How Companies Learn Your Secrets (Part 3)

In the past, that knowledge had limited value. After all, Jenny purchased only cleaning supplies at Target, and there were only so many psychological buttons the company could push. But now that she is pregnant, everything is up for grabs. In addition to triggering Jenny’s habits to buy more cleaning products, they can also start including offers for an array of products, some more obvious than others, that a woman at her stage of pregnancy might need.

Pole applied his program to every regular female shopper in Target’s national database and soon had a list of tens of thousands of women who were most likely pregnant. If they could entice those women or their husbands to visit Target and buy baby-related products, the company’s cue-routine-reward calculators could kick in and start pushing them to buy groceries, bathing suits, toys and clothing, as well. When Pole shared his list with the marketers, he said, they were ecstatic. Soon, Pole was getting invited to meetings above his paygrade. Eventually his paygrade went up.

At which point someone asked an important question: How are women going to react when they figure out how much Target knows?

“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.”

About a year after Pole created his pregnancy-prediction model, a man walked into a Target outside Minneapolis and demanded to see the manager. He was clutching coupons that had been sent to his daughter, and he was angry, according to an employee who participated in the conversation.

“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.

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.”

When I approached Target to discuss Pole’s work, its representatives declined to speak with me. “Our mission is to make Target the preferred shopping destination for our guests by delivering outstanding value, continuous innovation and exceptional guest experience,” the company wrote in a statement. “We’ve developed a number of research tools that allow us to gain insights into trends and preferences within different demographic segments of our guest population.” When I sent Target a complete summary of my reporting, the reply was more terse: “Almost all of your statements contain inaccurate information and publishing them would be misleading to the public. We do not intend to address each statement point by point.” The company declined to identify what was inaccurate. They did add, however, that Target “is in compliance with all federal and state laws, including those related to protected health information.”

When I offered to fly to Target’s headquarters to discuss its concerns, a spokeswoman e-mailed that no one would meet me. When I flew out anyway, I was told I was on a list of prohibited visitors. “I’ve been instructed not to give you access and to ask you to leave,” said a very nice security guard named Alex.

Using data to predict a woman’s pregnancy, Target realized soon after Pole perfected his model, could be a public-relations disaster. So the question became: how could they get their advertisements into expectant mothers’ hands without making it appear they were spying on them? How do you take advantage of someone’s habits without letting them know you’re studying their lives?

Before I met Andrew Pole, before I even decided to write a book about the science of habit formation, I had another goal: I wanted to lose weight.

I had got into a bad habit of going to the cafeteria every afternoon and eating a chocolate-chip cookie, which contributed to my gaining a few pounds. Eight, to be precise. I put a Post-it note on my computer reading “NO MORE COOKIES.” But every afternoon, I managed to ignore that note, wander to the cafeteria, buy a cookie and eat it while chatting with colleagues. Tomorrow, I always promised myself, I’ll muster the willpower to resist.

Tomorrow, I ate another cookie.

When I started interviewing experts in habit formation, I concluded each interview by asking what I should do. The first step, they said, was to figure out my habit loop. The routine was simple: every afternoon, I walked to the cafeteria, bought a cookie and ate it while chatting with friends.

Next came some less obvious questions: What was the cue? Hunger? Boredom? Low blood sugar? And what was the reward? The taste of the cookie itself? The temporary distraction from my work? The chance to socialize with colleagues?

Rewards are powerful because they satisfy cravings, but we’re often not conscious of the urges driving our habits in the first place. So one day, when I felt a cookie impulse, I went outside and took a walk instead. The next day, I went to the cafeteria and bought a coffee. The next, I bought an apple and ate it while chatting with friends. You get the idea. I wanted to test different theories regarding what reward I was really craving. Was it hunger? (In which case the apple should have worked.) Was it the desire for a quick burst of energy? (If so, the coffee should suffice.) Or, as turned out to be the answer, was it that after several hours spent focused on work, I wanted to socialize, to make sure I was up to speed on office gossip, and the cookie was just a convenient excuse? When I walked to a colleague’s desk and chatted for a few minutes, it turned out, my cookie urge was gone.

All that was left was identifying the cue.

Deciphering cues is hard, however. Our lives often contain too much information to figure out what is triggering a particular behavior. Do you eat breakfast at a certain time because you’re hungry? Or because the morning news is on? Or because your kids have started eating? Experiments have shown that most cues fit into one of five categories: location, time, emotional state, other people or the immediately preceding action. So to figure out the cue for my cookie habit, I wrote down five things the moment the urge hit:

Where are you? (Sitting at my desk.)

