Business leaders are the heaviest spenders.
Affluent consumers drive the U.S. economy.
In an economy where consumer spending accounts for 70% of the country’s gross domestic product, Affluents account for more than 40% of this volume. They are twice as likely to buy, and when they do, spend 3x more than the average household in many categories.
But they can’t be targeted using a “one size fits all” approach. There are significant differences on many issues depending on their household income, wealth, age, gender, and tenure of affluence. The trick is to understand both the challenges and the opportunities in tailoring messages to relevant segments within this important group.
There is research that highlights the buying habits of one of the most influential segments of affluent consumers – those who “chart the strategic course of American businesses, control corporate budgets, and have a profound impact on the entire economy,” according to Ipsos, the study’s publisher.
I’m speaking, of course, of the affluent segment called Business Leaders.
It may be helpful to understand that most of the wealth in the U.S. is created, rather than inherited. So, many Americans who are defined as affluent (HHI above $100k), own or operate their own businesses – or serve in some sort of managerial role.
Ipsos groups Business Leaders in three occupationally defined segments:
- Owner/Partner: 17% of Affluents are owners or partners in a business, with those businesses being evenly split between in-home and out-of-home.
- C-Suite Role: 14% of Affluents describe themselves as having the responsibility of a C-suite executive, even though they may not have a C-suite title.
- C-Suite Title: 2% of Affluents specifically have a title that is Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operating Officer (COO), or some other Chief Officer title.
According to the study, Business Leaders make up about one-fourth of the Affluent population. “There is significant overlap among the segments, and some Business Leaders fall into multiple sub-segments (for example, 41% of business owners have a C-suite title),” says the report. “Most typically, their businesses are relatively small. Across segments, nearly half work for companies with fewer than 10 employees and with less than $1 million in annual revenue.”
What is fascinating to me is the fact that average spending among Business Leaders (across 150+ categories measured in the survey) is almost 20% more than Affluents in general. But get this: among those with a C-Suite title, spending rises to 56% more than Affluents.
“Business Leaders are often involved with financial decisions at work, and not coincidentally, are financial opinion leaders and are particularly engaged with the management of their personal finances,” says Ipsos. In addition, they are “more engaged with their homes from a variety of perspectives – they live in more expensive homes, spend more on their homes, and are more emotionally engaged with their homes as an extension of themselves and their values.”
In fact, they index at 123 compared to Affluents on home and garden spending. They plan to redecorate, remodel, or renovate their home in the coming year at a rate that is six points higher than general Affluents (50% versus 44%).
As Ipsos says, “the high income, strong consumer spending and widespread influence of Business Leaders make them particularly valuable in all consumer marketplaces.” You may actually have a more straightforward opportunity targeting this segment of Affluents than the larger, general audience.
Make sure you take into account how they might impact your business and if you can successfully reach them with a relevant message and offer.