Customer Demographics 101 & The Importance of Demographics in Business
Behind every successful marketing strategy is an exhaustively researched plan based on detailed customer demographic data. New digital platforms have created an almost incalculable number of new ways to monitor and capture customer data for use in marketing efforts. The proliferation of tools for gathering, measuring, and analyzing demographic information underscores that customer data continues to be vital for marketing success. This article will provide an overview of what customer demographics are, why this data is important, and how demographics are used in marketing.
What are Customer Demographics?
Customer demographics comprise the objective and subjective qualities that define a particular group of buyers. These qualities allow subsets of customers to be segmented and marketed to based on their assumed likelihood to buy a particular product or service.
Objective demographic data typically includes information like the following:
- Household income
- Home address
- Marital status
- Level of education
The essential qualities of objective demographic data are that they can be verified and precisely measured. Specifically, this would include personal characteristics that are immutable (e.g., age, sex, etc.) or can be precisely quantified at a given point in time (e.g., household income, number of children, home address). Essentially, objective customer demographic data are not open to interpretation.
Demographic information that describes more subjective attributes of a group would include:
- Political affiliation
- Purchase intent
- Brand preference
These qualities can change over time due to personal circumstances and other factors that are either predictable or unforeseen. Used together, both objective and subjective data types create the fullest possible profile of a potential buyer or set of buyers.
How are Customer Demographics Used?
Strategically, demographic data is used to identify segments within an overall set of customers or potential customers. If a market is, according to the most basic definition, a group of people who have a shared need and purchase ability, then a market segment is simply some portion of buyers who share known qualities. Knowing the unique attributes of a specific market segment will help elucidate previously unseen opportunities within a larger market. For example, understanding the average household income of a certain segment will inform decisions about pricing strategies to ensure that cost is not a barrier for potential buyers.
Demographics are a key element of market research and should deeply inform the broader marketing strategy. The amount of available customer demographic information directly impacts the level of accuracy with which a segment can be identified. Ideally, customer demographic information should allow businesses to clearly understand their target buyer personas and effectively plan for how they will capture repeat business, increase purchase frequency, upsell or accomplish other marketing related goals within a specific segment.
Tactically, specific decisions about advertising copy, graphic design, branding, marketing channels and more will all be informed by audience demographics. You likely experience the results of targeted demographic information collection, analysis and the resulting segmentation on a daily basis. One of the most common uses of customer demographic information is advertisement targeting. Advertising platforms like Google allow businesses to target potential customers based on key demographics like age, gender and location. This detailed application of demographic targeting is why you will see ads for gloves on a weather website when it’s cold in your current location.
How is Customer Demographic Information Collected?
There are numerous channels and methods used to collect customer demographic information, including through applications on mobile devices and Internet browsers. While demographic information can be collected ethically and with a customer’s knowledge and consent, this data is most often captured surreptitiously. There is an enormous, thriving market that feeds on the collection, packaging and sale of customer demographic information to third parties.
The best way to get accurate demographic data is to conduct research first hand. This research can be done by analyzing information from existing customers and leveraging consumer research partners. Consumer research platforms like 1Q provide access to over 1M qualified consumer research participants that earn money in exchange for providing detailed demographic information.
An effective research platform will allow for incredibly detailed demographic targeting and data collection (especially a platform with organically-source participants). This rich source of information can be used to discover insights about purchasing habits and shopping behavior that might not otherwise be associated with specific demographic attributes. These insights can help answer questions like: what are the demographic qualities of shoppers who prefer convenience? What about online shopping vs. in-store? Having that data means you will be able to more effectively personalize and target marketing messages to reach consumers that are likely to make a purchase. Most importantly, applying demographic research should make marketing messages more powerful, authentic and relatable; not exploitative and calculated.
If you are interested in learning more about how to use customer demographic research for deeper consumer insights, request a demo of 1Q today. Our industry-leading technology and powerful platform makes cutting-edge consumer research simple, fast and affordable.