Behavioral Segmentation Articles - Personalics

Demographics vs Psychographics

Ohad Shperling — Fri, 20 Mar 2020 12:00:47 +0000

Demographics vs Psychographics

Consumer demographics answer surface-level questions about a company’s customers. It tells who is buying the product and includes information like age, gender, marital status, income level, etc. While this kind of information is important, it is not enough to capture the audience’s attention. Psychographics are much deeper and more insightful. They evaluate consumers’ psychology, lifestyles, and behaviours, and are usually not quantifiable. Why are psychographics so important for effective marketing? Let’s look at an example.

Betty and Sue are both middle-aged mothers, married, with an income of $100k. Both women drink Starbucks coffee every day. You are a local coffee shop wanting to increase traffic. You can determine who to market based on age, gender, marital status, and income of these customers. Without knowing why they buy Starbucks everyday, it may be hard to capture their attention. This is the question psychographics answers—why customers purchase based on their interests, values, beliefs, and more.

Psychographics Wins with More Effective Marketing

Knowing why these women purchase Starbucks helps define the right marketing tactic. Perhaps you find out that Betty gets coffee every morning because she has to drive her kids to school at 6 am and needs a wake-me-up. Sue sits down for coffee with friends before tennis lessons. With this information, you now know why these women value coffee, and more importantly how to capture their attention. To intrigue Betty, you could include images of kids and a tired mother in your advertisement. Or, you might offer her a two-for-one special on espresso shots because she values coffee for the caffeine. For Sue, you might want to brag about your friendly atmosphere and cozy outdoor seating. Or, you could offer her a free drink if she brings in a friend. This is the power and importance of psychographics.

What if you failed to consider the psychographics of consumers and relied only on demographics for marketing campaigns? Well, you might reach a similar group of coffee drinkers, but you would probably fail to spark their interests…because you don’t know them! If you sent both Betty and Sue a two-for-one espresso shot deal, you probably would not attract Sue since she is not seeking the caffeine wake-me-up that Betty is. If you sent photos of your cozy and decorated dining room, Betty wouldn’t care because she gets her coffee to-go.

The Prize: Traffic and Sales

You can see how imperative it is to understand and acknowledge the psychographics of your customers. Using this data, you will no longer waste time sending ineffective messages, using the wrong platform, or offering weak incentives. Instead, you can develop the messages, campaigns, products, and services tailored to specific customers’ wants and needs” (Harvard Business Review 2016). Targeted marketing like this will drive more traffic and more sales.

How You Can Reap the Benefits

This example demonstrates why demographics alone are not enough to develop an effective marketing tactic. Similarities in demographics are not conducive to similarities in lifestyles, values, and beliefs. This data is trickier to find, but the investment is well worth it. Affinio Inc. says “it is critical to connect with the audience on a cultural and emotional level to ensure that the look, feel, and tone of your content fits.” Here are a few steps to follow to collect this information and develop your marketing strategy:

Research your top segments—Narrow in on your top 3-4 segments and define the motives and drivers behind each segment’s purchasing decision. For example, if your product is a soft drink, what are your consumers’ motives? Is it for a special occasion? To accompany their lunch every day? Or to energize after a tough workout? In addition, you can also research each segment’s main barrier. For example, it may contain too much sugar or artificial additives.
Address their motives—Use this information to tailor your content and design to align with the customers’ values. Rather than just aligning your content based on your consumers’ age group, gender, etc., you can now strategically address their motives as well as their barriers.
Expand your audience—You can also use these defined drivers to locate additional growth opportunities beyond your existing demographic segments and ultimately expand your target audience. For example, if your product is a fuel additive for which the purchase motivation is road safety, you may experiment with new segments for which these motives are similar. If these new segments have a barrier which prevented them from consuming your product to date, you can address this issue in your campaign.
Additional tip: use your website data—You can do some analysis of previous customers and purchases with website analytics. This will tell you what content, promotions, or offers have incentivized customers to purchase. Whether it’s new products, a discount, free shipping, or seasonal specials, it’s helpful to know what motivates people to make the purchase.

