From Demographics to Psychographics: How Big Data will Disrupt Marketing

For centuries, marketers and business professionals have spent time and money focusing on demographics. They have looked at their target audience from an angle that focuses on their location, age, gender and income to better tailor their message more strategically and effectively. That said, marketers recognize that demographics are limiting as they can only tell us who customers are and not what they care about.

Enter the world of Psychographics. Psychographics are described as the feelings people have towards products, causes and much more. It’s their overarching worldview of society and the things around them. It’s what makes them tick. Unlike demographics, these attributes are more abstract as they are multi-dimensional by nature, and cover subtle elements of what goes on in our minds.

Knowing Your Customers Through Data
Understanding the thoughts and perceptions of a target audience presents organization with a chance to go beyond location and really connect using a message that resonates with their audience. As such, it was an eye opener when came across a recent piece in the Economist highlighting the effectiveness (or lack there of) as it relates to focusing solely on demographics in communications:

In America alone, people spent $170 billion on “direct marketing”—junk mail of both the physical and electronic varieties—last year. Yet of those who received unsolicited adverts through the post, only 3% bought anything as a result. If the bumf arrived electronically, the take-up rate was 0.1%. And for online adverts the “conversion” into sales was a minuscule 0.01%. That means about $165 billion was spent not on drumming up business, but on annoying people, creating landfill and cluttering spam filters.

Business can do better. In fact, that’s what we’re aiming to do.

Brands have forever looked at surveys and focus groups to better understand their audience. Over time, this medium and approach has become more and more ancient as the costs to conduct the research have gone up while the effectiveness has gone down.

Do you remember when Heinz launched Green and Purple ketchup? It was an idea that came from a focus group and one that cost them millions in advertising to launch nothing more than a fad and a solid case study on why we can’t put our trust solely in focus groups. As it turned out, while kids liked the concept, parents aren’t all that crazy about fries slathered in asparagus-colored goo. You can quickly see how a focus group of kids would overlook this insight.

Thanks to an explosion in social media and mobile devices, consumers are sharing more insights and information about themselves than ever before. As such, it’s easier than ever for brands and businesses to discover and understand the thinking of their audiences by diving deeper into their conversations and understanding their personalities.

The millions of tweets shared daily are providing us with large quantities of data that allow us to better understand what consumers think. We scan the profiles of millions of users and dissect key conversation pieces to formulate a better understanding of both their demographics and psychographics. Whether it’s understanding their relationship status or if they’re interested in Justin Beiber, we use data to understand their personalities and true colours.

The guessing games are almost over.

Recognizing the failures of direct marketing and possibilities of big data, it’s clear that the ability to connect with people on a personal level is going to change the way we do business. Imagine for a second that you’re on the hunt for a new car and you send out a tweet highlighting this sense of purchase intent. Today, it would go out to your followers and you may get one or two responses recommending a local dealership.

In the future, imagine a world where on the other side, an automotive brand has a platform that shows not only that you want a new car but also that you’re heavily engaged with environmental issues. It notices that you follow blogs like Treehugger and Good.is and has also determined that you’re thinking about bring a furry little friend into your family. From there, they message you with you with a special offer highlighting a great deal on a Hybrid car with extra room for the pup. Sounds futuristic right?

That’s because it is. But it’s what we’re betting on. It’s where we see the industry going and where we see brands finally getting back to one on one marketing and personalization. Wayne Gretzky once said, a good hockey player plays where the puck is. A great hockey player plays where the puck is going to be. Are you striving to be good or great?

Photo Credit: dborman2