Psychographics is more empathetic than demographicsArticle
13, Jul 2020. 10:29am
A recent CB Insights report takes a deep dive into how psychographics could fundamentally reshape how we collect, analyze, and apply data in digital marketing and beyond. We’ve summarized the 30-page report into the most relevant points, outlined below.
Expanding our approach to marketing, psychographics doesn’t just look at a target audience’s demographics (age, income, education, and zip code), but focuses on how people think instead. Branding gurus, marketers and analysts compile data and use this information to precisely target customers’ psychological, emotional, and subconscious thoughts.
Psychographics takes over where demographics leave off to analyze consumers’ activities, interests, and opinions (AIO). So, what drives our purchasing behaviors? Thought processes and cognitive motivations.
To create “psychographic profiles” of their target audiences, marketers collect critical data. These profiles allow advertisers to connect with individuals using relevant messaging because demographics alone aren’t enough to tailor an individualized ad. Often individuals in the same demographic group have different psychological motivations.
Consequently, older, less empathetic approaches to advertising, such as direct mail, television ads, magazine ads, and billboards often don’t get the desired result. They reach vast audiences, but the messaging isn’t precise enough for specific consumers. Online media, with their ability to target audiences far more closely, demand new techniques.
Psychographic profiles are the answer. These profiles contain psychological information detailing an individual’s AIOs and the emotional triggers that accompany them. Psychographics reveals the “why” behind a purchase, not just the “what.”
For example, the old approach to marketing a vegan protein bar might include a general Facebook social-media ad aimed at athletes and fitness enthusiasts. The ad may even enjoy some success. However, a psychographic profile would enable you to specifically market that same vegan protein bar for individuals based on those who feel strongly about the mistreatment of animals, or those who feel guilty for eating sugary energy bars.
In 2009, researchers conducted an experiment which showed that, effectively applied, psychographics increases click rates by 670%. Another study shows that psychographic marketing generates more clicks than traditional advertising by a factor of 2 to 1.
Collecting psychographic information
Several ways to collect and evaluate psychographic data exist, including:
- Browsing/search data
- Third-party vendor analytics
- Traditional focus groups/interviews
- TV-set-top-box viewing data
- Psycholinguistic dictionaries
- Website analytics (e.g. Google analytics)
- Social media (i.e. likes, clicks, tweets, posts, retweets etc.)
Companies and industries are leveraging psychographics
Consumers’ confidence increases when they know that the companies they do business with individualize the messages to their specific interests. Consumers appreciate this individualized attention and respond with clicks, purchases, and tweets.
But the benefits go beyond increasing sales. One company in the health services industry has successfully incorporated psychographic marketing to improve patient engagement and outcomes. According to Deloitte, the health-services industry has noted its value and effectiveness.
CoreHealth Technologies and PatientBond
Personalization isn’t just for customers. It can also be effective in building employee engagement. CoreHealth Technologies, a corporate wellness software platform, provides services to over 1,000 companies (including Fortune 500 companies like Cigna and Sun Financial). CoreHealth Technologies itself has more than two million employees worldwide.
Anne Marie Kirby, CoreHealth founder and CEO, predicts that artificial intelligence, psychographics, and individualized messaging will become critical drivers for innovation, poised to revolutionize the health services industry. The new approach seeks to increase employee participation in their clients’ workplace wellness programs, screenings, and health interventions.
In a collaborative effort, CoreHealth and PatientBond have teamed up to create a “platform for driving digital personalized engagement” using email, text message, and Interactive Voice Response. PatientBond asserts that their blend of psychology and technology will change human behavior.
PatientBond customized their own five-factor psychographic segmentation model, which categorizes employees as:
- Self-motivated achievers
- Pursuers of Balance
- Instruction Followers
- Willing Participants
They use this model to provide employees with their own personalized behavioral nudges to increase their engagement with CoreHealth’s products and services.
The company can boast real results. Their personalized psychographic files have increased employee participation by 82% in biometric screenings among blue-collar workers with Midwestern employers. Furthermore, they achieved a 72% enrollment in a 12-week metabolic syndrome program among eligible employees in Fortune 50 companies. On top of that, the number of employees who have chosen a primary care physician increased by 20%.
Does data mining and psychographic profiling exist only for multinational corporations, service providers for specific economic segments, or political campaigns? No. A number of food industry companies are getting in on the game too.
The Meatball Shop
On its platform, Tranzlogic, MerchantIQ brings psychographic techniques to vast segments of the restaurant industry.
The company uses an Industry Segmentation tool that analyzes the data of any given customer. This tool compiles interests, attitudes, lifestyle choices, brand preferences, biases, hobbies, social media participation, and so on. Psychographic files allow companies to create individualized customer profiles featuring demographic, geographic, and psychographic data.
The chart below shows their “Established Wealth” demographic, which consists primarily of married adults averaging 60 years old with a $200K+ income. These demographic characteristics reveal that this segment of the population enjoys material possessions and manages their finances responsibly.
The Meatball Shop used to identify its customers in such demographic terms: age, income, marital status, children, tourists/locals. etc. As The Meatball Shop grew from 1 to 6 locations, it realized that it needed a more specific ad targeting strategy for each store and its patrons.
This marketing shift resulted in a hyper-localized ad strategy that produced different content depending not only on demographic data, but also the AIO data customers generated while on the premises.
Through this process of psychographic profiling, management identified one store as “Bars and Beers,” its name for a segment of patrons who lived within walking distance of the store, had incomes over $100,000, no children, and averaged 29 years old.
These customers preferred lifestyles that suggested they enjoyed an unpretentious after-work establishment with alcoholic beverages. As a result of this data mining, The Meatball Shop instituted a Happy Hour at just this one location. It pursued its “Bars and Beers” marketing in the branch’s immediate neighborhood.
Tranzlogic claims “nuancing” ads to particular psychographic segments produces instant results. Tranzlogic reports “Not only did sales from that target segment increase, so did the frequency of customer visits, as well as the number of new customers.”
Evaluating psychographics actual effectiveness
Overall, psychologically crafted marketing gathered 40% more clicks and 50% more purchases. However, this only holds true if a particular demographic segment possesses a certain level of extroversion and an openness to new experiences.
Psychographics alone isn’t enough
Developing psychographic profiles is part art, part science. And although they come closer than demographics to presenting individualized messages, all the data, technology, and analytics in the world can’t provide the empathy it takes to build effective profiles around your customers’ wants and needs. To gain a truly complete understanding, you still need to get into peoples’ shoes and walk around their world.