Following these steps will allow you to uncover your consumers’ psychographics and individualize your content and design strategy. You can target not only age groups, gender, income level etc. but also the reasons and the behavioural patterns behind purchasing decisions. Have you already began using psychographic data in your marketing campaigns? Tell us about the results you have seen!

Written by Laura Swedo, Marketing Intern @ Personalics

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How Persona Marketing Can Amplify Your Brand’s Impact

Ohad Shperling — Mon, 24 Feb 2020 09:42:24 +0000

Persona Marketing

When it comes to marketing, you strive to meet every customer’s wants and needs. As favorable as that would be, it’s not realistic. Enter Persona Marketing: a method of creating comprehensive profiles that describe key segments of your consumer base. By grouping customers into certain “types,” you as a marketer can better understand and relate to your customers. You reveal not only who your customers are but how they act and make decisions. Using a few personas to describe your entire audience, you have enough information to connect with most customers while still maintaining a personal connection (Lee 2018).

The impact of creating and utilizing these personas is content delivered to customers in a more relevant and useful way (Albee 2016). For your business, it means generating awareness, creating effective content, increasing Customer Lifetime Value, and decreasing acquisition costs. Let’s take a closer look at the application of Persona Marketing:

Profiling Each Segment

Persona Marketing helps you better understand your customers’ wants and needs to create the most relevant and effective message. Lauren Sorenson describes it as shopping for a gift for your friend or spouse. “You can easily visualize them in your head as you shop. You can imagine their needs and wants, the things they’d love, the things they’d be interested in, and all the things they hate.” With a persona profile in mind, you begin to understand the customer’s likes, interests, and purchase rationale as if they were a friend. With this information, you have insight into the type of message that will capture their attention.

Choosing the Right Channel

If you profile successfully, you can start to understand how to communicate the message effectively. This means sending your message in the right place at the right time to the right people. If you know that a certain persona spends the majority of its online time on Facebook, you know to use this platform to deliver messages to this segment. Knowing the interests and routines of the persona will help deliver and promote at time which users are likely to be online.

Having the right communication strategy saves time and money. It helps save time by promoting content to the optimal audience on the most effective platforms. This way you won’t waste money promoting on a platform that your customers don’t use. You can also eliminate the futility of trying to connect with customers that rarely or never make a purchase. Instead, you can point your team’s marketing efforts in the right direction by knowing who and what to research (Kuenn 2015). Defining your personas helps build the right communication channel and optimize your efforts.

Prioritizing Personas

This goes hand in hand with your communications strategy. When you understand who your customers are and how to communicate with them, you can prioritize which personas are most important to your business and to achieving your goals. For example, choosing your top 3-4 personas based on their average spending on a given product could help improve your conversion rate. Then, you can tailor your marketing campaigns to attract the most important audience (Winsaur 2017).

Your Brand’s Lasting Impact

With so many brands out there to choose from, you need to make sure yours makes a lasting impact with the customer. Moreover, consumers expect brands to communicate with them in a personalized way. The better you tailor your message, the stronger your impact will be. To do this you must understand your customers’ wants, needs and interests. An efficient way to do this is by creating personas for each segment of your audience, prioritizing according to your strategy, and identifying the relevant communication channels. Persona marketing allows you to know and understand your target audience and thus build a connection and relationship. By focusing on the right audience segment, you help yourself save time, money, and effort and create a lasting impact on your customers.

Sometimes understanding the volume and variety of your personas can be overwhelming. However, once your campaigns are up and running, you have the ability to learn from your consumers’ engagement, and continually improve. If you want to know how this process can be automated, feel free to contact us.

Written by Laura Swedo, Marketing Intern @ Personalics

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Facebook marketing for re-engaging non-email-openers

Ohad Shperling — Tue, 20 Sep 2016 12:14:19 +0000

Most of your email subscribers are not opening your newsletters.

30%, 50%, 70%, even as high as 90% of your subscribers are not reading your newsletters.

You are not alone.

Before we get into the Facebook marketing and cross channel solution. Let’s understand why email open rates are declining.

