When Nike lost the 2012 London Summer Olympics bid to Adidas, it turned to target the sporting psychology of athletes and fitness enthusiasts to compete as the unofficial face of the tournament.
The company undertook psychographic segmentation of its customers. It studied their attitudes, beliefs, and values to launch the ‘Find Your Greatness’ marketing campaign.
Nike drove lakhs of people, comprising its customers, who showed a positive attitude towards sports into action. In no time, the Nike+ app membership jumped by 55%. The campaign, which used psychographic segmentation in marketing, pushed its revenue by $506 million.
The ‘Find Your Greatness’ campaign of Nike fetched an additional $506m in revenue
As in Nike’s case, segmenting customers based on psychological traits can prove a game-changer for companies. Technology comes in handy here by helping you measure psychological metrics, visualize segments, and tune them into your marketing strategy. Attributes such as the interests and beliefs of customers widen the aperture of your view of the customer. This in turn helps personalize the customer experience.
Let’s understand why psychographic segmentation is important, how you can perform it, and how customer engagement platforms can help.
What is psychographic segmentation?
Psychographic segmentation helps you categorize customers based on their psychological and cognitive attributes. These include beliefs, attitudes, values, personality traits, interests, and social status.
These can uplift your marketing campaigns as 95% of customers make purchasing decisions using their subconscious mind. By grouping customers along these traits, you can personalize campaigns.
A psychographic study also helps brands position their identity based on their core customer base. For example, motorcycle maker Harley-Davidson uses the tagline ‘Live Free, Ride Hard’ to appeal to its loyal clientele, which values freedom, adventure, and rebellion.
A Harley Davidson campaign highlighting the value of freedom
Customers need to believe you value their beliefs. Brands today stand by causes such as environmental sustainability, women’s rights, and equal opportunities.
Psychographic segmentation is different from other methods like demographic, geographic, behavioral, firmographic, RFM, needs-based, and benefit segmentation.
Here are the differences between psychographic and demographic segmentations:
| Features | Demographic segmentation | Psychographic segmentation |
| What is it based on? | Observable characteristics | Psychological and cognitive traits |
| Incorporated data | Age, gender, income, education level, or family size | Values, beliefs, interests, opinions, social status |
| Segment examples | Millennials, urban dwellers, women | Tech-savvy, health-conscious, luxury-oriented |
| Data collection method | Customer engagement platform, surveys, purchase history | Customer engagement platform, surveys, focus groups, social media listening |
| Challenges | Ignores nuance and why customers buy | Difficult to quantify |
Benefits of Psychographic Segmentation for Marketers
Understanding customer psychology can prove invaluable for marketers, as it lets them tap into the hidden desires and fears of customers. The benefits of psychographic segmentation are many:
Improved Targeting and Personalization
Psychographic segmentation lets you tailor marketing campaigns targeting the subconscious minds of customers and evoke the desired emotional response from them. This boosts personalization and makes the customer trust you more.
As many as 91% of shoppers abandon an online retailer over poor shopping experiences, suggests Netcore research (https://netcorecloud.com/ebook/e-commerce-personalization-trends-2022/). Thus personalization matters.
For instance, Sterling achieved a 13.4% higher revenue by relying on Netcore’s AI-driven segmentation.
Deeper Customer Understanding
It lets you identify motivating factors of customers and create multiple ideal customer profiles that you could target with varied messaging.
With this deeper understanding, you can design campaigns that resonate deeply with customers and seem natural to them. As a marketing expert, Tom Fishburne, says, “The best marketing doesn’t feel like marketing.”
Example: Highlighting the calorie tracker feature on an app to health-conscious customers.
Coca-Cola’s green marketing targets environmentally-conscious customers
Brand Differentiation
According to an article in Harvard Business Review, psychographics has proved effective in brand reinforcement and positioning. Segmentations based on psychological and personality traits let you differentiate yourself from competitors.
Knowing customers’ psychography lets brands pick from the 12 brand archetypes derived from Carl Jung’s psychology. These could be ‘the ruler’ for Rolex or ‘the magician’ for Disney.
Step-by-Step Guide to Psychographic Segmentation
In the book The Marketing Edge, the authors say that a segment specialist would enjoy the first-mover advantage until competitors start replicating their approach. This holds for psychographic segmentation too. Here are the steps to implement it:
Step 1: Define Goals
Lay out what you want to achieve with psychographic segmentations and how that fits your organizational goals. Consider these questions while defining your purpose:
- Are you planning to launch targeted marketing campaigns?
- Are you looking to identify new market segments for product expansion?
- Are you planning to improve your market share?
- Do you wish to build customer retention and loyalty?
- Do you aspire to brand differentiation?
Step 2: Conduct Research
Zero in on traits you plan to capture and standardize responses that would indicate them. There are various variables you can consider while capturing and segmenting psychographic data:
1. Interests: Includes areas customers most care about and spend their time pursuing.
Example: Particular kinds of sports or movie genres.
2. Attitudes: Customers carry beliefs, values and outlooks they acquire through their upbringings, communities and experiences.
Example: Being environmentally conscious and cautious about your carbon footprint.
3. Social status: This is based on both the social and economic position of customers. In some societies, social markers of ethnicity and caste are still prominent, while in others, economic markers of class influence buying decisions. A combination of both can exist too.
