Weekly Business Insights from Top Ten Business Magazines | Week 288 | Strategy & Business Model Section | 1

Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 288 | March 17-23, 2023

What Psychological Targeting Can Do

By Sandra Matz | Harvard Business Review Magazine | March–April 2023 Issue

Listen to the Extractive Summary of the Article

Psychological targeting, the practice of influencing behavior through interventions customized to personality traits, burst onto the world stage in 2018, when Cambridge Analytica’s involvement in the 2016 U.S. presidential election made international headlines. Since then, there has been a lot of speculation about what psychological targeting can and cannot do. 

Psychological targeting builds on validated psychological constructs that capture fundamental differences in how people think, feel, and behave. The most popular of such constructs is the Big Five model of personality, also known as the OCEAN model for the dimensions it measures: openness to experience, conscientiousness, extroversion, agreeableness, and neuroticism.  Advice for launching a psychological targeting program could include:

1. Ask, Do we really need psychological targeting?  There are two situations in which a psychological understanding of people is invaluable. The first is when a company sells to new customers.  The second scenario is the design of personalized marketing materials.
2. Create a holistic customer experience. Psychological targeting could join the two worlds of online personalization and offline personalization. By providing consumer insights that can be understood by both algorithms and humans, it offers a consistent “concierge service” across all channels.  
3. Help your customers discover new offerings.  Personalized marketing is typically focused on helping consumers exploit, serving up more of the things they already know and love. Customers will sometimes prefer recommendations for products that are outside their comfort zone and allow them to try something new. Psychological targeting lets companies offer them.
4. Keep your consumers in the loop.  Told—in plain language—exactly what data would be gathered from their Facebook profiles (for example, their likes) and, more important, how it would be used. Also told them what predictions it would make based on that data and assured them that no data would ever be passed on to third parties. 
5. Make personalization a key part of your value proposition. If you ask people for their data, give them back as much value and insight as possible. 
6. Don’t focus solely on selling. Psychological targeting can be a powerful “nudging” tool to help people improve their lives. 

The others are:

Collect only essential data.

Do a gut check.

Put ethics front and center. 

3 key takeaways from the article

1. Psychological targeting, the practice of influencing behavior through interventions customized to personality traits, burst onto the world stage in 2018, when Cambridge Analytica’s involvement in the 2016 U.S. presidential election made international headlines. Since then, there has been a lot of speculation about what psychological targeting can and cannot do. 
2. Psychological targeting builds on validated psychological constructs that capture fundamental differences in how people think, feel, and behave.
3.  Advice for launching a psychological targeting program could include:  Ask, Do we really need psychological targeting?  Create a holistic customer experience, Help your customers discover new offerings, Put ethics front and center, Keep your consumers in the loop, Make personalization a key part of your value proposition, Collect only essential data, Do a gut check, and Don’t focus solely on selling.

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Topics:  Strategy, Business Model, Technology, Data