Pregnancy, Data and Target: How One Company Figured Out a Customer Was Expecting Before She Did

At first, it may have seemed like a case of impossible intelligence. But how did Target know which of its customers were pregnant? And more importantly, how can other online retailers use data to better understand and serve their customers? Let's take a closer look.

Data-Driven Marketing 101

In order to understand how Target was able to use data to identify pregnant customers, we first need to understand a little bit about data-driven marketing. Data-driven marketing is a methodology in which marketing decisions are based on hard data and analytics rather than gut instinct.

This approach has become increasingly popular in recent years as businesses have become more reliant on technology and big data. By using data to drive their marketing efforts, businesses are able to more accurately target their audiences and allocate their resources more efficiently.

So how does it work? In a nutshell, businesses collect data on their customers through a variety of methods (e.g., cookies, surveys, loyalty programs, etc.), then they use that data to segment their customer base and create targeted marketing campaigns. For example, a business might use data collected from its loyalty program to segment its customers by purchase history and create targeted email campaigns accordingly.

Understanding Checkouts

It is the year 2012 and every time a customer added something to her online shopping cart, Target would assign her a Guest ID number, which would track all her purchases. The company then used that information to develop "pregnancy prediction scores" for each shopper. If a woman's score reached a certain threshold, Target would send her special coupons for baby-related merchandise.

And sure enough, customers started coming into the store with their coupons and making purchases. In some cases, they even thanked the store for helping them save money during such a expensive time.

Therefore understanding checkouts helps not just in effectively targeting customers, but also helps in serving them better leading to increased profitability. According to Scott Larsen, e-commerce veteran and Konigle evangelist - ' Understanding checkouts is the most useful way to know how your store visitors are using your website, with insights that move the needle to help you make more money online'.

Some key concepts to understand on checkouts are :

1. Abandoned Carts
   
2. Discarded Carts
   
3. How you can predict demand by understanding discarded carts.