What time is it? (3:36 p.m.)

What’s your emotional state? (Bored.)

Who else is around? (No one.)

What action preceded the urge? (Answered an e-mail.)

The next day I did the same thing. And the next. Pretty soon, the cue was clear: I always felt an urge to snack around 3:30.

Once I figured out all the parts of the loop, it seemed fairly easy to change my habit. But the psychologists and neuroscientists warned me that, for my new behavior to stick, I needed to abide by the same principle that guided Procter & Gamble in selling Febreze: To shift the routine — to socialize, rather than eat a cookie — I needed to piggyback on an existing habit. So now, every day around 3:30, I stand up, look around the newsroom for someone to talk to, spend 10 minutes gossiping, then go back to my desk. The cue and reward have stayed the same. Only the routine has shifted. It doesn’t feel like a decision, any more than the M.I.T. rats made a decision to run through the maze. It’s now a habit. I’ve lost 21 pounds since then (12 of them from changing my cookie ritual).

After Andrew Pole built his pregnancy-prediction model, after he identified thousands of female shoppers who were most likely pregnant, after someone pointed out that some of those women might be a little upset if they received an advertisement making it obvious Target was studying their reproductive status, everyone decided to slow things down.

The marketing department conducted a few tests by choosing a small, random sample of women from Pole’s list and mailing them combinations of advertisements to see how they reacted.

“We have the capacity to send every customer an ad booklet, specifically designed for them, that says, ‘Here’s everything you bought last week and a coupon for it,’ ” one Target executive told me. “We do that for grocery products all the time.” But for pregnant women, Target’s goal was selling them baby items they didn’t even know they needed yet.

“With the pregnancy products, though, we learned that some women react badly,” the executive said. “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.”

In other words, if Target piggybacked on existing habits — the same cues and rewards they already knew got customers to buy cleaning supplies or socks — then they could insert a new routine: buying baby products, as well. There’s a cue (“Oh, a coupon for something I need!”) a routine (“Buy! Buy! Buy!”) and a reward (“I can take that off my list”). And once the shopper is inside the store, Target will hit her with cues and rewards to entice her to purchase everything she normally buys somewhere else. As long as Target camouflaged how much it knew, as long as the habit felt familiar, the new behavior took hold.

Soon after the new ad campaign began, Target’s Mom and Baby sales exploded. The company doesn’t break out figures for specific divisions, but between 2002 — when Pole was hired — and 2010, Target’s revenues grew from $44 billion to $67 billion. In 2005, the company’s president, Gregg Steinhafel, boasted to a room of investors about the company’s “heightened focus on items and categories that appeal to specific guest segments such as mom and baby.”

Pole was promoted. He has been invited to speak at conferences. “I never expected this would become such a big deal,” he told me the last time we spoke.

A few weeks before this article went to press, I flew to Minneapolis to try and speak to Andrew Pole one last time. I hadn’t talked to him in more than a year. Back when we were still friendly, I mentioned that my wife was seven months pregnant. We shop at Target, I told him, and had given the company our address so we could start receiving coupons in the mail. As my wife’s pregnancy progressed, I noticed a subtle upswing in the number of advertisements for diapers and baby clothes arriving at our house.

Pole didn’t answer my e-mails or phone calls when I visited Minneapolis. I drove to his large home in a nice suburb, but no one answered the door. On my way back to the hotel, I stopped at a Target to pick up some deodorant, then also bought some T-shirts and a fancy hair gel. On a whim, I threw in some pacifiers, to see how the computers would react. Besides, our baby is now 9 months old. You can’t have too many pacifiers.

When I paid, I didn’t receive any sudden deals on diapers or formula, to my slight disappointment. It made sense, though: I was shopping in a city I never previously visited, at 9:45 p.m. on a weeknight, buying a random assortment of items. I was using a corporate credit card, and besides the pacifiers, hadn’t purchased any of the things that a parent needs. It was clear to Target’s computers that I was on a business trip. Pole’s prediction calculator took one look at me, ran the numbers and decided to bide its time. Back home, the offers would eventually come. As Pole told me the last time we spoke: “Just wait. We’ll be sending you coupons for things you want before you even know you want them.”