Psychographics are just as crucial for modern marketers as demographics.
In this article, we will explore what is psychographics and how to use it in marketing.
I was introduced to psychographics and psychographics analysis while I was attending the University of Colorado in my MBA marketing courses. We applied it to outdated HBR case studies. You know typical MBA stuff. But in real life, it’s exciting to see it work.
But it wasn’t until I arrived at IBM where I could apply this knowledge. Psychographics analysis was an element we used at IBM in almost every marketing campaign.
When I get engaged with a client that is struggling to see an ROI with their marketing campaigns I start at the beginning. What are they trying to say? What response do they want? And what are the benchmarks to get there?
So, the poor sales response rate is often attributed to the fact their marketing messaging and communication architecture is missing something. Psychographic information is typically missing.
They are not seeing the expected sales response. They may have expected a 7 percent sales response and it is hovering below 2 percent.
Most marketers are used to thinking and speaking in demographics since segmenting a market by age, gender, ethnicity, and other broad variables can help to understand the differences and commonalities among customers.
Psychographic information relates to your buyer’s habits, hobbies, spending habits, and values. You can see how this is important in a political campaign and now you must use this for your business to help boost your conversion rate optimization (CRO).
I have been working with a lot of clients that have great web traffic (over 25,000 per month) but their web leads were not converting into sales accepted leads (SAL). Do you know what I’m talking about 50,000 monthly web visits will not mean anything if there is no business outcome, like leads or sales?
To help increase the conversion ratio I usually do a deep dive into the communication value map in a more structured and detailed way. This is where psychographics can be very revealing and worth the exercise. If you want to improve your key marketing ROI you have to do this periodically.
Demographics explain who your buyer is, while psychographics explains why they buy. You can see why they are important now, right? You can only reach your target audience when you understand both their demographics and psychographic.
Do your research.
Psychographics examples can be found in almost every industry. These include industries like auto, healthcare, food, and politics.
What is Psychographics anyway? Psychographics is a qualitative methodology used to describe consumers on psychological attributes. Psychographic segmentation has been applied to the study of personality, values, opinions, attitudes, interests, and lifestyles.
Although it came to light with the Cambridge Analytica scandal and the 2016 US presidential election, psychographic marketing maybe even more effective in commercial rather than political advertising. And it’s already more prevalent than you might think.
My friends at CBInsights offered the following as it relates to psychographics and the dark arts of marketing.
What is psychographics? Is it the dark arts of marketing as some, including former presidential candidate Hillary Clinton and Democratic Congressman Adam Schiff, have claimed?
Or is it merely the standard operating procedure for today”s savviest advertisers?
Does it even work?
The topic is certainly catching media attention, with 2018 seeing a drastic uptick in psychographics mentions across news outlets, largely because of the recent Facebook/Cambridge Analytica scandal. However, it had already started gaining media attention even before its Facebook moment.
Psychographics has the potential to transform the way marketers understand and influence decision-making.
Critics suggest psychographics essentially based on personality profiles and emotional triggers could quickly turn dystopian.
In this explainer, we dive into psychographics, from what it is to how it’s leveraged across industries.Â We also analyze its impact, the likelihood of regulation, and the potential impact on business and industries including advertising, auto, healthcare, food, and politics.
What is Psychographics?
The definition of psychographics is the study of consumers based on their activities, interests, and opinions (marketers call these AIOs).
It goes beyond classifying people based on general demographic data, such as age, gender, or race.
Psychographics focuses on understanding cognitive attributes, such as customer emotions, values, and attitudes, among other psychological factors.
Marketers, advertisers, and researchers leverage this approach to create psychographic profiles of consumers. These profiles help researchers understand consumer motivations and opinions that can then drive messaging tactics.
In doing so, marketers move beyond blanket advertising like direct mailers, television ads, and billboards. (These approaches tend to target entire demographic groups, such as males 18 to 34, females 50+, or upper-middle-class suburbanites?)
Since there is a great deal of variation in personality traits within demographic groups, this kind of blanket advertising is a very blunt tool.
In contrast, a psychographic profile contains information around a person’s interests, hobbies, emotional triggers, and lifestyle choices, among other data. This could provide insight into why someone might buy a specific product, support a given cause, vote a certain way, and much more.
For example, political consulting firm Cambridge Analytica created a psychographic profile that placed people in a particular market segment according to the presence or absence of five personality traits: openness, conscientiousness, extraversion, agreeableness, and neuroticism (popularly known as the OCEAN model of personality).
Using this information and more, brands can customize messages and tones accordingly.
Often, marketers will combine both demographic and psychographic data for a more holistic view of a consumer. In doing so, they can provide more tailored messaging and increase their chances of impact.
For example, imagine trying to market a vegan protein bar. You could run a Facebook ad targeted at athletes and fitness enthusiasts and maybe find some success. But by getting more granular, you could market to a segment of vegans who feel strongly about the mistreatment of animals, or to health-conscious people who feel guilty when they eat sugary energy bars.
In an economy based almost exclusively on clicks, whether on products in online marketplaces or on published content, the time lag between ad and purchase or conversion drops to a matter of seconds and makes every lever count.
Psychographic marketing, which plays on subconscious personality characteristics, is perfectly suited to help advertisers capitalize on impulsive decision-making. According to a 2009 experiment, psychographically-informed behavioral targeting increases click rates by 670%.
