Birds of a feather flock together. Where do your customers flock?

We spend a great deal of time helping clients identify their target customer, understand their profile and find high concentrations of their target using psychographic profiling. Beyond household income, age and education, we work to understand customers’ lifestyle and spending habits (a.k.a psychographics). Our clients find an improved understanding of customer segments, and the ability to differentiate good customers from the average, can greatly increase focus and profitability.

Psychographic profiling is based on lifestyle and consumer preference data, in addition to traditional demographics. This information is useful to distinguish between seemingly similar customers. For instance, two different customers may each have incomes of $75,000. However, one may be a young couple with no kids and plenty of disposable income, while the other is a growing family with a mortgage, two car payments, and growing child care expenses.

Using over 600 lifestyle and demographic variables, customers can be segmented into one of 60 psychographic clusters. Each of the 250,000+ block groups (block group = an area with about 1500 people) have been classified into 60 clusters under the premise that people of similar backgrounds, interests, and means gravitate toward the same neighborhoods and communities (birds of a feather…). Using your existing customer address list, a profile of your best customers can be created by segmenting them into the sixty clusters. With this information, companies can improve location, sales, marketing and other decisions.

Cascades Advisory Group has helped many clients use psychographic profiling to create more effective market expansions or relocations. In addition, these clients have used this information to make specific real estate decisions, evaluate product or service offerings, and identify the most profitable customers. What could you learn by understanding where your customers flock?