Travel, Leisure and Hospitality firms have been using Psychographic segmentation for a long time – especially in the US.

Harrah’s used it in the past – to determine drivers of people’s behavior (Check this AdAge article, to know more).

Hilton targets “ambitious” individuals who would like to express their “perceived high status and achievement” by staying in five star rooms at “premium prices” (click here to read more).

The subject is also widely covered in Academic circles. Professor Bill Carroll from Cornell School of Hotel Administration discusses market segmentation, including psychographic segmentation, in detail in some of his courses (check here for more details).

So, then, why are we talking about Psychographic Segmentation?

What has really changed?

What has changed is the advent of Social Media. Let’s illustrate it with an example.

Paul, a US resident, is a business professional and a frequent traveler. Prior to the social information era, hospitality brand A used to target him with a suitable offer based on his past behavior and brand engagement. Since Paul was unaware of other brands and their offerings, his buying decision was primarily influenced by brand A, turning him to a loyal customer.

However, with evolution of social media, Paul knows that there are other brands offering better deals and high service quality. He is frequently influenced by other visitors’ experiences & reviews. At the same time, he scrutinizes multiple options available in open market platforms. Now, his buying decision is influenced by brand advocates, influencers and peer opinions, thus turning him into a less brand loyal customer.

social iformation era

In the social information era, information is easily accessible to customers through:

  • Organized travel websites such as Expedia, – These have succeeded in providing information across multiple players through one single platform.
  • Review websites (e.g. Tripadvisor) – Consumer Reviews available on these platforms are frequently visited by travelers before making a booking.
  • Social Networks (Facebook, Twitter, etc.) – Feedback through networking / sharing platforms spread like wildfire. Positive feedback is taken seriously, while negative feedbacks can result in dwindling revenues.
  • Competitor websites – Travelers almost always check competitive offerings before buying from one specific firm. Mobile apps at a touch away accentuate the phenomenon.

Is this good, or bad, for business?

The explosion of Smart Phones and accessibility to the internet through mobile devices has opened a unique opportunity for customers to access relevant information and take informed decisions. This has made the job of marketing department even more difficult to retain and engage their loyal customers.

Availability of multiple options and choices for the guests may sound alarming, and even daunting, to hospitality firms. But, there is a silver lining here. The same social media that allows the guests to search for information also allows brands to understand them better, if captured & utilized well.

Is Psychographics, in conjunction with social information, the next gen solution?

Social platforms capture rich customer information giving a peek into their activities, interests and opinions. This data can immensely improve any existing Psychographic segmentation due to the richness of the information available.

Taking the previous example ahead – agreed that Paul has many more options available; but, if additional information about Paul’s interests and opinions are captured, a brand’s targeting strategy could be transformed altogether; a suitable offer in line with Paul’s interests and likings could be offered. For e.g. if Paul’s social profile shows inclination towards deal websites such as Groupon, then he could be associated as a value conscious customer, looking for rate discounts at a hotel. On the other hand, if Paul likes/follows premium brands across different segments, then he could be aspirational, and wants to showcase his perceived high status. In such a scenario, special privileges like a free wine tasting session might suit his best interests. Appropriate targeting is more likely to attract him and thus drive loyalty.

Authored by – Rahul Sood – Manager, Analytics at Absolutdata, along with Abhishek Garg – Senior Analyst, Analytics at Absolutdata