As we climb out of the recession, the affluent market segment is leading the way, so now is a good time to refocus marketing attention on understanding this group.
While the pre-recession mass affluent, trading-up market has shrunk, the hardcore affluent market remains significant. According to the most recent survey of 11.4 million affluent households by the American Affluence Research Center in the Fall of 2011, this group represents potential purchases of 1.5 million remodeling projects, 752,000 primary homes and 285,000 vacation homes this year. The surveyed households have an average annual income of $282,000, an average net worth of $3.1 million, average investable assets of $1.7 million and an average primary residence value of $1.1 million.
The book No B.S. Marketing to the Affluent by Dan S. Kennedy offers many valuable insights into how this group thinks. Since it was written in 2008, a lot of the statistics and information about the mass affluent market are outdated, but the behavior and values of the core affluent market have not changed significantly.
“Affluent consumers are not prone to substantial changes in their basic behavior and values from year to year or even over an extended period of time,” notes Ron Kurtz of the American Affluence Research Center.
Following are some of Kennedy’s insights on the attitudes of the affluent and some ideas on how they can apply to our business.
Most of the affluent achieved their success through “ambition, initiative, drive, grit, ingenuity, hard work and entrepreneurship,” he writes. “Their wealth has not separated them from those values. They deeply resent the idea that they got their wealth through inheritance or luck.”
Kennedy says this means you should relate to them as a fellow entrepreneur. Don’t be embarrassed to talk about how you’ve built your business. The story of your background and how you became an expert in kitchens or baths will give you instant credibility and admiration.
Talk in depth about the research, planning and preparation you will invest in designing and delivering their kitchen or bath since the affluent are methodical and appreciate process. This carries more influence than describing the end result or a specific product.
Never say no and don’t be afraid to be aggressive. “Affluent entrepreneurs are fiercely independent and will reward integrity, drive, persistence and salesmanship. They respond to aggressive but not desperate hustle since that’s what they do,” notes Kennedy.
LOOKING FOR VALUE
There is a paradox in that the affluent do not spend frivolously, yet they will spend for personal and social gratification. It all depends on engaging them emotionally and understanding their passions. You must connect to the passion surrounding their new kitchen or bath, be it gourmet cooking for friends, or showing off the latest spa bath.
Self-made affluents have an abhorrence of waste, notes Kennedy. “They may be self indulgent but not casually so.” If you offer a super high end, a deluxe high end and a moderately high end kitchen or bath, they may often buy in the middle because they feel as though they have spent responsibly.
“They know the value of a dollar, tend to pride themselves on being smart about money, getting good deals and bargains, negotiating successfully, even being seen as frugal,” Kennedy insists. So even if someone can easily pay your price, they still have to justify and rationalize it.
How do they rationalize it, then? They will pay, often generously and willingly, for competence, efficiency and convenience. They are stressed and pressed for time. You need to offer a full conglomerate of services. And that means everything for the new kitchen or bath: not just the basics of cabinetry or fixtures, but the entire environment: tile, flooring, lighting, a sound system, whatever it takes. Select and provide the very best cookware for their new induction range. Train their chefs on the new appliances.
The affluent will also increasingly pay for elite products and services. This is a result of a backlash against what many saw as a watering down of luxury during the pre-recession trading up days. “The more luxury brands are democratized, the less psychological satisfaction the rich get from owning them,” Kennedy notes. Instead they want items only they can afford. For that reason, seek out resources that are highly unusual, one-of-a-kind, and be sure to tell prospects how special they are.
The affluent also want services and special privileges not available to everyone else: a private limousine tour to see their hardware hand cast or to pick out their very rare Brazilian stone; a private top customer number that takes them to their own project concierge.
Anything you can do to provide an exciting unusual experience around buying a kitchen or bath from you is important, because that’s what gets people talking. And that’s what leads to referrals.
At a party, they are much more likely to talk about how their kitchen designer flew them to an exotic stone yard than they are to talk about the actual stone they bought. Make a new kitchen or bath a story-worthy experience
“A growing trend in working with the affluent is charging for access,” notes Kennedy. You might decide to tell prospects that you take only a limited number of jobs at a time so that you can devote full attention to each job, and therefore you charge a design fee of x. Or fees can be tiered depending on whether the well-known company principal works on the job, or whether someone else in the firm handles it. This way, people feel victorious when they get to you, notes Kennedy.
It all relates to being an expert. “The more affluent the customer and the more significant the purchase or the price, the more likely perceived expert status will play into the decision,” he writes. By presenting yourself as an expert in your field, you make yourself much more attractive to the affluent customer.
Kennedy believes that “publication, promotion and publicity” are the best routes to expert status, not degrees, certification or other credentials. “As an information provider, you separate yourself from the ordinary,” he says.
In marketing and selling to the affluent, language matters. Use copy that “puts us in mental movies,” he suggests. Something like, “It’s Thanksgiving, your new husband’s family is coming to dinner and you are proudly presenting a delectable, perfectly roasted succulent turkey.”
Finally, he stresses that the wealthy worry about potential loss of money, power and status. “As a result, they spend a lot of money on symbolic validation of their success, status and prosperity,” he concludes. They seek approval, recognition of their success, and respect, and will pay for it.