Psychographic segmentation is a classification of customers by beliefs, attitudes, and values. It’s best for companies whose customers’ values, like honesty, are more important than income or ZIP code. It’s great for tailoring product messaging or positioning to align with customer mindsets. Costs are generally higher for psychographic segmentation because data is harder to capture.
A customer relationship management (CRM) tool like Freshsales allows you to take advantage of psychographic customer segmentation by being able to create segments. You can create email campaigns where you segment them by their values or opinions and use email templates to personalize emails. Prices start at $12 per user, per month. Sign up for a Freshsales 21-day free trial to give it a try.
How Psychographic Segmentation Works
Psychographic segmentation works by grouping customers based on beliefs, attitudes, values, opinions, lifestyles, and personality characteristics. Instead of segmenting customers based on more tangible qualities like ZIP codes or incomes, you’d group them together based on their religious beliefs, cultural values, or community service-orientedness. This data is collected through polls, surveys, or by appending data collected from third parties.
Once you identify their psychographics, which includes their beliefs, values, and personalities, you’ll need to classify them in your database or customer relationship management (CRM) software under a particular category. This is necessary so that you can easily identify records matching particular attributes to increase the effectiveness of your promotions and better tailor other communications.
For example, let’s say your company sells shampoo and you just introduced a new eco-friendly line. Psychographic segmentation helps target customers who value things like refillable or more sustainable containers or those who prefer to use all natural formulas, making your promotional messages more likely to be read by the people most likely to buy your new line.
Psychographic Segmentation Examples & Uses in Sales
Psychographic segmentation is used in account management and sales by personalizing communications or interactions with customers based on psychographic traits. If you knew that your customers had certain personality traits, you’d be in a better position to speak to them in a way that was compatible with their personality. Likewise, if you knew your customer had certain attitudes, you could incorporate your knowledge of their attitudes in your outreach efforts.
Here are a few psychographic segmentation examples and their uses in sales:
1. Customer Attitudes
Customer attitudes fit into the category of psychographics. Data around customer attitudes is primarily gathered by asking customers or prospects directly. You can gather information on attitudes through vehicles like surveys. You can also buy this type of information about your customers or prospects from data providers and append it to your customer or prospect list.
You can personalize your communications by incorporating psychographic information into email campaigns. For instance, reference your prospects’ or customers’ attitudes toward a common pain point in their industry and include a link or PDF of how similar firms are overcoming this with your technology. In order for this to work, really emphasize their shift in attitude and how you, as a salesperson, relate to their mindsets.
2. Personal Loyalties
Categorizing your prospect or customer by their personal loyalties is another psychographic segmentation example. Personal loyalties will typically include things like family and loved ones, but can also be expanded to include things that capture your customers’ heart like music, bands, professional sports teams, or types of literature and film.
There’s a lot you can do to incorporate these personal loyalties into sales. For instance, let’s say you have a group of customers who are interested in professional sports and are either huge supporters or rivals of particular teams. If you call them and get their voicemail, you can leave a message about why you’re calling and reference something about their favorite or rival team. This adds a personal element to your voicemail and helps build rapport.
3. Relaxation Strategies
The things your customers or prospects do during their spare time, such as running, playing volleyball, cooking, gardening, painting, and more, reflect a side of them that may not be as visible in their professional lives. Showing interest in these hobbies or similar activities tells prospects and customers you see them as a person, not just as the means to another sale, making it a great way to build rapport and establish longer-term relationships.
Knowing your customers’ or prospects’ preferred way to relax is particularly useful in conversations because it breaks the ice. People love to talk about their hobbies, but it can also be used to put a prospect at ease. For example, if you know your customers are avid long-distance runners, you might mention how you admire runners or ask if they’re training for any events, like local or national marathons.
Values are beliefs about ways of living, being, or even doing business that are very personal and that are very important or of value to people. They include attributes like honesty, openness, kindness, community-oriented, and more. Most companies have shared values and use them to unite their employees around a common vision and around common goals. They are similar to personal values and include things like transparency, inclusion, and collaboration.
Webinars are great ways to share your company or personal values with customers and prospects because of the amount of time you’re able to interact. They are most impactful when they’re personalized and incorporate aspects of your prospects’ or customers’ values. You also have the opportunity to demo your product and show how it helps your customers express their personal or corporate values.
For instance, you can create a customized webinar for a named or high-value prospect or customer that incorporates aspects of their company values. Armed with your customers’ pain points along with their company or corporate values, you have both personal and professional information to build trust and prove you have what they need to solve a problem or capitalize on an opportunity.
5. Social Status
Social status is another psychographic data point. It’s your customers’ real or even perceived value in society. Those with high social status include people with celebrity status, high levels of income, high levels of influence or popularity, and high levels of intelligence. Incorporating social status into sales is great for those who place a high value on whatever their social status is.
