What is Demographic Data & How to Use It

What is Demographic Data?

Demographic data is statistical knowledge gathered about a given population. In more detail, it refers to descriptive information about characteristics such as gender, age and location.

Demographics can be used to categorize people into customer segments. The segments can then be studied to bring efficiency to communication and product development. Companies use demographic data to research and understand how their offering is being perceived and in which markets. In turn, using demographic data can also enable businesses to learn how the customer makes choices, and how the choices are related to the customer’s demographic characteristics.

Due to technological advancements over the years, data collection has become more scalable and the price of demographic data has decreased. More and more companies are turning to data driven solutions in their marketing and business intelligence teams. When used correctly, demographic data can help to bring powerful insights and forecasts for organizations across all industries.

How to use Demographic Data?

Marketers can use demographic data to group customers based on their characteristics like age, gender, and income. The ability to segment consumers makes it easier for marketers to create accurate and relevant messages which are aimed towards a specific public. As a result, your messages are more likely to be received as they were intended, leading to more conversions and revenue.

Businesses often use demographics to guide their next steps towards growth. The data allows businesses to learn what their audiences need, where do they want it, and are they willing to relocate for that service or product. Demographic data can help you to identify key segments within your industry.

Data driven companies are able to learn from demographics and customize their products based on their customers preferences. Demographics can give you insights on current market developments and enable your teams to develop products the audience is ready for. Putting the people first comes easier with demographic data.

What are typical Demographic Data attributes?

Financial Data
Financial wealth of a given audience is often measured by:

  • Household Income
  • Net Worth
  • Home Value

Gender
Gender is many times used to select the primary decision makers in the households. They are the people who should receive your communication. The key decision makers in households are usually females.

Lifestyle Data
Lifestyle data aims to find consumption patterns by explaining audience interests. Some attributes might include:

  • Product ownership ( how many cars, tv’s, motorcycles do they own)
  • Hobbies ( sportclub memberships etc..)

Lifestage Data
Lifestage data indicates the place your audience is in their lives. It can give you valuable insights on their interests, disposable income, and purchase behavior. These are common attributes for lifestage data:

  • Age
  • Marital status
  • Presence on children
  • Number and age of children

Geographic Data
Geographic data refers to the location of the audience and is usually evaluated by addresses.

How is Demographic Data typically collected?

There are a multitude of ways to collecting demographic data. One way of sourcing demographics includes the use of surveys signed to individual consumers. Surveys can be given to people at home or during events. Marketers have found this method to be troublesome due to its manual components and low response rates. Surveys may be able to gather very detailed forms of information but can become costly for larger sample sizes.

Another way to do this is by the use of technologies such as Google Analytics which track the insights from millions of website visitors to draft powerful analytics for marketing purposes. Google takes the browser details to form data about the user’s location, language preferences and others. This technological approach is more scalable and delivers statistics which can be updated almost in real time. However, as a collection method it is limited by privacy related issues and cannot often offer the same level of granularity as other collection methods.

Your demographic data can be taken on another level by enriching it with insights from cookies or event tracking. Adding other data points to your demographic data can create powerful analytics which drive your business. Imagine combining your demographic segments with their respective lifestyle and transaction data collected from social media and credit card companies. Such information, if accurate, can pinpoint not only who and where your customers are, but also what they want and how much are they willing to pay for it.

How to assess the quality of Demographic Data?

One of the more common issues with demographic data lies in finding extensive, large scale datasets which are both timely and reliable. Surveying for demographic data is a slow process which often has low response rates. Portions of datasets may come outdated before they are even put to use. Use of outdated data may lead to skewed results and can potentially harm a business.

Imagine your marketing team receives a dataset created based on surveys from 2017. Many of the survey participants may have moved to another location, or had a change in their lifestyle. Creating effective marketing communication based on outdated datasets is a mission impossible, even for the best of us.

Issues with data accuracy occur often due to a lack of understanding or knowledge in the data sources and collection methods. You need to understand the data collecting and procurement process to some extent in order to be able to benchmark any data vendors or datasets.

Checklist to acquiring quality demographic data:

  • Learn about the data type and its use cases
  • Know your worth (set an expected value for the dataset)
  • Understand the process of data collection
  • Confirm that the data is able to cover your niche and is of proper scale
  • Make sure the data can be integrated with your current business technologies
  • Test dataset quality with a sample set

How is Demographic Data typically priced?

Demographic data comes with various pricing models. Depending on the use case you can find vendors offering basic licensing models as well as pay per use models like CPM/CPC. For smaller organizations, larger data dumps with one time fee are not uncommon either. Many data providers are able to give custom quotes based on your needs as well.

What to ask Demographic Data providers?

There are some many questions you should always ask during the acquisition process to make sure you are engaging with the right data provider. The questions depend heavily on your use case and the dataset size.

Here are some examples:

  • Do you offer sample sets for testing purposes?
  • What is the update frequency you offer?
  • How is the data collected?
  • What is the coverage and how granular can a single data point be?
  • Can the data be integrated to our current business technologies?

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