05.09.20167 min read

Why Psychographic Segmentation is More Important than Knowing Customer Demographics

 

 

Say you own a candle manufacturing business and, as a savvy marketer, you know that you shouldn’t send the exact same message to everyone on your list. So you start working on segmentation, dividing your customers into similar groups in order to tailor your marketing efforts accordingly.

Through research, you learn about the demographics of your customers: They’re mostly women, ages 25 to 65, who live on the West Coast. You also analyze their online behavior, identifying which emails they opened and links they clicked before making a purchase.

In theory, you have information to help you segment your list by age, location, and buying history. But for many businesses, that kind of information is only so insightful. What conclusions could you draw from knowing that a 25-year-old in California and 65-year-old in Arizona bought the same candle? 

Demographic and behavioral information only give marketers part of the story they need to effectively segment a customer base, said Susan Baier, an expert in audience segmentation.

“The problem with both of those types [of segmentation] is that they don’t tell us why people are doing things,” she said, “which, as marketers, is the most important thing for us to know.”

As president of Audience Axis, Baier helps small business owners market based on another type of information: psychographic, or attitudinal, insights.

Psychographic segmentation helps marketers understand that why—the goals, challenges, emotions, values, habits, and hobbies that drive purchase decisions. 

Women don’t buy candles just because they’re women. Psychographic segmentation, though, tells us that some women buy candles as part of decorating their homes. Others purchase candles as gifts. And some buy them simply to enjoy the fragrance. 

Major brands and organizations are turning to psychographics to better understand and resonate with their customers. Subaru’s CMO has said that the car manufacturer targets customers based on their interests and passions rather than straight demographics. And the campaign for former presidential candidate Ted Cruz paid a firm $750,000 for psychographic profiling, hoping to understand why two voters who look identical on paper react to different political messages. 

Small business owners don’t need that kind of cash to dabble in psychographic segmentation. Here are a few ideas for beginners to get started. 

Collecting psychographic information 

Psychographic segmentation helps make your marketing efforts more relevant—that is, if the information behind the segmentation is accurate. 

Working from assumptions could only make your marketing more irrelevant. Back to the candle manufacturer: Say you think people buy your products because of the high-quality wick. If you focus on that attribute on your website and in your marketing materials, your messaging may not resonate with those shopping for a candle that looks or smells nice. 

“The trick to psychographic segmentation is you have to talk to your customers or prospects about what they care about,” Baier said. “You can’t just wing it.”

As a first step for a small business owner, you could do just that: Ask customers about their preferences when you meet or talk on the phone. What problems are they looking to solve? What kind of experience do they want with your products or services? What do they do in their free time? What’s important to them?

Your takeaways from those conversations may not represent your full customer base, Baier said, but information is better than none. You can also gain anecdotal insights by doing keyword research to see what people are searching for online or by monitoring online conversations, like those on social media platforms, in reviews, or in forums.

For more in-depth insights, send an online survey, explaining that its purpose is to help you better understand your customers and send them information they’ll care about. “As long as you explain why you’re doing something, I find people are usually willing to provide feedback,” Baier said.

Include open-ended questions, like “Why do you buy candles?” But to gain responses more insightful than “Because I like candles,” add closed responses, too, like asking customers to rank whether the scent, cost, or appearance of the candle matters most.

Expand your research by asking the same questions of non-customers. Sending surveys through platforms like Google Consumer Surveys, SurveyGizmo, and SurveyMonkey can help you learn how to better target prospective customers (for a price, of course).

Putting psychographic segmentation to work

Your research identified three main psychographic segments: candle gift-givers, home decorators, and scent lovers. Now what? Start tweaking your marketing efforts accordingly. 

Psychographic segmentation could help increase the effectiveness of:

  • Your emails: With your customer segments defined, you can send emails that better speak to the reasons why people are interested in your products. For example, the candle gift-givers could receive an offer for Mother’s Day gifts.
  • Your content: For customers using candles as decorations, write blog posts related to decorating and show photos with ideas.
  • Your website: Your customers buy candles for their unique fragrance? Organize products to help them find what they’re looking for, like “sweet scents” or “floral fragrances.”
  • Your advertisements: Honing in on segments can be particularly effective for advertising on Facebook and other social media platforms. Say you’re trying to advertise to the decorators: On Facebook, you can target the ad to reach users who follow home-decorating magazines, websites, or businesses. 

Automation software like Infusionsoft can help you define and market to these segments by tagging people accordingly as a result of their actions. For example, you can set up an automated sequence in which every customer receives a survey after making a purchase. Based on their answers, the software can automatically tag them as belonging to a segment you’ve identified: “candle gift-givers.” The software could also apply this tag when someone clicks certain email links or buys a product you’re advertising as a gift. With a segment identified, you can send emails only to that group—not to everyone on the list. 

In the end, will your sales increase because you’re marketing to home decorators or fragrance lovers? Hopefully, using psychographic segmentation will allow you to see better return on your marketing investments because you’re targeting only the people most likely to be your customers. And hopefully, those efforts will also result in better customer engagement and more repeat business because customers feel your company addresses their needs. But there’s only one way to find out: Try changing your marketing, measure the results, then adjust as needed—and repeat.

“It’s always going to be a proof-in-the-pudding situation,” Baier said. “We can sit back and decide the world looks this way, but in the end, we won’t know until we’re getting reaction to it: People are clicking, people are reading, people are buying.”  

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