This happens for a variety of reasons:

More brands are aware of the power of email subscriptions, and hence – incentivizing users to subscribe to their newsletter.
Therefore, there is higher competition for email visibility.
More emails get into the ‘Promotions’ tab and get somewhat less exposure in the clutter.
Overall – the ‘Promotions’ tab is getting more crowded with a larger number of competing offers.
Every brand is receiving, on average, less visibility to recipients.

And that’s a pity.

You probably invest quite a lot in your email marketing. Even though you are putting an effort into your regular newsletter promotions, subscribers are not seeing these offers and curated content.

Therefore, your brand perception is gradually declining and becoming less in your customers’ top-of-mind. Consequently those customers will be less likely to choose your brand as their ‘go to place’ for shopping.

So, what should you do about it? In this increasingly competitive environment, how can you capture your customers’ attention again?

Answer: Re-engage those customers in another non-email channel – such as Facebook.

By using Facebook marketing and Custom Audience, you can re-engage with those specific users who do not open your newsletters regularly. This is a very effective cross channel strategy if you implement it correctly.

Here are the steps you should be taking to do it effectively:

Segment your subscriber list to ‘openers’ and ‘non-openers’. ‘Openers’ are subscribers who regularly open your emails, at least once a month, or once a week, depending on how frequently you send newsletters. ‘Non openers’ are those that haven’t opened your emails for a month or more.
Segment the ‘non-openers’ to different engagement levels, as follows:
- ‘Dormant’ subscribers, who haven’t opened your emails for more than 4 months.
- ‘At Risk’ subscribers, who last opened one of your emails a couple of months ago.
- ‘Drifting’ subscribers, who haven’t opened an email for a few weeks.
- ‘Loyal’ subscribers, who are regularly opening your emails at least once a week.
Per each of these segments – create micro segmentation according to their expected life time value. In other words, for each segment, categorize your audience according to how cold or warm they are – this audience should be divided again according to their expected ‘worth’ (or life time value) to your store. To calculate this ‘expected worth’, take into account several attributes such as their previous overall spend, how much time has passed since their last engagement, their engagement frequency, and average order value.
Prioritize your Facebook budget – start with the ‘non-openers’ who are relatively warm and have the highest expected life time value, and target only this segment with Facebook Custom Audience first. You should serve this micro segment the recommended products that they are most likely to engage with.
Spend your Facebook budget gradually. Begin with the warmest, highest expected lifetime value segment and continue all the way to the coldest, lowest expected lifetime value segment, while testing the ROI of your Facebook Custom Audience campaign.
When calculating your Facebook campaigns ROI, take into account other channels those customers interact with. For instance, if a customer has clicked on (or viewed) your Facebook Custom Audience campaign, she may not purchase right away, but she may be back into engaging with your brand via newsletter or directly with your site. This level of re-engagement may be enough to consider the Facebook campaign a success, or ROI positive, for that user at that point in time – the campaign has successfully converted the disengaged customer back into engagement. This way, you can actually increase the effective ROI of Facebook campaigns, because you consider engaged users via other channels as users who may not require additional spending in Facebook. Taking this broader view means you can allocate your Facebook budget more effectively to other relevant segments who require additional exposure.
Keep testing whether users who became engaged continue to be engaged, or require additional cross channel promotion. Your ultimate goal is to optimize revenues, or customer life time value. For maximum results, you should run this exercise on a daily basis and treat each user separately according to their engagement level and funnel.

In summary, email open rates are declining. But there is a lot you can do to converse with your shoppers in a relevant way via Facebook.

Have you tried implementing cross channel marketing for email engagement?

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7 Secrets To Increase Your Customer Lifetime Value With Email Remarketing

Ohad Shperling — Mon, 14 Mar 2016 09:00:42 +0000

Your email marketing campaign is incredibly important to your business. Email remains one of the single most effective types of digital marketing, and today the majority of businesses still report that their email campaigns are vital for their overall marketing success.

But are you getting everything you should in terms of customer lifetime value? Are your customers ‘one purchase wonders’ who will never make another purchase with you again, despite being satisfied with their initial experience?

Setting up the right email remarketing campaign could have a tremendously positive impact on your business, and we’ve put together 7 secrets that can help you do just that.

