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What are Psychographics and How Can They Benefit Loyalty Marketers?

Used properly, and with customer consent, psychographics can help loyalty marketers foster unprecedented levels of customer retention

Evan F.P.
September 01 2018

An emerging marketing discipline known as psychographic profiling has risen to prominence following the recent Cambridge Analytica scandal, where Facebook came under fire for their lax InfoSec practices that allowed a UK data firm to profit off publicly perceived stolen profile data.

These same profiling practices are more common than most consumers or even professionals are aware. They inform the marketing strategies maintained by some of the world’s largest brands like Subaru as well as the campaigns of major politicians like Ted Cruz. They can be used to extract value from massive volumes of aggregated consumer data that recent technological advancements have only just made possible. Independent of whether or not you believe Facebook was at fault, the customer cohorting techniques that its platform has made possible pose an inarguable opportunity for marketers, especially those tasked with cultivating customer retention.

The chief strength of psychographic profiling is its ability to allow marketers to move beyond the shortcomings of demographic-based strategies and into the world of attitudinal segmentation. Employed properly, marketers can group customers according to their convictions rather than simple census data, leading to more resonant communications and higher overall brand engagement.

As paid advertising grows less effective and community-driven interactions become the new gold standard for marketers of all industries, advantages like these will eventually reach the mainstream consciousness. For now, psychographic profiling represents an unfair advantage that tenacious marketers can use to gain ground in the marketplace, even when up against larger competitors. The first step is understanding the technique’s fundamental aspects.

What Are Psychographics?

Unlike demographic segmentation, which depends on quantitative variables like age and income, psychographic segmentation uses qualitative variables to organize individuals into discrete addressable cohorts. Psychographic segments are not mutually exclusive, and deal primarily with attitudes, interests, and opinions. These can come in various degrees of granularity, from something as simple as placement on a traditional political spectrum all the way to specific convictions on individual issues like climate change, immigration, or gun control. As the segmented CRM experts at InfusionSoft explain, “Psychographic segmentation helps marketers understand that why—the goals, challenges, emotions, values, habits, and hobbies that drive purchase decisions.”

Collecting actionable psychographic data, however, can be difficult. Its qualitative nature means that psychographic information must be volunteered, as it can’t always be reliably gleaned from behavioral data like spending or engagement. In the case of Facebook, its end-user license agreement entitles them to algorithmically farm this information from a user’s on-platform activity, including profile information and post content. Through visual and textual analysis, it can then develop the sort of reliable psychographic profiles that other marketers would need to build manually, either through surveys or customer interviews. Giving marketers the ability to leverage this data in their paid advertising campaigns is what makes Facebook such a powerful and profitable entity in today’s data-driven marketing economy. But whether loyalty marketers are leveraging first or third-party data, the applications of psychographic profiling remain the same.

Psychographics For Loyalty Marketers

The greatest potential for marketers to affect positive change through psychographic profiling lies in its ability to inform targeted communications, promotions, and experiences as a means of increasing customer loyalty. Evidence is mounting to suggest that psychographics should be considered fundamental to the development and execution of modern loyalty programs, including a study by Sarah Tanford and Kristin Malek of the University of Nevada’s College of Hotel Management. As the authors explain, “This study segments hotel reward program members using a matrix approach that classifies loyalty on attitudinal and behavioral dimensions. It introduces a new psychographic dimension, attitudes towards green hotel practices, which are becoming increasingly important in industry and society.”

Participants included customers of varying demographic backgrounds, and even several members who demonstrated classically poor retention as identified through spending behaviors. After conducting the test and analyzing results from six study clusters who were each exposed to psychographically personalized rewards program experiences, the study’s authors concluded that “Hotel companies can enhance reward program effectiveness by using a refined segmentation process that allows them to tailor benefits to the characteristics of each segment.”

The evolution of psychographic profiling points to the validity of the martech world’s recent focus on dynamic personalization, while still calling for greater discipline and nuance from marketers in their cohorting practices. By developing a more thorough understanding of the differences between demographic, behavioral, and psychographic segmentation, as well as the ideal applications of each, loyalty marketers can drive greater retention through better experiences and lead their businesses to foster more mutually beneficial customer relationships.

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Evan F.P.

Evan is a writer, educator and tech marketer. As content director at Fluid PR Group, he helps businesses tell their stories to the world. He lives in Toronto with his wife, their son and an occasionally well-behaved Australian Shepherd named Islay. Follow Evan on Twitter

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