Tenure of affluence can be more important than net worth.
Many home brand marketers have found success targeting affluent consumers who own a second home.
The reasoning is that if your brand is an expensive consumer durable with a 10-15 year lifespan, then regardless of how loyal your customer is, it may be a while before she buys your brand again. But if she buys a second home, you now have an opportunity to sell twice as much product to the same loyal customer, without the 10-year wait.
I know of one smart marketer who turned his high-end home brand into a profit powerhouse, not only by targeting consumers with second homes, but by using a consumer targeting strategy that I call “tenure.”
When I met him, this marketer was targeting “HNWI’s” (high net worth individuals with investable assets of $1-5 million) and “Very HNWI’s” (investable assets of $6-30 million). I asked him whether the dollar value of his prospect’s wealth was more important than the tenure of the wealth.
I told him about Jim Taylor, a brilliant researcher whom I’d met at the Amex Luxury Summit, and the author of The New Elite: Inside the Minds of the Truly Wealthy. Jim’s research shows that a consumer’s net worth may not be as critical as the number of years that he or she has experienced wealth. As Jim says,
“The length of time people have been wealthy is one of the most powerful predictors of not only how they spend money, but also how they view themselves and live their lives.”
Jim points out that those who have had money for many years are very different from those who’ve recently had a liquidity event, such as selling a company. And since most of today’s affluent Americans were raised in middle-class households, their buying habits evolve over time once they’ve acquired true wealth.
- Apprentices in the first five years of wealth are cautious and price-sensitive, particularly with big-ticket items. They are highly reluctant about buying a brand that they consider a status symbol.
- Journeymen are 6-14 years into their wealth experience and are beginning to mature in their buying habits. They begin to be connoisseurs.
- Masters have been wealthy for 15 years or more, and have become comfortable with being wealthy. But get this: they spend twice what apprentices do on home renovations and four times as much on home furnishings.
It’s a subtle but important differentiator, but when my marketer friend adjusted his targeting strategy to include tenure, he noticed a definitive bump in sales.
He quickly learned that he was more successful targeting the Master who spends four times as much on furnishings than he was when he targeted by pure net worth alone. As he says now, “I’ll take a lower net worth Master over a higher net worth Apprentice any day.”
To learn more about The New Elite: Inside the Minds of the Truly Wealthy, click here.