‘Psychographic Segmentation’ – the term sounds like something straight out of neuroscience and psychology books. But it is far from that. In fact, psychographic segmentation is a powerful tool in the belt of every marketer who understands it. From strengthening brand recall to accelerating laser-targeted sales, psychographic segmentation is a must-know for every e-commerce brand.
However, this term is still alienating to many businesses, brands, and marketing managers.
We’ve decided to fix this with our blog.
Here is your definitive guide to psychographic customer segmentation.
What is Psychographic Segmentation?
In the simplest term, psychographic segmentation is “grouping people based on their psychological traits, lifestyle preferences, and consumption habits.” These groups or clusters’ basis is big data – collected from every activity, transaction, interaction, and behavior a consumer does online.
As the term itself hints, psychographic segmentation is about cracking the customers’ values, beliefs, thought-process, and life aspirations. These key data points are excellent indicators of the customers’ future behavior and help in formulating better offers, creating a great product-market fit, and unraveling new commerce opportunities, if any.
E-Commerce brands looking to understand their customers at a fundamental psychological level find psychographic segmentation highly effective after demographic, behavioral, and geographic customer segmentation techniques.
How is Psychographics different from Demographics?
Psychographic and demographic segmentation techniques are fundamentally different. Psychographic segmentation is associated with measuring qualitative traits like attitude, behavior, values, and lifestyle. Simultaneously, demographic segmentation is associated with the quantitative measure of a person’s identity, such as their age, gender, income, etc.
For better clarity, demographic segmentation says ‘who’ purchases a business’ products, and psychographic segmentation tells the ‘why’ behind their purchase intents. Knowing the who and why of your target audience is a surefire way to sell more and adding loyal customers to your list.
Why use Psychographic Segmentation in Marketing?
The effective implementation of psychographic marketing can boost your overall conversion rate by up to 40 percent for starters. Ask any business, and they’d trade anything to achieve that number!
Psychographics allows using the information gathered on people to send marketing communication and collateral that interest them. Now that marketing has become smarter and customers are more clued in on what they want, it is important to know what your customer intent is and what type of information they want to receive without them asking for it.
Psychographic segmentation is promising for any business as long as it collects accurate data from the customers. For instance, it could be used to identify what stage of the funnel a potential customer falls into, which products might be the most interesting to a website visitor, or inform marketing on what other products could be sold to a customer.
Must-Know: Psychographic Segmentation Variables
Psychographic segmentation variables are common attributes shared by a group of people. It is based on these properties that a ‘cluster’ of a like-minded audience is formed. Below is the list of crucial psychographic segmentation variables every marketer must know;
Personality is a critical factor when evaluating the psychological make-up of a group of people. An individual’s personality directly influences their behavior, actions, and decisions – especially the purchase decisions.
A few of the defined personalities include creative, emotional, friendly, opinionated, introvert, and extrovert in marketing. Market researchers can conduct a segmentation based on these personality types to form a group of people with similar outwardly traits. The marketing message, offers, and campaigns can then be tailored to these customer personality clusters.
It is the income of different sections of the society that decides their purchasing power. Knowing your audience base’s average income and financial status is important to gauge your sales potential and market penetrability. For instance, a luxury perfume maker can’t market to students. Similarly, a premium smartphone maker can only market to people above a certain income category who can afford their products.
An audience’s social status can be gauged directly through surveys or indirectly by knowing their employment details, average online expenditure, devices used by them, and association with other brands.
Activities, Interests & Opinions (AIO)
AIO are key indicators of a person’s life activities, interests, and opinions, which strongly predict their behavior. Activities often depict their online interaction patterns. E.g., browsing for online movies is one activity that can be common among thousands of your customers. Then, the audience may be further divided as per their variable interests. E.g., groups of people might be interested in sports like hiking, skiing, camping, and biking. Lastly, opinions tell us the likelihood of a person to be pro or against a given product, idea, offer, or value. E.g., those of the opinion to reduce carbon footprints are much likely to purchase eco-friendly products than those who are neutral or against this idea.
Lifestyle is nothing but a collection of habits, daily routines, and factors that influence the overall quality of life. Clustering customers by way of their lifestyle can be a powerful psychographic factor for marketers to leverage. Lifestyle depends on many factors like profession, hobbies, marital status, social class, etc. Thus, while grouping your customers via lifestyle, you need to map several details about their lives for an accurate analysis.
E.g., a sports shoe will resonate much better with professional athletes, marathon runners, and fitness enthusiasts. On the other hand, a product like gym shorts will resonate much better with regular gym-goers and workout enthusiasts.
Examples of Psychographic Segmentation in Real-World
Ford Pinto 1975
Ford changed the ad of their iconic car ‘Pinto’ after discovering their existing customers’ psychographic profile. As opposed to their assumption of ‘keen, enthusiastic & romantic’ drivers, they discovered that their customers were practical car owners who wanted a reliable car.
Previous Ford Pinto Ad 1975
New Ford Pinto Ad 1975
Basecamp for Marketing
Basecamp sure did uncover some insights into who actually used their platform is a seamless and highly capable digital workspace. It turns out; it was majorly marketing teams and marketing agencies. The ad was then tailored to their psychographic analysis. Short, sweet & effective.
This Old Spice Commercial
Being an ‘all-male’ products leader, Old Spice found something exciting in their market analysis. Most of their shopping base was women who purchased the products for men in the house. So, they tweaked the ad that spoke specifically to women – about men’s grooming products. Watch the video here.
Segmenting your audience based on their mental attributes is a powerful notion.
Wondering what golden insights your CRM data holds for you? Run a psychographic segmentation analysis right now to uncover them! You can even use an AI-based tool like Wigzo to get going with ease.
More power to your brand in 2021 🙂