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06 October 2016, 11:21

The death of customer demographics

What do a web developer in Silicon Valley and a stay-at-home mum in San Diego have in common? Based on demographic customer segmentation, quite a lot: both are female, the same age, same nationality and with the same household income. But it shouldn’t come as a huge surprise that these two women have completely different interests, hobbies, experiences and attitudes.

Now imagine a 50-year-old lawyer in London and a 25-year-old session musician in Paris. Based on demographics alone, these two couldn’t appear more different. But what if they’re both triathletes, or comic book geeks, or they’re about to become fathers for the first time? What if they’re both obsessed with clean eating? Or they’re trying to give up smoking? It’s easy to see how shared interests and experiences like these could place two seemingly different people firmly in the same customer segment. 

This is why traditional methods of segmenting customers according to demographics alone just aren’t relevant in today’s marketing landscape. Instead of grouping customers by their age, income, gender and the like, marketers should be segmenting them according to what they’re interested in. 

The art of psychographic segmentation
This is all part of a method called psychographic segmentation, whereby you define a customer segment according to their interests and hobbies, attitudes, personality and lifestyle. This type of segmentation is more focused on what your customers like rather than what demographic they fit into on paper. By segmenting your customers according to what interests they have in common, you can more accurately target them with relevant messages, better focus your marketing efforts and build stronger relationships with your customers. 

Take banking as an example. Banks target customers across a wide spectrum of ages, locations, and income brackets. Instead of segmenting their customers according to simple demographics, banks take a more sophisticated approach, using different messages and channels to target customer segments with similar lifestyles, interests and experiences. Customer segments for a typical bank might include small business owners, first-time home buyers, big spenders, keen savers, university students with no fear of a huge overdraft, and so on. The idea is, the 20-year-old entrepreneur is likely to have more in common with a 40-year-old business owner than a 20-year-old student – at least in terms of banking needs.

Three quick tips for building a better picture of your customers
Here are our three top tips for segmenting your customers according to what they like:

1. Look at their habits
A person’s habits can tell us a lot about them, and help you provide a better product or service. Social media is perfect for gaining insight into habits, enabling you to analyse interactions and build lookalikes. Useful data about media-consumption habits can also be gained from online tools like Google Trends, and paid-for data from surveys (e.g. from TGI and Acxiom) and reports (from the Office for National Statistics and Ofcom). 

2. Figure out their interests, likes and dislikes
In this age of constant status updates, tweets, selfies and likes, it’s easier than ever to get to the heart of what people are interested in, be it football, gardening or heavy metal. Owned tools like Facebook Audience Insights, and online tools like YouGov profiles are great for providing data about your current and potential customers’ lifestyles and interests.

3. Understand their pain points
Okay, this is less about what your customers like and more about what they need. You have to define their pain points, i.e. what problems they have and how you can solve them. Reviewing your previous campaigns, talking to customer services, investing in social listening tools and looking at Google Analytics for drop-off data and page insights will all help you to build up a picture of any issues your customers are experiencing. 

There are many nuances to segmenting customers by their interests, and the practical implementation varies from company to company and sector to sector. But, by recognising the importance of interests in customer segmentation, companies are certainly one step close to better understanding their customer groups and creating more meaningful relationships with them. At pslondon, we specialise in gathering critical customer insights and building lasting customer relationships. See how this approach has helped our clients attract and engage customers and grow their business. 

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