Create Some Form Of Urgency

Sometimes you simply need to get into the mindset and psychology of marketing. One of the biggest motivators out there? Urgency. When a customer or client feels like what you’re offering isn’t always going to be there or like they need something right now, sales can rise.

For example, offering special sales on items is a great way to motivate for more business. A 24-hour sale or even alerting a customer that their wish listed item is running low in stock could be enough to motivate them to buy. These urgency-based product recommendation email marketing campaigns can make a big difference in your bottom line, and every email you send out has the chance to get their attention.

Show Them Why They Need You

You already know that you need your customers and clients in order to thrive in the market. But do they know that they need you? If not, you need to change this. There are a few different ways that you can do this.

One of the best ways? Charts, graphs, statistics, and other hard numbers. For example, showing your customers in a weekly email how much your product or service has saved users or providing regular examples of how you’ve helped improve the lives of your customers can often help you remind customers why you’re the company to trust. It’s an offshoot of any product recommendation email marketing, and while you’re offering products be sure to tell them why you matter.

This is even true if you’re offering a service or product that customers don’t pay for. Things like a free app or service that draws income from ads and other sources of revenue may not directly make you money from the person you’re sending the email from, but making sure that they see why you’re important to them will help keep them as clients and ensure you get the best overall attention from your actual revenue sources.

Make Each Customer Feel Special

Loyal customers like to know that they’re appreciated and that you value them. So how can you do this? There are a few great examples:

Send a birthday greeting and even a special discount code for a deeper discount on their birthday
Send them a thank you note a few days after a purchase
Send an email checking in after a purchase to ensure they’re satisfied
Send out emails when a new product, service, or feature is offered

Seeing a pattern? Great email marketing means taking the time to send out personalized emails from time to time, not just the mass emails you send regularly. This helps customers feel like you really do appreciate them, and it can make a huge difference in how they regard your company.

Give Them Some Discounts

What do customers love? Discounts! One of the fundamentals of email marketing is to send out digital vouchers, coupons, and discount codes. This can be specially targeted based on their interests, a store or site-wide coupon code, or anything else. The key is to regularly offer some kind of discounts through email. It will keep customers connected to you and your email system and also help ensure that you retain their business throughout the future. Discounts work, so don’t ignore them.

Pay Attention To Lifecycles

Are you selling items that will be needed again in a few months? If so, pay attention to when your customer makes a purchase of that item. Have detailed algorhytms in place that allow you to send out a targeted email down the road as the average lifespan of that product ends – if you know that the majority of customers buying jeans from you end up buying another pair 6 months later on average, sending out that email at the 6 month mark could make a difference.

The key is to identify shopping patterns and product lifecycles and plan out your email strategy accordingly. It can take some effort, but is well worth it in the end.

Set Up Effective Recurring Payments

With revenue streams that are recurring like monthly subscription services or other similar systems, designing your stream the right way is important. In particular, having a system that allows you to ask customers to pay over a longer period of time can decrease your workload, increase the amount of time that they stay with you, and help you build a stronger relationship with them.

For instance, offering a free month of service if they sign up for an annual plan instead of a monthly or quarterly plan ensures that they’re your customer for a year. That month is a small price to pay for the big benefit you can get from the long term relationship you create.

Segment Users And Target Appropriately

Different customers want or need different things. Targeted marketing succeed when you know which customers want what, and when you target the right ones with your emails. Don’t just send out blanket emails to everyone on your list. Instead, create two or three email lists and develop marketing strategies for each one based on the information you have available. This can help you get a much larger ROI than you would with mass marketing email blasts.

If you’ll keep these 7 secretes in mind you’ll be able to start getting even more from your email marketing efforts. Our team can help with software solutions, strategies, and more. Contact us today to find out what we can do for you.

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15 ways discounts cause irrational shopping behavior

Ohad Shperling — Fri, 20 Nov 2015 10:06:42 +0000

Everybody loves a bargain – or rather, the feeling and perception that they’re getting a bargain. Smart discounting doesn’t automatically mean “deep” discounting. It takes understanding shopping behavior. Changing the presentation of an offer changes how shoppers perceive its value and respond – often in irrational ways. Big retailers and suppliers use these insights about shopper behavior to their advantage. To compete, you must be just as skillful.Otherwise shoppers may miss your unique value because your product presentation is unappealing.

