In his book The Power of Habit, author Charles Duhigg shows readers that understanding how habits work can be the key to customer conversion and millions – even billions – of dollars in sales. In an excerpt of the book that ran in The New York Times in 2012, Duhigg provided a number of examples breaking down the behavior pattern that forms a habit – the “cue-routine-reward loop” – including case studies of how corporations have exploited predictive analytics to boost revenues.
One example revolved around the market launch of the now-popular household product, Febreze. The freshening spray was designed and marketed as a traditional cleaning product, but it brought virtually no money in for parent company P&G at first. But after using habit insights to recalibrate and tailor its marketing, P&G repositioned Febreze as the reward in the habit loop, versus an all new cleaning activity altogether. Febreze quickly became one of P&G’s biggest revenue generators.
Habit-driven analytics are not without risks, however. Given the sometimes sensitive nature of the information researchers are attempting to suss out, any indication that a customer’s privacy has been breached could lead to a full scale public relations nightmare in a matter of hours. One particularly eye-popping example from the excerpt in the Times follows the research of Target marketing executive Andrew Pole who had been tapped by the company to determine the best possible windows in which to convert customers, usually in connection with a life event like pregnancy. Pole pinpointed roughly 25 purchase patterns that indicated when a consumer was pregnant so that Target could customize discount mailers. When an enraged father stormed into his neighborhood store demanding why his teenage daughter was receiving coupons intended for expecting mothers, Target quickly scaled back on how aggressively and obviously they applied their analytics to their marketing.
Mr. Duhigg spoke about habits and predictive analytics at our BRITE ’13 Conference (March 4-5, NYC).