Psychographic segmentation is a marketing strategy that involves dividing a target audience into sub-groups based on psychological attributes, values, lifestyle, and personality traits.

This approach goes beyond traditional demographic segmentation, which focuses on age, gender, income, and location, by delving deeper into the motivations and beliefs that drive consumer behavior.

In simple terms: personalization.

In the context of employee benefits, psychographic segmentation can be a game-changer in increasing enrollment and engagement rates for benefit programs.

Understanding psychographic segmentation in employee benefits
Employee benefits are a critical component of any organization's compensation package. However, ensuring that employees understand and appreciate these benefits can be challenging. Traditional methods of communicating benefits often fall short because they do not address the underlying motivations and values of employees.

This is where psychographic segmentation comes into play. By categorizing employees into distinct psychographic segments, organizations can tailor their benefit communications to resonate more deeply with each group.

In simple terms: from education to marketing.

How many segments do we actually need?
Most marketing experts "get" that a 3-segment model doesn't provide sufficient differentiation. But a 10-segment model - which would have greater granularity and, thus, precision - is too complex to "work" in practical, day-to-day terms. The general consensus is that a 5- or 6-segment model provides both meaningful differentiation and "internal consistency."

• The 6-segment Well-Beings model

1. Directors: Proactive managers of their health who actively seek information and solutions.

2. Socializers: Individuals who prioritize social connections and community engagement in their health and wellness journey.

3. Thinkers: Those who value knowledge and data and prefer well-informed and controlled environments.

4. Balancers: Individuals who focus on maintaining a balanced lifestyle, both physically and mentally.

5. Doers: Those who prefer practical, immediate solutions to their health problems.

6. Adapters: Flexible individuals who are open to various health and wellness solutions.

• Our 5-segment BenefitPersonas™ model

  

1. Self-Achievers: Goal-oriented individuals who prioritize personal achievements and are motivated by progress tracking.

2. Balance Seekers: Individuals who focus on holistic health, including mental and emotional well-being, and prefer balanced living practices.

3. Priority Jugglers: People who manage multiple priorities and need practical, time-saving solutions.

4. Direction Takers: Those who prefer clear, structured guidance from trusted sources.

5. Willful Endurers: Individuals who tend to resist change and prefer familiar, traditional methods.

Classifying employees into the segments, with high confidence
The challenge for psychographic segmentation has always been "How do we bucket people accurately?" If you use a self-reported questionnaire, you run into the same problem the wellness industry has always had with Health Risk Assessments - you'll never get more than (roughly) half of employees to complete them!

But for employers, benefit consultants, and vendors, we can segment a given group of employees just using their name and address!

By combining extensive research data from in-depth questionnaires - plus the vast quantities of readily available consumer data - we can predict an employee's segment with relatively high confidence.

In much the same way as everyone who borrows money has a Credit Score, data scientist teams analyzed the underlying consumer data on tens of thousands of research study participants to find the common characteristics for each type - and that are distinct from the other types.

Based on the research study data that quantified each type's core values, world views, and beliefs, the data scientists then grouped the entire U.S. adult population around the core values that are reflected in each type's consumer characteristics and - importantly - their preferred communication styles and modalities (emails, texts, physical letters, apps, etc.)

This is how we can classify employees into high-confidence psychographic segments without relying on questionnaires.

Lessons from high-end retail
To understand the potential of psychographic segmentation in employee benefits, consider how it has been used in high-end retail. Luxury brands have long recognized that consumers buy not just products, but also the lifestyle and values those products represent. For instance, a high-end fashion brand might segment its customers based on their desires to feel powerful, admired (or envied), or "sexy," rather than just their income or age. This is a common approach to increase brand loyalty and sales.

For benefits, instead of merely "educating" or "communicating" how the programs work, employers, consultants and vendors can frame their programs in terms of why each type would want what's being offered.

As we like to suggest, you have to get employees to understand that a particular program not only "makes sense," it also "feels right" - for each type!

In other words, you must begin to appeal to the unique needs and values of each psychographic segment with more a personalized approach that will significantly increase enrollment and engagement rates, where employees feel that their benefits are truly aligned with their individual priorities and goals.

Beyond communication - to comprehension
If there's a better way to move to a system where employees truly "get" what's in it for them, we have yet to find it. We must begin to address the subconscious and often-unarticulated questions employees have about benefit program: "What's in it for me?" and "Why should I care?" How else can you really create more meaningful connections?

The last word
Psychographic segmentation offers a powerful way to increase enrollment and engagement rates for employee benefit programs. By understanding and addressing the deep-seated motivations and values of employees, organizations can create benefit packages and communications that truly resonate.

It's not like psychographics is a passing fad! The U.S. advertising industry generates almost as much in annual revenues (~$171 Billion) as the entire benefits industry (~$200 Billion)!

~ Mark Head
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