Understanding customer behavior and preferences has been one of the most essential aspects of marketing. Companies have traditionally heavily relied on demographic and behavior data to predict consumer choices. It’s significant to note, however, that this conventional approach fails to capture the complexity of human decision-making. Demographics like age, income, and gender offer some insight. However, they rarely tell the entire story.
Demographic data groups individuals into broad categories based on surface-level similarities. It doesn’t consider the nuanced differences between individuals within these groups. Joe Schaeppi, the CEO of Solsten, a company on a mission to usher in a new tech era that is better for the people and brilliant for businesses, attests to this.
Joe Schaeppi, CEO
“Take the example of Ozzy Osbourne and King Charles III. They’re two public figures with a similar demographic—same age, same country—but have obviously different lifestyles, preferences, and buying habits. Assuming that people with similar demographics will behave the same way can lead brands to develop misguided marketing strategies,” Schaeppi remarks. With over a decade of experience transforming digital experiences, the CEO has witnessed how demographic data alone is an unreliable predictor of consumer behavior.
Behavioral economics, which focuses on the decision-making processes of consumers, is a step forward. However, it has limitations in its predictive power, struggling with the inherent unpredictability of human behavior. Numerous internal and external factors influence people’s choices, making them difficult to forecast solely based on past actions. Individuals aren’t always rational actors when looking at them from a behavioral perspective, and their future decisions might deviate from past behavior. Behavioral economics does not take into account cognition. Schaeppi elaborates, “If someone needed to go grocery shopping, but when they got to the store they immediately turned around, from the outside that would look like irrational behavior. However, if we had the insight that the person had high levels of social anxiety and the grocery store was crowded that day, the behavior suddenly makes sense.”
Solsten acknowledges that such unpredictability illustrates why a more holistic approach to understanding consumer behavior is needed. It, therefore, incorporates psychological insights into data analysis to provide a more accurate and reliable way of predicting consumer behavior. It helps companies avoid superficial assumptions and learn about the true motivations behind customers’ actions.
The innovative firm’s ethos stems from the belief that audiences aren’t mere metrics or data points but humans with intricate psychological profiles. Schaeppi and COO Bastian Bergmann co-founded Solsten in 2018 to make technology more human by tapping into these psychological dimensions, allowing them to help brands understand their customers better.
Bastian Bergmann, COO
“Many companies think they own their audience,” says Schaeppi. “This is far from the truth. Consumers own themselves. They’re not tied to a single brand or product. They interact with different brands across various platforms.” The CEO believes businesses must understand this to compel themselves to understand their consumers better. Doing so would naturally make them remain competitive.
Solsten provides psychological insights that allow companies to assess the potential success of their products in the market. Its ongoing psychological assessments enable businesses to reliably predict future actions instead of only relying on demographic data and analyzing past behaviors. Traits and Navigator, its proprietary tools, assist companies in avoiding the costly mistake of launching products that don’t resonate with the target audience. They help brands optimize their marketing and product designs by aligning them with their customers’ psychological traits and motivations.
Schaeppi shares an example: “Our real-time psychological assessments showed that Merge Mansion’s player base had changed demographically from predominantly women in their 20s to 30s to a more balanced gender mix. We learned that the men who now played the game showed similar psychological traits to the top-spending women. The game’s designers were able to tailor their strategies to cater to their evolving audience, rather than making assumptions based on the changing demographics ”
This instance demonstrates the benefits of psychographics over traditional demographic categorizations. The pace of business today is faster, and demographic snapshots can quickly become outdated. Relying on demographics in advertising has become more problematic amid the privacy changes by tech giants, which have reduced the effectiveness of hyper-targeted ads.
“This is where Solsten comes in. Our psychological data helps marketers focus on underlying motivations, values, and traits that resonate with their audience,” Schaeppi says. “For example, the data might show that a specific group values friendship, status, and entrepreneurship. Brands will then be able to create ads that reflect these values. This will lead to higher engagement—sometimes as much as a 300% increase in win rates, as we achieved with IPs like Godzilla, compared to ads built on demographic and behavioral data alone.”
With these insights, Solsten contributes to paving the way wherein advertising becomes a “gentle tap on the shoulder from a good friend,” straying away from intrusive messaging. Overall, the shift from demographic and behavioral data to psychology-driven insights improves customer engagement and leads to more successful product launches, better marketing return on investments, and a healthier digital future.
