Target Knows You're Pregnant; Is This What Customers Really Want?

At the heart of the renewed focus on "Big Data" is an explosive excitement about the implications on customer management. The mountains of customer insights, observers stress, hold the keys to properly understanding and targeting customers, and those businesses who can take advantage of the opportunity stand to significantly improve customer relationships and, ultimately, profitability.

More specifically, article after article, book after book in the customer management space speaks of the importance of personalizing the experience based on customer habit. They point to Amazon’s related items pitch as the type of strategy all customer-facing businesses should employ. If businesses can understand a customer and show it by tailoring their messaging to that customer’s unique preferences and habits, they are truly maximizing their relationships.

Most importantly, customers actually want this form of service. A new SAP UK study reveals that at least three-quarters of buyers are more responsive to personalized offers and are, in fact, demanding that level of customer-centricity from retail organizations. Though the Amazon presentation might seem like a crafty sales tactic, customers perceive it as a legitimate value add and a sign that the organization cares about getting to know its supposedly all-important customers.

It is within this context that a buzzworthy New York Times article on Target’s customer analytics strategycarries so much meaning. Entitled "How Companies Learn Your Secrets," the piece details how retail giant Target leverages customer insights and predictive analytics to deliver customer marketing messages at exactly the time customers are most open to such messaging.

A noteworthy accomplishment of Target’s predictive analytics strategy—and a key focus of the NYT piece—has been its ability to identify pregnant female customers far in advance of their due date based on certain habits in their purchasing. Customers, research has shown, are most susceptible to changing their purchasing habits when dealing with a life-changing event (and few events rival having a child), and if Target can attract expectant mothers with offers for baby- and pregnancy-related items at the right time, there is a good chance it can convert them into regular, long-term customers for other products.

In an example cited by the Times piece, Target actually profiled an expecting teenage mom before her own father knew about the pregnancy. It might not "guess" right every time, but when it does, it can deliver the targeted advertising and offers needed to create a new class of loyal Target customers.

The path to personalization is not paved with gold

Like the reaction to Amazon’s personalized recommendations, it would seem intuitive for most customers to appreciate this kind of marketing. Target is speaking directly to the actual, specific needs of its audience and thus demonstrating true customer-centricity. If customers were ever thankful for mailings with coupons, offers and new product announcements, it should be for those with messaging related to their specific, imminent product needs and wants.

The pregnancy targeting, however, created uneasiness for some female customers. No matter how accurate (or perhaps because it could be so accurate), speaking directly to a personal, private matter with ties to one’s sex life will naturally create more uneasiness than recommending a pair of headphones to someone who just purchased an iPod.

Compounding the discomfort is the fact that the customers never disclosed their pregnancy to Target and, if Target’s predictive model was ideal in its success, only gave subtle signals of the impending birth. This is not recommending "Tales from the Crypt" and "The Outer Limits" to someone who bought a "The Twilight Zone" DVD; this is a retailer analyzing some purchasing signals and then making a bold declaration about the customer’s personal life.

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Moreover, while Amazon.com customers make their purchases through an account profile and can thus clearly comprehend how the e-tailer is able to leverage purchasing and browsing data, Target’s brick-and-mortar customers are not as clear on how they are being profiled. While it stands to reason that Target would do everything in its power to profile customers, because its internal "Guest ID" system, which tracks a single customer’s credit card purchasing, support inquiries, coupon use, survey completion, etc., is less visible, clear and transparent than an online merchant account, the scope of the behavioral data will likely surprise many buyers.

Sure enough, customer concerns extend far beyond predictions of pregnancies.

Target, in fact, long alleviated the pregnancy issue by peppering random product offers within the "pregnancy mailings" to minimize discomfort. The renewed spotlight on Target’s predictive analytics strategy, however, reveals a mixed, overarching sentiment to the retail giant’s use of customer data.

In the epitome of a catch-22, the very customer base that so enthusiastically demands personalized offers from brands is also rampant with concerns about how such brands formulate those offers.

In addition to a prevailing vow to use cash as a means of avoiding customer profiling, a number of comments on the Times article demonstrated frustration with behavioral tracking:

"You really have to be on your guard with everything these days. Walmart [sic] has their big brother type system worked out so well that they know when women are pregnant from tracking their stats. Interesting what they do."

"I just think it's really sad that this is how Mr. Pole [the executive behind Target’s strategy] makes his living. Really grotesque."

"It is not necessary to know individual identities, but such knowledge does enable the delivery of more personalized offers and services. These may be welcomed by opt-in frequent shoppers, but can be downright creepy when they seem to be the outcome of cyber-stalking."

"This is what is known as ‘Corporate Stalking’ on a mass scale of the American electorate."

"The real concern here should be about where all this information goes BESIDES advertisers. Suppose you are applying for a job or a place in university, or you are seeking insurance or want to buy a co-op or condo. How much of your "private" information will end up getting to people who may make judgments of you based on it?"

"What happens when insurance companies figure out how to identify the "riskier" people and start blacklisting them. You'll be rejected for health or auto insurance and never know why. This has got to stop."

"After reading this article, I KNOW I will never shop there."

"However, reading this article, I'm not sure which disturbs me the most: having my personal information gathered without my consent and/or sold or the extent to which companies will go to gather my information. It is truly mind-boggling."

"This report is positively sickening. With all of this work to invade people's privacy, it just adds credence to the wholesale dismissal of entire chains, entire brands, or entire industries."

While the comments were not universally negative—some, in fact, were quite positive in their endorsement of the analytics—very few outright applauded Target for working to better understand its customers. Few outright said, "I’m glad Target is working to create a customized experience for me."

And many more than a few, as noted, dealt with the ramifications of a data-driven culture in which big brands can learn such information about their customers and their behavior.

The overwhelming majority of customers wants to receive a personalized experience. It has no theoretical objection to receiving relevant product offers instead of generic "spam" mailings. It wants to believe that merchants see customers as individuals with unique tastes rather than as expendable commodities who mean nothing more than the dollar total of goods in the shopping cart.

But it remains willing to consider the hazards inherent to the creation of such an experience. And, for many, concerns over privacy can create a philosophical hurdle to the personalized engagement process.

Framing is Key

In overcoming this catch-22, businesses will have to look seriously at how they formulate and frame their personalized experiences for the market.

Notable to the NYT article is the fact that it approaches data-driven marketing as a profit-driving endeavor rather than as a customer-centric one. While the investigation does touch on some benefits to the customer, its main focus is on revealing how marketing minds work to more-effectively influence customer purchasing.

When looking at how Target identifies and targets pregnant women, the fundamental objective is not portrayed simply as, "How can we make the shopping experience more enjoyable and rewarding for these women" but rather as, "How can we get these women to spend more money at our stores?"

That distinction—and the suggestion that businesses are using customer insights to slyly create more revenue opportunities—is pivotal in establishing the dirtiness so many NYT commenters associate with Target’s practices.

With "Big Data" as a major focus for every business—and every marketing and customer experience team within those businesses—consideration must be given to using insights and analytics to actual improve the customer experience.

This is business and revenue is, obviously, crucial. But if brands want the buy-in necessary to optimize their data-driven strategies, they will need to assure that the revenue comes as a result of creating a more attractive, valuable experience.

They will need to assure that the motivation for their predictive analytics is a commitment to customer-centricity rather than a desire to play subconscious puppetmaster.