of this was Target’s Baby Direct Mail Program which was driven by their Predictive Analytics Department.
This department was already fairly established by the time they decided to create a Pregnancy Prediction Algorithm to help determine if a woman was pregnant as well as estimating her exact due date. Target didn’t want to wait until after the birth to start capturing these highly valuable customers, they wanted to capture them even before their closest friends knew they were pregnant. Previous to this they had simply done things like identifying woman who bought bikinis in February so they could send them coupons for weight loss books in May and sun cream in July.
By pouring over the data and using their ‘Pregnancy Prediction Score’ Target were not only able to plot the trimester that every pregnant woman was in but even their actual due date. With that information they could then target the pregnant woman at the exact time when Target knew they would need every conceivable baby related product, both pre and post birth. Folic acid, unscented lotions, cotton balls, hand sanitizers, baby sleeping bags and right the way down to the obscenely overpriced and high margin items like strollers and car seats.
As a result of the work done by the Predictive Analytics Department their “Mom and Baby” sales shot through the roof and helped drive exceptional growth for Target. Between 2002 (when the Predictive Analytics Department began the Baby Direct Mail Program) and 2009, Target’s revenues grew from $44 billion to $65 billion.
