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June 11th, 2013 at 9:00 am

How Companies Learn Your Secrets from The Best Business Writing 2013

“There is a calculus, it turns out, for mastering our subcon­scious urges. For companies like Target, the exhaustive render­ing of our conscious and unconscious patterns into data sets and algorithms has revolutionized what they know about us and, therefore, how precisely they can sell.”—Charles Duhigg, “How Companies Learn Your Secrets”

The Best Business Writing 2013As we learn about the extent to which the United States government monitored its citizens phone calls and online activity, Charles Duhigg’s article “How Companies Learn Your Secrets,” from the New York Times Magazine, reminds us that corporations are also keeping a close eye on our activities in the name of trying to sell us more stuff. The following excerpt is from Duhigg’s article, which is included in The Best Business Writing 2013:

The desire to collect information on customers is not new for Target or any other large retailer, of course. For decades, Target has collected vast amounts of data on every person who regularly walks into one of its stores. Whenever possible, Target assigns each shopper a unique code—known internally as the Guest ID number—that keeps tabs on everything they buy. “If you use a credit card or a coupon or fill out a survey or mail in a refund or call the customer help line or open an e-mail we’ve sent you or visit our website, we’ll record it and link it to your Guest ID,” Pole said. “We want to know everything we can.”

Also linked to your Guest ID is demographic information like your age, whether you are married and have kids, which part of town you live in, how long it takes you to drive to the store, your estimated salary, whether you’ve moved recently, what credit cards you carry in your wallet, and what websites you visit. Tar­get can buy data about your ethnicity, job history, the magazines you read, if you’ve ever declared bankruptcy or got divorced, the year you bought (or lost) your house, where you went to college, what kinds of topics you talk about online, whether you prefer certain brands of coffee, paper towels, cereal, or applesauce, your political leanings, reading habits, charitable giving, and the number of cars you own. (In a statement, Target declined to identify what demographic information it collects or purchases.) All that information is meaningless, however, without someone to analyze and make sense of it. That’s where Andrew Pole and the dozens of other members of Target’s Guest Marketing Ana­lytics department come in.

Almost every major retailer, from grocery chains to invest­ment banks to the U.S. Postal Service, has a “predictive analyt­ics” department devoted to understanding not just consumers’ shopping habits but also their personal habits so as to more effi­ciently market to them. “But Target has always been one of the smartest at this,” says Eric Siegel, a consultant and the chairman of a conference called Predictive Analytics World. “We’re living through a golden age of behavioral research. It’s amazing how much we can figure out about how people think now.”

The reason Target can snoop on our shopping habits is that, over the past two decades, the science of habit formation has become a major field of research in neurology and psychology departments at hundreds of major medical centers and universi­ties, as well as inside extremely well financed corporate labs. “It’s like an arms race to hire statisticians nowadays,” said Andreas Weigend, the former chief scientist at Amazon.com. “Mathema­ticians are suddenly sexy.” As the ability to analyze data has grown more and more fine-grained, the push to understand how daily habits influence our decisions has become one of the most excit­ing topics in clinical research, even though most of us are hardly aware those patterns exist. One study from Duke University es­timated that habits, rather than conscious decision making, shape 45 percent of the choices we make every day, and recent discoveries have begun to change everything from the way we think about dieting to how doctors conceive treatments for anx­iety, depression, and addictions.

This research is also transforming our understanding of how habits function across organizations and societies. A football coach named Tony Dungy propelled one of the worst teams in the NFL to the Super Bowl by focusing on how his players ha­bitually reacted to on-field cues. Before he became treasury secretary, Paul O’Neill overhauled a stumbling conglomerate, Alcoa, and turned it into a top performer in the Dow Jones by relentlessly attacking one habit—a specific approach to worker safety—which in turn caused a companywide transformation. The Obama campaign has hired a habit specialist as its “chief scientist” to figure out how to trigger new voting patterns among diff erent constituencies.

Researchers have figured out how to stop people from habit­ually overeating and biting their nails. They can explain why some of us automatically go for a jog every morning and are more productive at work, while others oversleep and procrasti­nate. There is a calculus, it turns out, for mastering our subcon­scious urges. For companies like Target, the exhaustive render­ing of our conscious and unconscious patterns into data sets and algorithms has revolutionized what they know about us and, therefore, how precisely they can sell.

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