Oct 15, 2020

Psychographics, not Demographics

George Howard

In my recent articles, we have built the following foundation:

  1. An understanding of the ultimate economic aim of a firm (low touch/high margin) via the Touch/Margin Matrix
  2. Recognized that the only way to achieve this sweet spot and not quickly be imitated by a larger firm (and thus out of business) is to embrace the mindset of: Purpose, not Product....and that Purpose must be greater than yourself.
  3. Begun thinking about the [total addressable] market for your offering, and begun to understand that within this TAM there are a special group of customers who are actively seeking out something new — the Most Passionate Percentile (people who will feel better about themselves when they gaze in the Mirror of your offering) — and that they are responsible for educating (Customer as Teacher)  others — later adopters — within the market.

There’s a natural rhythm to the above: You have an idea; you calibrate your idea against the reality of the likelihood of it being sustainable (using the Matrix); you then dig deeper to determine if this idea could achieve the sweet spot in the Matrix if you truly are PnP-centric; you then begin thinking about not only where the entire customer base is for this offering, but in terms of identifying whom within this market is most likely to be actively seeking out your offering because it will make them feel like a heightened versions of themselves....the MPP of the TAM.

To give yourself the best likelihood of success in terms of making this MPP aware of your offering, you must turn to Psychographic profiling or personas.

Psychographic Profiling

I was an English major and went to business school later in life than most; in fact, I had already run and sold two companies (Slow River and Rykodisc) and launched a third (TuneCore) prior to getting my MBA. The reality is that not only never during the operating of these companies did I hear the term “psychographic” mentioned, but it was also not mentioned in MBA land. Rather, I was exposed to this mindset when I was consulting for CVS/pharmacy and helping them launch their social platforms in the mid 2000s. There, the CMO and everyone else in marketing galvanized a set of psychographic personas that enabled them to laser focus their marketing efforts.  As a related aside: Think of them what you will, but CVS is a very well-run operation; one of the few massive companies where you will find people in upper management who began as cashiers in the stores, and this value helps them to avoid Innovator’s Dilemma thinking.

During my years working with CVS, I came to know exactly what they meant when they said things like, “This campaign is directed at a Sarah.” Sarah is a Persona that has a certain profile: she’s 35 years old, white, lives in the suburbs, has two young kids, drives a used Ford Explorer, is trying to juggle her career with being a mom. This is not an actual name or profile from CVS, but you get the idea. If you stopped with the above characteristics of Sarah, you’d have a pretty good idea of her demographic profile: white, middle class, 35; and a limited sense of her geographic profile: the ‘burbs.

The fact that you don’t have to go much deeper than the suburbs (i.e. a suburb in Ohio), is a testament to the homogenization (and commoditization) of America; sad to say, there just ain’t that much difference between a suburb of Ohio and Massachusetts at this point; you market to customers in each geographic range in pretty much the same manner.

What you don’t really get from the above is the mindset of Sarah: her Psychographic profile. Thinking in terms of psychographics is truly the key to marketing.

Geographics and Demographics are fairly straightforward. The exciting and rewarding work around marketing is delving into the psychography of a customer; what drives her?

It’s frequently not as obvious as you’d think, and I’m constantly counseling customers, employees and students to dig deeper than top-level psychography (price sensitivity, etc.) and to think instead of Actualization.

Maslow’s Hierarchy of Needs

Maslow’s durable hierarchy of needs helps us. To (over) simplify, Maslow’s framework posits that once humans have achieved certain base-level needs — Physiological (food, water, shelter), Safety (security, stability)  — they have the luxury to aim higher towards other needs; such as: Love and Belongingness (social relationships) and Esteem (recognition from others). At the top of the pyramid is Self-Actualization, and this can only be achieved once the others are in place.

I’ll pause here and recognize both my own white male privilege *and* the source of this thesis. Abraham Maslow was indeed a white male with an Ivy League education, who developed this framework in the 1960s. That said, much of the Hierarchy of Needs theory was developed as a response to the horrors he witnessed living through World War II. So....while it’s imperative that we consider the source, and the limitations of the applicability given this source; there is a degree of empathy that informed it that should also be recognized.

Self-actualization is the goal for all of us, and while long-institutionalized systems of racism and misogyny make the attainment of this far more difficult for any non-white males, it is still the goal, and we as a society must collectively work to make it more achievable for all.

