Psychographics and Demographics
By David Dorf-Oracle on Jul 06, 2011
At Crosstalk when Gary Vaynerchuk spoke he told the story of researching a first-time wine customer and finding out the customer was an avid Chicago Bears fan (American football). To thank him for his first purchase (which was fairly large), Gary's team sent the man an autographed jersey they bought on eBay. The customer was so impressed, he said he'd only buy from Gary's wine store.
Progressive auto insurance offers customers the option of installing a device in their cars called the Snapshot. It records driving habits such as hard braking, quick acceleration, and speed driven for a set period. Based on the data collected, Progressive can offer good drivers up to a 30% discount on their premiums.
What do these two seemly unrelated stories have in common? In both cases we've moved beyond demographics and looked more closely at individual traits, like loving a sports team or a having a particular driving style.
Demographics, such as white, male, age 35-45, married, employed can help with targeting at a gross level, but to continue moving the needle we must incorporate psychographics, such as college football fan, mountain biker, boy scout leader, and fiscal conservative. Today's population shares personal information via social networks, and tomorrow's population will continue to be less concerned about privacy. This presents an opportunity for marketers to collect activities, interest, and opinions that help hone marketing, which benefits both retailers and consumers.
Today, technology can process so-called "big data" to create profiles that contain both demographic and pyschographic data about consumers. In many cases, consumers will give up this data voluntarily in exchange for a better shopping experience. Retailers need to start extending their CRM systems today to house such information so they are able to compete as shopping gets more personal.