You can incorporate social status into any communication channel, but for this example, we’ve chosen landing pages. The ability to personalize landing pages combined with psychographic data like social status allows you to create a powerful personal experience for your customers and prospects. If your target audience has elite social status, you can incorporate design elements they generally find appealing.
Here we’ve outlined examples of psychographic segmentation and how to use them in sales. You can incorporate just about any psychographic data element into just about any sales or communication channel as long as it works for your prospect or customer. If you’re able to incorporate psychographic segmentation into your sales communication strategy, and if it’s executed the right way, it will make your sales efforts more effective.
Why Psychographic Segmentation Is Important
Psychographic segmentation is important in sales because this type of data allows you to incorporate personal attributes of your target audience into your sales communications. These personal attributes help you build rapport and create personal connections, which increase your likelihood to make sales.
Using psychographic segmentation data also helps you to continue building upon your relationships with your customers, and supports your customer retention efforts. If you’re able to grow the relationships, you’re likely to keep your customers, and they are likely to keep the product they purchased from you and buy additional ones. Effectively doing this reduces your customer acquisition costs as it’s cheaper to convert an existing customer than to acquire a new one.
Not only does psychographic segmentation help you acquire and retain customers, it also helps generate leads. Using information like prospects’ interests, activities, and values helps to get their attention and makes them think you and your company understand and relate to them as individuals. Starting off using psychographic segmentation can help retain more of your leads throughout your sales funnel.
Who Psychographic Segmentation Is Right For
Psychographic segmentation is right for a variety of businesses, from nonprofits seeking volunteers or monetary contributions to companies engaging in business-to-business (B2B) sales looking to build long-term relationships. It’s also right for individuals, from entrepreneurs selling their own products to professionals working in established businesses like sales and marketing professionals.
Here are more details around the types of organizations psychographic segmentation is right for:
- Nonprofits and social enterprises: Psychographic data, such as how an organization’s target audiences feel about the causes they represent or about volunteerism or doing good, help to identify who would be likely to offer the support they need.
- B2B organizations: B2B companies can use psychographic data to build rapport and relationships throughout the sales funnel. They can use data like attitudes and values to present their products in a way that prospects will be more likely to buy.
- Retailers: Retailers can use psychographic data to create in-store and online experiences using psychographic segmentation. If online retailers appeal to different psychographic segments, they can create multiple online experiences for each segment.
- Values-based companies: Companies that base their branding on values, like being environmentally friendly or using wholesome ingredients, benefit from psychographic segmentation by tapping into values connected to these ways of doing business.
- Lifestyle-based organizations: Organizations, like ones that specialize in outdoors, fitness, and activities, benefit from psychographic data around those activities. They use this information to target buyers of their products.
Most organizations can benefit from psychographic data. Companies that find psychographic segmentation especially useful are those whose products or branding center around some aspect of psychographic customer data. Organizations or individuals who can use it to build better rapport or relationships also benefit by increasing their chances to sell products to new customers and retain those customers so they buy additional products.
Here are additional details on the types of individuals psychographic segmentation is right for:
- B2B sales professionals: Psychographic sales data helps B2B sales professionals break the ice with new prospects. The more information they have, the easier it can be to tailor their message and approach customers in a way that will help them build trust.
- B2B sales leaders: Psychographic segmentation can help sales leaders plan activities and messaging (along with marketing) in each sales funnel stage in a way that helps move customers along in the process.
- Marketing managers: Marketing managers can work with sales to plan both marketing and sales funnel messaging along the sales and marketing funnels to move prospects along the sales cycle, making them more ready to buy after each stage.
- Entrepreneurs: Busy business owners can benefit from psychographic segmentation by having information handy that will help them communicate with groups of customers or with customers individually in a way that appeals to their values, beliefs, and so on.
Professionals working in established businesses or entrepreneurs actively selling their businesses’ products and services find psychographic segmentation helpful for connecting with customers. It allows them to group customers together by psychographics, send customized mass communications based on psychographic data, and speak to them individually based on values, beliefs, and so forth. It’s helpful for building better relationships and getting closer to a sale more quickly.
Psychographic Segmentation & Associated Costs
Psychographic segmentation costs can range from very little money and a lot of time to a lot of money and not as much time. Costs depend on how you go about collecting data, segmenting it, and storing it. The lower costs depend on you collecting and storing the data. Higher costs involve working with third-party providers to do some or all of the work for you.
Here are a few costs involved in psychographic segmentation:
Third-party Data Providers
Costs for third-party providers can range from a few thousand dollars to several hundred thousand dollars. It really depends on how large your data project is and whether or not you’re starting from scratch. Simply buying psychographic data to append to data in your database will be a lot cheaper than if you had a provider source customers with certain psychographic traits that are similar to your existing customers.
Psychographic Data Collection Software
Costs for psychographic data collection software can be several hundred to several thousand dollars. Generally speaking, it’s not as expensive as working with third-party providers, but more cost effective than collecting the data manually. This type of software includes software to create surveys, polls, and quizzes. It also includes software that analyzes behavior on your website or app that could capture and organize that data for you.
