Demographics vs. Psychographics
It’s no wonder there’s a disconnect between banking and retail customers and the brands that have served them for so long.
The customer journey used to be simple. A linear ‘funnel’ with customers falling in the top and moving straight through to the pointy, purchasing end.
Today that funnel looks like a chaotic spiral, with dozens or hundreds of interconnected touchpoints between the customer and brand. This data is available to us in realtime, and at every stage of the customer journey.
So why stick with simple demographics for segmenting our customers? You can’t, without risking falling far, far behind the competition for customer’s hearts, minds and wallets.
Smart businesses are now focusing on micro-segmentation of customer data using psychographics. They focus on values, attitudes, behaviours and interests - information that is vastly more predictive of customer behaviour than the tired old age/sex/location/income equation.
Let me introduce you to Stefan. Stefan lives in Vienna, in the 3rd district in Fasangasse. He’s 26, and studies at the local Wirtschaftsuniversität in Wien.
If we’re looking just at demographics, he earns 20,000 Euro a year working part-time. He’s in his final year of university and about to enter professional life.
That’s one story.
It gets far more interesting if you ask how his bank might win him over by going beyond the raw facts.
From his Facebook profile, he’s a member of the WWF environmental organisation. His investments are in ethical mutual funds and he sometimes sells organic marmalade, straight from his grandmother’s farm to the local Saturday town market.
Even this provides vastly more context, and richer information than pure demographics.
Going further, we know he gave a 5-star review for “Inside Job” on IMDB; he really loved that movie about the global financial crisis. He’s also angry that his mum lost her job because of the financial downturn - something that’s likely to shape his attitude and belief system. He sometimes transfers money to his sister in Sarajevo. He likes to play tennis and binge-watch Game of Thrones on weekends. He’s a rabid football fan, but only for his local team and enjoys ice hockey.
With this kind of information we can truly start to consider how we might win this customer. Is digital the way? Do we have an accurate picture of his attitudes, beliefs and habits?
And more importantly, how can we shape our own narrative to appeal to his analogue heart?
Stefan could become a customer. If his bank decides to focus on purpose, ethics and environmentalism… as opposed to a campaign targeted towards a young, broke, college student.
This is the path of a savings bank embracing the human story. Their values, their beliefs. Recognising that they need to focus on people, not just numbers. That the stories of ourselves are as important to the purchasing process as the raw data.
And by winning him over personally, he becomes their brand champion. Every interaction with that brand is now a positive one. One that he’ll go out of his way to communicate to friends, family, and colleagues.
It is, as always, a case of big data, big hearts and big minds. By looking to join your customers on their journey, you weave your way into the narrative of their lives in a way that enriches us all.