Knowing your customer is perhaps the most crucial step to securing their custom, and for this purpose the traditional approach has been demographic analysis. Technology, however, has opened the door to another kind of insight: psychographics.

Demographics versus psychographics

Demographics arrange the population according to quantifiable characteristics such as age, gender, family size, income, and nationality. Demographic data is readily available and easily applied, but it has its limitations. With access to the same data, competitors duplicate marketing strategies and target the same shoppers. Moreover, demographics struggle to account for certain factors that affect shoppers’ behaviour – that is, the consumer’s personality.

Values and behaviours

In contrast, psychographics delve into individual beliefs, values, and behaviours, including buying habits. We might think of demographics providing us with the dry facts of who the buyer is, while psychographics explain the motivation behind his or her purchases.

Unlike demographic data, however, psychographic insight is not always easy to render in numbers, nor is it all that simple to obtain. It is a matter of understanding the ‘why’ of purchases instead of just the ‘who’. When you did manage to get a thousand clickthroughs last month on a product that had been on offer since 2011, what was the reason? And customers who pick up items in-store are half as likely to return them. Why? This is the sort of insight that relies on interviews and expert analysis to uncover. Neither are inexpensive or simple to procure, and in this light, the reluctance of retailers to adopt or rely on psychographic data is unsurprising.

The Internet steps in

But here, as on countless other fronts, the Internet has stepped in to make the exploitation of psychographics much easier. More precisely, consumers leave a data trail with their purchases when they use a credit card, complete a survey, or reply to email campaigns. Social networking forums where shoppers express their interests and opinions are among the most valuable. All of these sources conspire to help retailers create very narrow, detailed customer profiles, which would not have been possible with demographics alone.

Once a psychographic profile is created, it can serve as a platform for fine-tuning the tone of advertising to bring it more in touch with its target audience. By arming savvy staff with usable information about their shoppers’ personalities and motivations – Bargain hunter? Penchant for high fashion? Likes or resents being guided? – you have meaningfully improved customer service.

A combination

The insight provided by demographics is increasingly insufficient for effective modern marketing campaigns. To bolster competitiveness, progressive retailers will be adding psychographics to the mix.