Manual Data Gathering & Entry
Gathering data manually may be financially cheaper, but will cost more time and energy. For instance, you could have your inside sales team ask psychographic questions or hold conversations where they get psychographic data and then enter this information in a database or CRM. A potential pitfall is data accuracy if they input the wrong data.
Manual data gathering could take several months, and you may not get information on all or at least the majority of your customers. If you purchased data from a high-quality, reliable source, you have a better chance of getting accurate data on a greater percentage of your customer base. Also, it would take several weeks versus several months.
It’s hard to put an exact dollar amount to it because it depends on how large your efforts are in terms of database size and the type of psychographic data you are trying to capture. If you’re working with a third party to capture data for you, be prepared to spend thousands of dollars. If you’re buying software to capture data, be prepared to spend hundreds, if not thousands, of dollars. If you’re doing it yourself, be prepared to spend the time.
Psychographic Data Providers
There is a variety of data providers you can use to obtain psychographic data. If this is a new realm and you are willing to spend a significant amount of money, consider a third-party data provider that can help you get reliable psychographic information on your customers or prospects. It will pay off in terms of speed to market and accuracy.
Here are a few consumer data providers you should consider:
Prizm, which is owned by Claritas, contains databases of people divided into segments that contain psychographic information. Their segments contain lifestyle and life stage information. They even give their segments descriptive names like “Big Fish – Small Pond” and “Winners Circle.” Combining psychographic with geographic information helps them—and thus their clients—identify where these target groups are offline.
Acxiom’s product, Personicx, also has a large database of customer segments or clusters containing demographic and psychographic information, giving marketers the data they require. Data from surveys and other sources are included, which provide life stage information like whether or not segments have kids or are empty nesters as well as psychographic information such as their attitudes. There’s a lot of financial data since Acxiom is credit report provider.
Experian has an array of customer segmentation products that include psychographic information like consumer attitudes. Like Acxiom, they have a lot of financial data because they are a credit bureau.
Pros & Cons of Psychographic Segmentation
There are pros and cons of psychographic segmentation. Some of the pros include being able to understand and connect better with customers and being more empowered to create effective messaging. Some of the cons include the expense of gathering and organizing the data, potentially not using the data properly, or the data not being accurate.
Pros of Psychographic Segmentation
- Increases customer understanding: Psychographic data increases understanding of your customers, and this understanding allows you to categorize them in a way where you can effectively engage and interact with them.
- Helps build rapport: Another benefit of psychographic segmentation is being able to use it to build rapport at scale. Identifying these attributes lets you provide this data to your entire sales team, who can then build rapport with more people within your database because they can use this information to better understand their customers.
- Allows for customized messaging: You can also customize messaging at scale with psychographic segmentation by creating bulk email campaigns and customizing them with psychographic data, like opinions and attitudes about problems related to your product or service.
Cons of Psychographic Segmentation
- Can be expensive: Whether you buy or acquire psychographic data yourself, it can be expensive. It can either cost a significant amount of money or time.
- Time-consuming if done manually: If done manually, it could take a significant amount of time or resources if you use your sales or support staff to extract the data.
- Negative consequences if used inappropriately: If sales teams don’t know how to use psychographic information, it may come across in the wrong way to customers. For instance, assume you know a customer is an avid runner but they hadn’t told your sales rep that. If your sales rep tells the customer they know this, it could be upsetting to your customer.
Alternatives to Psychographic Segmentation
There are many alternatives to psychographic segmentation. These alternatives include demographic, geographic, economic or income, and lifestyle or life stage. The most effective way to use any type of customer segmentation strategy is to use a combination of data types.
Here are more details on various psychographic segmentation alternatives:
Demographic segmentation is when you categorize your database based on attributes that include where they live, their socioeconomic status, or how old they are. This is a great alternative to psychographic segmentation if demographic data is more of a factor in your customers’ decision-making process than psychographic attributes.
If your target audience has strong ties to where they live or work, geography may be more relevant than certain psychographic elements. Geographic segmentation is when you classify customers in your database by where they live and sometimes by where they work and do business. This allows you to tailor your messaging by city, state, county, or region.
Life stage refers to the stage your customers are in; examples include young couples with children, older couples who are empty nesters, and middle-aged couples with older kids. It could also include college students, recent grads, or retirees. This type of segmentation is great for companies whose customers are more driven by what stage they’re in within their lives than by their psychographic attributes.
Categorizing your target audience by their attitudes, opinions, values, and activities is psychographic segmentation. This segmentation strategy is best for companies whose customers are driven more by things like values and beliefs than by income or other demographics. If you are prepared to make the financial investment or are ready to invest your time to implement psychographic segmentation, the rewards will result in increased sales.
Also, be sure to also invest in a CRM where your salespeople can access and make use of psychographic data. With Freshsales, salespeople can personalize phone calls with the built-in phone and send customized emails with campaign features, all using psychographics. Sign up for a 21-day free trial to give it a try.