In the last few years, psychological analysis of shopping behavior has gotten popular. Authors such as Dan Arieli (Predictably Irrational), Daniel Khaneman (Thinking Fast and Slow), and partners Richard Thaler and Cass Sunstein (Nudge) present academic research about shopping behavior in easily readable books for general audiences.

Here are some of those insights about shopper behavior and discounts. If you are a retailer, these can help you grow sales and ecommerce with discounts without cutting deeply into your bottom line. If you are a shopper, understanding how marketers take advantage of these patterns of shopping behavior could help you make more conscious purchasing decisions.

1. Use the Pleasure Principle: The pleasure principle is simple. People seek pleasure and avoid pain. Knowing that you missed out on a discount is usually a pain you want to avoid. We’re afraid of making mistakes, being at a disadvantage, or having less than others, says Emory University professor of psychology Drew Westen.

We also want to gain advantages. Our brains are programmed for behavior that gives us an edge, says Westen. When we make shopping decisions that we perceive as beneficial – such as getting a big discount on something we want – dopamine is released in our brains. And dopamine makes us feel good.

2. Create a sense of urgency. One reason discounts change shopping behavior is the sense of urgency. Discounts expire. This urges us to act fast or feel the pain of missing out. Avoiding loss motivates us more than the possibility of achieving gains, according to Nobel Prize-winning psychologist Daniel Khaneman. We feel the pain of losing much more than the joy of winning. Thus, the fear of missing out on a sale increases the impulse to buy.

In his book “Influence,” social psychologist Robert Cialdini describes a study of the effect of time limits on shopping behavior. Researchers found that when the length of a sale was limited, participants bought three times as much as they did when there was no time limit. Telling participants that only a few people knew about the sale increased this effect on shopping behavior. Limiting how long the deal was available, and how many people knew about it, caused shoppers to buy six times as much.

3. Avoid inviting customers to comparison-shop. We see it all the time: “Compare our prices to the name brand.” But this can easily backfire. Shoppers can decide that the no-name brand is riskier and the name brand is safer. In a 2005 study, Itmar Simonson, Sebastian S. Kresge Professor of Marketing at Stanford GSB, found that negatives weigh more heavily on shopping behavior than positive advantages. In one of Simonson’s examples, a camera retailer asked shoppers to compare low-end, mid-range and high-end cameras. The shoppers chose the mid-range camera. The study also reported that asking shoppers to compare in online auctions caused them to deliberate more, wait longer and make fewer bids.

4. Offer more product for the same price. People prefer getting 50 percent more of something for the same price than saving 33 percent – even though the unit price is exactly the same. Most consumers perceive a 33 percent price discount and 33 percent more quantity as the same value proposition, according to one study by the Journal of Marketing. But the discount price is the better value. This is a textbook example of irrational shopping behavior, because more quantity has a higher price-per-unit.

5. Give multiple discounts. People are more likely to buy when you offer an additional 25 percent off on top of a 20 percent discount, instead of a single 40 percent discount – even though both add up to the same dollar amount.

6. Give percent discounts instead of dollar discounts. A larger percentage discount influences shopping behavior more than an absolute dollar discount. For example, 10 percent off a $100 product will be perceived as more valuable than $10 off a $20 product.

7. Take advantage of ‘Free.’ Shoppers are more likely to respond to a price reduction from $1 to free, than from $2 to $1 – even though the dollar decrease is exactly the same, according to behavioral economist Dan Ariely.

8. Use “Get” for promotion-focused shoppers, and “Save” for prevention-focused shoppers. Research shows that words used in a promotion – “get” vs. “save” – affects shopping behavior differently. Some shoppers are more focused on avoiding loss – prevention-focused – while others focus on gaining advantage – promotion-focused – reports Psychology Today blogger Alain Samson. This is called ‘regulatory focus.” Shoppers are more likely to respond to an offer when the message matches their regulatory focus. When there’s a fit, shoppers buy more in general – not just the discounted items.

