Business owners, employees and customers’ days are made up of millions of habits – most of them operating subconsciously. At our firm, we believe that part of any successful profit improvement strategy involves recognizing and changing existing habits within the business.
The book “The Power of Habit” by Charles Duhigg covers this philosophy in an enjoyable narrative style and provides interesting real-life stories.
The book explains the habit loop of first having a “cue”, and then performing the “routine” which is then followed by a “reward”.
Habits can’t be erased, but they can be overwritten
The recommendation is to leave the existing “cue” and “reward” in place, but work on changing the routine in the middle of the loop.
The author also provides a very interesting discussion on how Target stores and other businesses can predict shopping habits from data collected in legitimate ways – including a rewards program detailing what a customer has purchased in the past.
Target realizes families with newborn babies are great future customers with a large lifetime value of total spending ahead of them. They also know a big life-changing event of childbirth is a time of opportunity to potentially change shopping habits. But since all their competitors know this too, they were able to study the shopping habits of young female customers and predict fairly accurately and early when they became pregnant.
For example, a new habit of purchasing vitamins like calcium, magnesium and zinc are an indicator early in the pregnancy – even before an “announcement” may have been made!
Since Target can also custom print advertising flyers for each residence fairly economically – an offer for a great deal on diapers will arrive in the mailbox in what looks like a generic advertisement.
The book is at the very least a good education in the science of habits. It is most interesting though to read it and brainstorm how the new knowledge could be used to impact the buying habits of the marketplace for your own business.