The Psycho is King
Like the classical tale of Dr. Victor Frankenstein, it is very easy for passionate tech entrepreneurs, to get caught up in the creation of their solution without an objection consideration of the final outcome. Whether it’s a funky new augmented reality/virtual reality (AR/VR) platform that encourages patients to lead healthier lives or a new nanotech diagnostic tool that shifts the wait time of an incumbent technology from days to seconds, all that hard work and innovation is absolutely worthless if the market for said product or service does not exist — i.e. is there a customer and would they (or someone else e.g. their employer or insurance provider) be willing to pay for it.
Yes, you may have the unit economics figured out, but do you really know your customer? The days of demography have gone the way of the dinosaur. Enter instead, the brave new world of psychographics.
Psychographics is the study of consumers based on their activities, interests, and opinions (traditional marketers call these AIOs). It goes beyond classifying people based on general demographic data, such as age, gender, or race.
Instead of dull demographics, psychographics focuses on understanding cognitive attributes, such as customer emotions, values, and attitudes, among other psychological factors. Tech founders must leverage this approach to create “psychographic profiles” of their consumers. These profiles will help entrepreneurs understand consumer motivations and opinions that can then drive messaging tactics.
This way tech entrepreneurs can beat those in traditional brick and mortar businesses to the proverbial punch by moving beyond blanket advertising techniques like direct mailers, television ads, and billboards. These approaches tend to target entire demographic groups, such as “males 18 to 34,” “females 50+,” or “upper-middle-class suburbanites”, which is so 2000 and late. There is a great deal of variation in personality traits within traditional demographic groups, making this kind of blanket advertising a very blunt tool. Tech founders need to be sharper than a surgeon’s scalpel.
In contrast, a psychographic profile contains specific information around a person’s interests, hobbies, emotional triggers, and lifestyle choices, among other data. This provides insight into why someone might buy a specific product, support a given cause, or vote a certain way.
There are several different ways to gather and analyze psychographic data. Some methods include the use of:
· Traditional focus groups/interviews of initial beta users
· Surveys/questionnaires/quizzes (obviously online versions are paramount to the paper based variety)
· Psycholinguistic dictionaries
· Website analytics (e.g. Google analytics)
· User Browsing Data
· Social Media (i.e. likes, clicks, tweets, posts, etc.)
· Third-party analytics
With each data source, and obviously with the appropriate user permission, founders can gain important insight into their customer’s preferences either directly or indirectly. And while the data collection methods are time consuming, it is well worth it as the trove of information gathered can be game-changing, again, all the while respecting user’s privacy and patient confidentiality.
For example, disgraced political consulting firm Cambridge Analytica created a psychographic profile that placed people in a particular market segment according to the presence or absence of five personality traits: openness, conscientiousness, extraversion, agreeableness, and neuroticism (popularly known as the OCEAN model of personality).
To see how this works in practice, let’s look at a tech companies using psychographic modeling to revolutionize the wellness industry — CoreHealth Technologies and PatientBond.
CoreHealth Technologies is a corporate wellness software company and platform that provides services to over 1000 companies (including many Fortune 500 companies like Cigna and Sun Financial), representing more than two million employees worldwide. CoreHealth a good example of how psychographics helps entrepreneurs refine and deploy their services to their core customers.
In her 2017 annual newsletter, CoreHealth founder and CEO Anne Marie Kirby predicted that artificial intelligence, psychographics, and personalization will be key sites of innovation for companies like her own in 2018. Considering CoreHealth’s wellness focused business model, it was important to find ways to increase employee participation in its clients’ workplace wellness programs, screenings, and health interventions.
To this end, CoreHealth partnered up with PatientBond, a “platform for driving digital personalized engagement” using email, text message, and Interactive Voice Response (IVR). PatientBond promised behavior change by bringing together psychology and technology.
But PatientBond did not simply rely on the OCEAN model. Instead, together with CoreHealth, they customized their own five-factor psychographic segmentation model, categorizing potential users as:
· Balance Seekers
· Priority Jugglers
· Direction Takers
· Willful Endurers
Using this customized psychographic model, PatientBond then provided each of its users with the appropriate behavioral nudge to increase engagement with CoreHealths products and services, resulting in some impressive immediate results. PatientBond claims to have increased participation in biometric screenings among blue-collar workers at Midwest employers by 82%, achieved 72% enrollment in a 12-week metabolic syndrome program among eligible employees in Fortune 50 companies, and increased the number of employees among their clients who have chosen a primary care physician by 20%.