Can Service Providers Use Psychographics?

Communications service providers rarely seem to make full use of psychographics and “personality” when crafting services and offers, relying more commonly on demographics: age or income being primary.

While there is some basic segmentation of offers (certain products and offers for low-income users, others for higher-income users; some products for younger users; some products aimed at small business; others at enterprise), communications services generally are aimed at enterprise, mass market or wholesale customer segments.

Beyond that there are allowances for monthly budgets and usage. But service providers frequently do not know very much about their users, beyond their service addresses and the history of products they have bought.

So customer “personality” profiles cannot be built using the standard data bases service providers have access to.

But customer segmentation is unparalleled in predicting how consumers will adopt new technology devices and behaviors, says Jacqueline Anderson, Forrester Research analyst.

“It has been used to track the adoption of almost every technological development in the past decade, from the Internet to home networking.”

The power of customer segmentation is that it is based on psychographics and demographics that service providers can use to craft packages and features that appeal to different kinds of users, rather than using rather more crude measures such as income or neighborhood, though there is some value there. It just isn’t sufficient.

The Forrester method of applying technographics centers around three main components: technology attitude, income, and primary motivation.

While the simple classification of people into high- or low income and technology optimism or pessimism groups is very useful, adding the additional level of primary motivation creates Forrester’s 10 distinct segments and helps take the predictive nature of the segmentation to the next level, says Anderson.

The reason, Anderson argues, is that each segment has a unique “personality” that crosses all aspects of its members’ lives, from media usage to online behaviors. Understand the personality and one can craft solutions and marketing messages that will resonate with each personality type.

One way the basic groups differ is in attitudes toward the state of the economy, for example. When it comes to both their personal financial future and the future of the national economy, New Age Nurturers aren’t expecting much.

About 35 percent of them agree that their financial situation will get worse in the next 12 months, while 66 percent see the same outlook for the national economy.

Conversely, only 23 percent of Digital Hopefuls and Media Junkies expect their personal financial situation to decline.

At a high level, that suggests Digital Hopefuls, representing households attracted to low-cost PCs, might be better candidates for netbook sales than New Age Nurturers, who also believe in technology, but because of their pessimism, might not be willing to spend for PCs right now.

Media Junkies, who love television, are likely candidates for buying advanced IPTV services.

Messaging campaigns, of course, cannot use “gross” tools such as TV or newspaper advertising all that well. If one has discrete segments, those segments have to be pitched messages that resonate with their interests. That tends to mean direct mail, online or other targeted forms of messaging.

Also, roughly half the segments are technology optimists, while roughly half are technology pessimists. Selling technology to segments that like technology is quite different from selling to segments that basically are uncomfortable with technology.

Still, at this point, most service providers seem unlikely to use targeting techniques so refined. The tools don’t work for business or wholesale customer segments, while mass market advertising of the sort often used by large carriers does not allow for tailoring of the messages.

Also, internal data bases do not offer any guidance on which particular existing customers are in each of the segments, so ability to create direct contact or other targeted campaigns is quite limited.

The point, though, is that the “mass market” has as many as 10 different distinct buyer segments, differentiated by key values (career; family or entertainment); income (high or low) as well as attitude towards technology (optimistic or pessimistic).

On the other hand, the growing use of mobile smart phones does provide an almost ideal personal device that can be used as a platform to build “preference” filters that would address the segments on a more-granular basis.

There are six “high-income” segments out of 10 total segments, representing 58 percent of users. Those segments would be most likely to use smart phones as well as Web applications, and that in turn means it should be possible to ask users to self identify their preferences.

Even “non-telecom players such as media companies, retailers and financial institutions need to define or refine their mobile strategy to engage directly with consumers via the mobile Internet,” says Forrester analyst Thomas Husson.

“Thirty five percent of iPhone owners and 30 percent of smart phone owners who access email or the Internet outside their homes browse the mobile Internet at least daily,” says Husson.

Mobile Internet penetration is increasing and has now reached the critical mass ceiling of 20 percent, says Husson. “The percentage of European online users with mobile phones who accessed the Internet on their handsets at least monthly jumped from 20 percent

in 2007 to 24 percent in 2008,” he says.

A look at weekly usage shows that 19 percent of European online mobile phone owners access the mobile Internet at least weekly. Eight percent of the European online population even accesses it daily.

Some 37 percent of consumers who access the mobile Internet several times per day agree that it is a valuable addition to their lives compared with 19 percent of those who access it about once a day.

Mobile users with access to the mobile Web could allow at least some service providers to create targeted profiles, test messaging and offers. IP