A later study, one of the first to test the effectiveness of targeting advertising, showed that because of the propensity effect of psychographic marketing to generate clicks, such advertising strategies outperform traditional advertising by a factor of 2 to 1.
But psychographic marketing is only as effective as the data underpinning it. How then, do companies acquire this information?
How Psychographic Information is Collected
A public presentation to the Concordia Annual Summit in September 2016 by Cambridge Analytica’s then-CEO Alexander Nix gave the world one of its first glimpses into the psychographic techniques used by the company.
Discussing his company’s work on the Ted Cruz presidential campaign in the US, Nix acknowledged his company had acquired four to five thousand data points on every American citizen. But he gave no details on how the company had acquired it.
There are several different ways to gather and analyze psychographic data. Some methods include the use of:
- Traditional focus groups/interviews
- Set-top box viewing data
- Psycholinguistic dictionaries
- Website analytics (e.g. Google Analytics)
- Browsing Data
- Social media (i.e. likes, clicks, tweets, posts, etc.)
- Third-party analytics
With each data source, researchers can gain insight into consumer preferences either directly or indirectly. And while the data collection methods may be time-consuming, the trove of information gathered can be game-changing.
For example, the main product Cambridge Analytica sold to its political clients like Cruz and Trump was a cutting-edge advertising strategy. To design and deliver these ads, however, it needed data. Lots of data. And where better to find it than on Facebook, a social network consisting of 2 billion users across the globe.
In 2015, Cambridge Analytica approached Dr. Alexander Kogan, a psychological researcher at Cambridge University’s Psychometrics Centre, to develop a Facebook app called This Is Your Digital Life. The app took the form of an online personality quiz.
It is now known that Cambridge Analytica harvested user data from Facebook in large part through This Is Your Digital Life, which violated Facebook’s terms of service by sharing user data with the firm.
Despite all the attention this sensational incident received, it is hardly the only example of data acquisition with a psychographic flavor. There are plenty of legitimate ways to gather psychographic data.
IBM Developed a Tool
Since 2012, IBM has been compiling Linguistic Inquiry and Word Count, a psycholinguistic dictionary that uses Twitter as its dataset.
Using this dataset to train its AI engine, Watson, IBM has been able to program an ever more refined set of algorithms to sort and retrieve psychographic information from emails, blog posts, text messages, search histories, online purchases, online reviews and comments, and, of course, social likes and shares.
Businesses can leverage these insights to drive more targeted marketing campaigns, acquire new customers, personalize consumer connections, and more.
Text-based datasets like these are particularly useful: psychological studies have shown that personality traits often show up in people’s word choices.
To use one of Nix’s own examples, because words like apparently and actually are indicative of a high degree of neuroticism, people whose harvested data frequently featured words like this would be marked as high N in their psychographic profile. Other linguistic markers could be mapped to the other Big 5 personality traits (OCEAN).
Companies & Industries Leveraging Psychographics Examples
A number of startups are working on providing psychographic insights to enhance audience outreach.
It’s important to note that, even though the potential for misuse exists, this can be done without improperly gathering data on individuals. And often, data collection is anonymized, meaning the underlying data powering the targeting is scrubbed of individual identifiers.
Many psychographic profiles, as we’ll see in industry examples below, are relatively harmless complements to traditional targeting methods.
Television and video advertising company Videology, for example, has developed a platform that incorporates psychographic segmentation to drive greater advertising results.
CaliberMind, which raised $3.2M in the second tranche of a seed round in 2017, builds psychographic profiles using machine learning and human language analysis.
The company assesses a person’s language using natural language processing (NLP) in order to understand what buyers are talking about.
There are some cues in the way someone expresses themselves in text, some nuances in language. It’s not just the words; it’s semantics. We can take 100 words and place you on the emotional vs. analytical side. The adjectives, the verbs, context in the sentence allow us to say someone is more analytical or more emotional.
If you’re analytical and I send you a webinar or video, there’s a good chance I’ll miss you. If you’re analytical, I’ll send you a return-on-investment calculator or a spreadsheet. If you’re emotional, I’m going to use more emotional language.ÂRaviv Turner, CEO CaliberMind
The company also uses social footprint (e.g. posts on Facebook) as an indicator. These psychographic insights as well as behavioral and demographic data collected allow CaliberMind to build out buyer personas that clients can then leverage in their marketing and advertising strategies.
Have something to say about your thoughts about psychographics?
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Psychographics concentrates on learning cognitive attributes, such as customer emotions, values, and attitudes, among other psychological factors.
What are the psychographics examples?
Psychographic examples can be found in almost every industry. These include industries like auto, healthcare, food, and politics. Porsche uses psychographics for its advertising quiver. Porsche has added the arrow of psychographic segmentation to target a younger audience and females traditionally thought of as demographic segments.
How can psychographics be used in marketing?
In marketing, demographics, opinion research, and social research in general, psychographic variables are any attributes relating to personality, values, attitudes, interests, or lifestyles. They are also called IAO variables (for Interests, Activities, and Opinions).
What is marketing psychology?
Marketing psychology is a range of psychological principles applied to your content, marketing, and sales strategy. Think of marketing psychology as a way to look for patterns in humans and assess how this relates to their purchase decisions.