Example: Owning a Mercedes-Benz car indicates a higher social status.
4. Lifestyle: Purchasing power of customers doesn’t always determine the way they live. Forces of globalization also influence lifestyles.
Example: Preferring a health-conscious diet.
5. Personality: Customers may be introverted/extroverted, creative, flexible, honest, humble, ambitious, or conscientious. These attributes might influence buying decisions.
Example: Ambitious customers may value goods and services that help them achieve a higher social or economic status, such as owing a Harley Davidson motorcycle.
Step 3: Analyze Findings
Use statistical techniques to identify patterns and correlations in data. Perform cluster analysis by grouping customers with similar psychographic traits.
For instance, a person interested in fashion could value sustainable clothing and animal rights.
Step 4: Create Personas, Integrate with Other Segmentations
Create personas based on psychographic segmentation. These should seem like real people with defining psychological and cognitive traits.
Example: Sarah values wellness and balance between work and life. She practices yoga regularly and likes to spend time with her family. Together they travel every six months.
Next, correlate psychographic data with other segmentations based on demographics, behaviors, geography, and so on.
Step 5: Create targeted campaigns, inform product development
Tailor messages that resonate with each psychographic segment. Use an omnichannel strategy to engage customers across email, social media, and mobile phone messaging channels.
Align product and service offerings with the desires of each segment to maximize conversions. This opens up a window to partner with product and design teams.
For instance, Amazon launched the Amazon Saheli offering to promote women entrepreneurs in India. This aims at widening offerings on its platform and capturing the attention of customers who value women’s empowerment.
The Amazon Saheli program to empower women entrepreneurs
Step 6: Evaluate and Improve
Evaluate the performance of your marketing efforts against previous strategies and stated goals. Go over metrics like the cost of customer acquisition, most effective channels, retention rates, engagement rates, lifetime value, conversion rate, and time-to-conversion.
Examples of psychographic segmentation
Lifestyle
An apparel brand identifies a significant chunk of its customers that is deeply concerned about environmental impact and social justice. So it launches a marketing campaign targeting them by showing an interaction of fashion and sustainability. The brand reiterates its use of organic material and fair labor practices.
Meals delivery service
A meal delivery aggregator identifies a customer segment that shows aggressive buying around weekend European football league matches. The company offers special discount coupons for these customers around the match hours.
E-learning
An online education portal fields a survey and identifies a group of customers who strongly value professional growth through upskilling and reskilling. The portal targets these customers through emails, SMS, WhatsApp, and phone calls to offer courses they could consider at a discount.
Best Practices for Psychographic Segmentation in Marketing
When you segment customers based on psychographic markers, it’s essential to follow certain practices for optimal results and derive a return on investment. Here are those practices:
1. When you segment customers based on psychographic markers, it’s essential to follow certain practices for optimal results and derive a return on investment. Here are those practices:
2. Be transparent and value privacy: Inform your customers about how segmentation will help enhance their experience. Be clear about data collection and processing procedures.
3. Use technology: Use a unified software tool instead of relying on multiple disjointed tools to integrate and process data and launch targeted campaigns.
4. Refine segments: Create workflows to automate real-time updates of segments based on customer interactions. Review these updated segments to create related content pieces and launch marketing campaigns.
How Can Customer Engagement Platforms Help?
Technology lets data flow across collections and analyses across streams. It lets you automate several repetitive tasks so you can redirect your attention to strategy. They help marketers in multiple ways for psychographic segmentation:
Data Collection
Customer engagement platforms can help you track customer behavior across channels, platforms, and stages of the conversion funnel. You can define the metrics aligning with your strategy and automate data collection.
You can also track website interactions, including visits, time spent, and purchases, that could reveal customer preferences and interests.
Data Analysis
Such tools let you gauge sentiment across channels and visualize trends with you. They help you group customer traits into segments for the creation of personas.
Visualization of segments helps you view group characteristics, size, relevance, and conversion rates. It makes reporting easier for launching and tracking marketing campaigns for these groups.
Targeted Campaigns
Using customer engagement tools, you can decide ‘what’ to say to ‘which segment’ through ‘which channel’ and ‘at what time’ to maximize conversions.
The integration of data gathering, analysis, and campaign management on one platform reduces the chances of error that come with manual work, facilitates omnichannel communication, speeds up message delivery, and offers real-time analytics.
For instance, Kotak General Insurance relied on Netcore to achieve a 525% increase in clicks and a 41% conversion in policy renewals by using its RFM analytics and segmentation features, among others.
Final Words
Psychographic segmentation offers brands a powerful tool for crafting marketing campaigns that truly resonate with their audience. By understanding consumers’ lifestyles, values, and interests, companies can move beyond basic demographics to deliver messages that align closely with what their customers care about.
This approach not only enhances engagement but also builds stronger, more meaningful connections with the target audience. In essence, psychographic insights allow brands to cut through the noise and offer tailored experiences that drive loyalty and growth.
Technology can help you power psychographic segmentation. On unified platforms like Netcore, you can collect and analyze data to launch campaigns. The software lets you track every user interaction in real-time and make you respond to evolving customer needs.
On Netcore, you can create AI-led personalized user journeys and improve conversions. You can set rules for product recommendations and messaging for different segments. The platform lets you perform control group testing before launching a wide campaign. With a single view of your customers, you can delight them and boost your revenues.
