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Same Demographic, Different Approach
How psychographics debunk the birds of a feather theory.
Next time youre at a party, reaching for the chips and dip, look around. Many of the guests are probably around your age, with similar household incomes, education levels and life situations (i.e., married, married with children, or single.) But do you think they all donate to the same charities that you do, choose the same vacation spots and drive the same cars?
If you are only segmenting your marketing campaigns by demographic data age, sex, marital status, etc. you are, in essence, assuming they do.
Although demographics give you an idea of who your typical customer is, they dont tell you about that customers motivations, interests or priorities in life many of the things that drive purchasing decisions. Thats where segmentation comes in: to distinguish customers by more than their paycheck and year of graduation.
Ed Keller, president of market research giant RoperASW, told Time Magazine that researchers using demographic data alone can correctly guess what kind of car an individual will buy only 18 percent of the time. But when you combine peoples attitudes, behaviors, life stages and values, you can predict 82 percent of the time what car a person will buy next.
Better insight leads to better use of marketing resources.
With that in mind, imagine grouping your fellow party guests by personal variables, such as political affiliations, hobbies and lifestyle preferences items known in the industry as psychographics. You may end up with your own group nametags of Culture Connoisseurs, Fit and Active, Pottery Barn Groupies and Worldly Intellectuals.
And when your extracurricular exercise has concluded, youll probably have a better sense of which guests allocate discretionary spending on recreational equipment versus home accessories and shop at gourmet markets instead of supermarkets. Plus, you can probably guess whose car is parked behind yours.
By taking that same approach with your marketing program to determine who should be included in your mailing, as well as how to communicate with them, you can increase ROI while reducing costs. Thats because identifying the differences among your customers can drive your overall marketing strategy, determine distinct messaging that resonates with each groups values or pinpoint which products should be pitched to each group.
Soar to new heights with a new sort of flock.
To see how different customers in the same demographic group can be (in this case, upper-middle-class 40- to 50-year-olds who are married with children), look at the following classifications from Acxioms® Personicx® segmentation system (see chart below).
If a home décor retailer only had demographics to work from, it may have mailed to all three of these groups with a single mailing, focusing on new or seasonal products. But, with this additional insight, this retailer could segment the imagery, copy or a combination of both to make its mailing more effective.
For Soccer & SUVs, since a busy home life is the norm, content and products might be positioned as making life easier items such as baskets and on-the-go food accessories. Meanwhile, Apple Pie Families might receive a mailing that promotes personal time with products that support their child-free pursuits. And, for Leveraged Lifestyles, the mailing might center on the theme of lifes little luxuries with simple accessories that dress up the home.
Of course, just because a segmentation system identifies three distinct groups within a single demographic doesnt mean you have to send different mailings to each of them. When you add up all the demographic groups of your customer base, you may have as many as 20 different segments often too many for separate mailings.
Segmentation is as simple as you want it to be.
Instead, you can group segments with similar values and needs, regardless of demographics. You can also swap out catalog cover images, outer envelope messages or make other minor adjustments that can help you reap the benefits of segmenting without depleting your budget.
Demographics are a great starting point for getting to know your customers. But to end up with better results and more of your budget money intact not to mention a great excuse to throw your next shindig look beyond age, income and marital status.
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