A life lived without at least the opportunity to self-actualize is a tragedy, and the fact that fewer and fewer feel that they will ever have this chance, goes a long way to explaining not only the opioid crises, but Occupy Wall Street, and - sad to say - Trump (I wrote about this, and how it explained the rise of Trump in 2015).

In any case, I’ve found in my work that if I just toss around Maslow, I tend to lose the attention of those “listening.” I therefore developed the heuristic of the Mirror of Desire. Inspired by The Mirror of Erised in Harry Potter. In short, it aims to help marketers and operators break through the lower-level needs of their customers to understand whet these customers’ true needs are; the needs for Self-Actualization.

This is the root of Purpose not Product, and it is the root of thinking from a psychographic perspective.

Utilizing Psychographics

Back to Sarah. What does she really need? Sure, she needs food and shelter and she needs cough syrup for her kids, and she fabric softener and extension chords, and other products you can find at CVS. But she needs other things too. She’s 35....a tough age for people generally, and for women in the workplace (particularly when they're also moms), specifically. Think about the bundle of higher-order needs she has: be a good mom, be a good partner, be a good employee. “Fail” at any of these, she’s not just failing at a task, but — in too many people’s minds — failing as a human.

My firm has had the privilege of working with a large home heating company for years. Early on we worked with them to understand what was it about this company that had managed to grow and stay independent in a very tough vertical....for nearly 100 years...while definitely not being the cheapest offering.

The conventional wisdom was: great customer service. Undoubtedly, the customer service is great; the CEO is one of the most charismatic and decent humans I’ve ever worked with. Every day he monitors inbound customer correspondence and frequently amazes customers by picking up the phone and calling them to address an issue they are having. Not only does this gesture always turn a negative customer into a positive one, but it gives him the insight to — again — avoid the travails of Innovator’s Dilemma that most CEOs suffer from.

But, “customer service” is a commoditized and generic term. Every company claims to care about customer service. It is not the right thing to market, and it will not allow you to compete in a very price-sensitive industry like fuel oil.

We wrestled with it for a long time; trying to determine what kept people loyal to this company when they could get cheaper products, and perhaps not exactly the same high-level customer service, but something similar.

Finally, we realized what it was: customers were not buying the heating oil. They were buying something else. The customers for this company typically had families and had achieved the other stages of Maslow’s hierarchy. These customers had shelter, safety, community, etc. What they really wanted was to feel like the best version of themselves — self-actualized — when it came to their place within the family. They weren’t buying heating oil, they were buying the ideal that via staying loyal to this particular firm the likelihood that they would have an issue with their heating was minimal; that, it was unlikely, for instance, that during a storm in the winter their loved ones would be cold. These customers were buying (and paying extra for) the self-actualization that they were being a responsible homeowner.

Viewed from this lens the marketing comes together easily. For instance, we quickly determined that we should look for other products that would help these people achieve their psychographic needs of self-actualization (their Purpose) and began aggressively offering generators as a product. They sold so fast that we had trouble keeping up with the orders.  The generator is a product, but it helps the responsible homeowner achieve their self-actualized Purpose of being the responsible homeowner.

I often tell people whom I work with in business to business sales, that you must think in terms of the psychography of the person you are trying to get to buy your offering. Often, these potential buyers aren’t debating whether or not your product is good or bad, but rather if — by buying your product — it will help them rise in the corporate hierarchy of their employment or if they are worried that buying it will get them fired. Very often in B2B sales, you are selling the possibility of safe career rise much more than you are selling a product.

Sarah doesn’t just want to buy an extension chord at CVS. She wants products that will make her feel better about herself as a mom (“I’m going to make sure that I have the things my child needs should she wake up with a fever in the middle of the night); she wants things that will make her feel better about herself as a partner (“I’ll grab the trash bags”); that make her feel better about herself as a working person with her own identity (“I’m going to try this new brand of cosmetic”)

These are psychographic elements not demographic or geographic, and they connect to higher needs that people have. When you are a firm or artist who understands this and taps into it, so much of your “marketing” is done for you. The customer who finds a product that makes her feel like a more self-actualized person will not only remain loyal, but will become a true evangelist and spread the word of your offering for you.

Photo by Morgan Housel on Unsplash

George Howard

George Howard is the former president of Rykodisc, the world’s largest independent record label, and cofounder of TuneCore, the world’s largest independent digital music distributor. He is also the cofounder of Music Audience Exchange, which comprises a team of digital marketers, engineers, and music lovers, using technology to redefine the fundamental structure of brand-artist relationships.