Psychographics can help you understand why clients would be interested in certain products or financial plans, so you can better serve them — and ultimately build a more profitable practice.
Sending email newsletters to clients is a cost-effective method of permission-based marketing that allows you to connect with clients and prospects throughout the year. But are you getting the most out of your newsletters?
One size does not fit all
In a previous post I cited studies that show consumers want well-written, relevant content, but firms are not providing it. It’s no longer enough to send a single email blast to clients — consumers expect tailored content that is relevant to their lives. Of course, it would be near impossible to send a personalized email to each client on a regular basis, but by segmenting your mailing list you can reach groups of clients with similar needs.
Four ways to segment your clients
Geographic: Clients can be segmented by location, which can affect things like housing affordability and tax rates. Most advisors have clients from the same legal and tax jurisdiction but may still look at segmenting by urban, suburban or rural dwellers or even by neighbourhood.
Behavioural: Behavioural segmentation looks at how clients and prospects interact with you, your firm and your products. It includes things like purchasing history and level of engagement, such as whether a person contributes to their retirement fund monthly or only once per year.
Demographic: Demographics are population characteristics such as age and income, which can be important factors in assessing financial goals and risk tolerance.
Psychographic: This is the study of people’s activities, interests and opinions, which can help to develop profiles based on cognitive attributes such as attitudes, values and beliefs. Psychographic variables help us understand why people would be interested in certain products or financial plans.
Aim for psychographic segmentation
Psychographic profiles are the best basis for client segmentation.
For example, one couple might prefer the suburban life, while another couple would rather live downtown but their budget won’t permit it. Knowing why clients live where they do will give you more insight than location alone.
The same can be said for clients with a low level of engagement: One might have little financial knowledge or interest, trusting you to get in touch when needed, while another is financially savvy and believes you have little to add. These two groups require a different approach.
Targeting based on psychographics is more powerful than targeting based on demographics alone because it reaches people on an emotional level rather than simply appealing to their circumstances. A rich, elderly environmentalist may have more in common with a poor, young environmentalist than with a rich, elderly person who has no interest in the environment.
Start with data you already have
In future blogs I’ll expand on the mechanics of creating psychographic profiles, segmenting your client list and developing appropriate content. You probably don’t have enough psychographic data to begin segmenting your client list this way, but you can start the process without a great deal of extra work by using non-psychographic variables.
Start by segmenting your clients with data you already have on hand: demographic, geographic and behavioural variables, risk tolerance, investment knowledge and financial goals. With this data, you can start to target the content of your newsletter.
Young couples may be interested in mortgage information, for example, while older, wealthier couples with children may be more interested in trust and estate planning. If a client is setting up an education savings plan, then special-interest articles on the future of education might be appropriate.
Begin collecting better data today
A good way to build on this and start collecting psychographic detail is to be more thorough at doing something you’re already doing: having natural conversations with your clients and actively listening to what they tell you. Approach your next client or prospect meeting with this in mind. While asking directly about beliefs and opinions may be inappropriate, spending time discussing activities and interests isn’t too intrusive and will help build better relationships.
Record and organize what you learn in a way that allows you to start segmenting clients by psychographic similarities. The goal is to create a few different profiles. For example, you may have the ‘socially conscious’ client, who believes in giving to charity, spends time volunteering and invests in ethical funds. This group might be interested in articles about the work of non-profits or green initiatives, in addition to relevant product and planning knowledge.
Tailor content to each segment
If you work for a large firm, you likely have access to canned content or even pre-packaged newsletters. If not, you can write them yourself or hire someone to write them for you. Be on the lookout for shareable material. With an email newsletter, links to relevant content can be used — but run all content past your compliance and marketing departments to be sure it’s consistent with your firm’s branding and meets regulatory requirements.
Monitor how it’s working
Monitor the performance of your newsletters using metrics such as ‘opens’ by clients. More informally, you can simply ask if they read and are satisfied with your newsletter. Over time you’ll get a better sense of what’s working.
A greater understanding of what drives your clients will not only help you create better newsletters, but also better meet their needs and build a more profitable practice. This is extra time spent that can have measurable results on your bottom line.
Image: iStock.com/bluebay2014
Douglas Warren is a co-founder of Walmer Road Writing. He’s a corporate writer with expert knowledge of financial markets, economics, insurance and commercial real estate.