Promotion-focused shoppers are more likely to respond to an opportunity to “Get $1.” The opportunity to “Save $1″ appeals to prevention-focused shoppers. Regulatory focus can change depending on the situation and a person’s state of mind.

9. Use “Get $ off” for indulgences such as chocolate. When the product is a treat instead of a necessity – ‘hedonic’ products – offering dollars-off has a more positive effect on shopping behavior.

10. Use “get” or “buy” for new customers. Samson also reports that using “get” or “buy” is most persuasive to shoppers without established buying routines.

11. Sell “time.” A 2009 Stanford research study found that shoppers appreciate time — sometimes more than money. This is because time is a scarcer resource than money, and “time says so much more about who we are.” Messages that empahsize the value of time significantly affected shopping behavior — attracting more engagement and favorable opinions on the product than an emphasis on money.

12. Place expensive products next to discounted ones. When Williams-Sonoma showed a $279 breadmaker next to $429 appliance, sales of the cheaper model doubled – even though practically nobody bought the higher priced item. Positioning a product next to a nearly identical but twice-as-expensive one makes the cheaper item look like a gotta-have-it bargain, says author William Poundstone in his book “Priceless.” Because we often don’t know the real cost or value of many things, we look for cues that will tell us. Differences in price tell the story – the cheaper breadmaker is 40 percent less than the other model – and provide a basis for buying – it was a great deal!

13. Take 1-cent off whole number prices. We’ve all seen these prices: $9.99, $19.99, $199.99. But why? Those 1-cent off prices are called “charm pricing.” We perceive the lower number and round down to the next unit rather than up to the closer one. Thus, you perceive the price of a $1.99 pack of pencils as $1, not $2, even though the price closer to $2. We’ll go out of our way for perceived “deals” like this to get the dopamine reward I spoke about earlier.

In “Priceless” psychologist William Poundstone dissects eight different studies on the effect of charm prices on shopping behavior. He found that, on average, they increased sales by 24 percent over their nearby items at a ’round’ price point.

However, shopping behavior changes when sale prices emphasize the undiscounted ones. Then buyers are more likely to choose the “round’ sale price over the ‘9’ price in a split test, In the image below, the $40 reduced price won over the undiscounted $39:

In this case an even number has more impact on shopping behavior even though it’s the higher price. However, combining $39 with a price reduction beats an undiscounted $39:

14. Don’t Let Discounts Become the “Real” Price. Unless your business is discounting, too many discounts may let customers get used to not paying full price for anything in your store. Your price integrity will erode. Unconsciously, a sale price is a statement of what shoppers should really pay for something. So why would shoppers believe your full price if they know there will always be a big sale?

15. Don’t Compete Just on Price: Is price really your only advantage? Even retailers that are synonymous with discounting promote other features such as selection, style, or special services. The original designer outlet, Loehmann’s had good insight into irrational shopping behavior. The store cut the labels off its heavily discounted designer clothing. That made a trip to Loehmann’s into a competitive adventure. Shoppers not only got deals that they could brag about. They also took home the feeling of superiority that comes from the ability to distinguish between a $1,000 Chanel suit with a $100 price tag and a $200 suit selling for $100.

Don’t let your differentiation and positioning have a negative effect on shopping behavior. Your product’s perceived effectiveness will be reduced. This is especially true for cosmetics, prescription drugs, and over-the-counter health products. This Nielsen survey shows that shoppers actually favor value – bigger, higher quality – over price.

In summary, there’s no shortage of research in the psychology of pricing and discounting on shopping behavior. I’ve just skimmed the surface here. Of course, as with any marketing tool, the foundation is clarity about your target customer and your value proposition.

If you’re a discount supermarket, your customers expect to see a prominent list of weekly specials. Even if those discounts are only a few cents, as we saw, shoppers are more likely to buy and buy more – two loaves of artisan bread for $6.79, instead of 1 for $3.49.

If you’re a high-end specialty grocer, your shoppers expect an experience – not just artisan bread, but getting to know about the baker who made it, the recipe she uses, and her special technique. Your discounting strategy is “this week only” it’s on sale for $6.79 – instead of $6.95 – a loaf.

What discounting strategies have you tried? How have they affected shopping bahavior?

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