Affluent consumer; Michael Kors
NEW YORK – Luxury brands are constantly relating to their heritage and codes, but true value lies in the ability to relate those concepts to the values of like-minded affluents, according to an executive from Wealth-X at the Luxury Insights Summit 2015 April 29.
Looking microscopically at the ultra-affluent and understanding their beliefs, values and interests gives brands an advantage in connecting with the ultra-high-net-worth individuals. Marketers who take the time to delve into their own data and understand who has the funds to be a repetitive consumer are more likely to form campaigns that run deeper than advertisements or hope marketing events.
“Getting down to the exact individuals and thinking about your brand and seeing what the values that are in common,” said Lynn Raynault, vice president of global marketing, Wealth-X, New York.
Luxury Insights Summit 2015 was organized by Luxury Daily.
Forming bonds
Understanding where UHNW individuals hold their money, how liquid it is and how much access they have of it is important. Most of these consumers hold the majority of their funds in cash, real estate and luxury assets as well as private holdings. The remainder is invested publically.
The average net worth of UHNW individuals is $141 million, but the average liquidity is $35 million. The $106 million difference is what marketers need to understand, that the individual may have a lot of money on paper, but knowing what is accessible and spendable is more important.
Age range of UHNW
UHNW individuals are unique consumers for brands because they do not react to traditional advertising, but those that are connected to them may be consuming these ads. These UHNW individuals have 845,000 people connected to them with access to their assets. High-net-worth individuals are those individuals that have a net worth of $1 million to $29 million and they have 63 million close connections that have access to their assets.
The experiences created by brands for these individuals and their close familial connections are the advertising tactics that work. Understanding their interests and investments and curating an event around this is the ideal situation.
Also, with the aging population of UHNW individuals, where the average age is about 59, the transfer of wealth from parent to child is in the near horizon. Therefore, brands need to prepare to adjust to a younger population of affluents having access to more money.
Where its at
Another key factor for understanding these UHNW individuals is knowing where they live.
The United States’ population of ultra-high-net-worth individuals grew by 6 percent overall last year, and no states saw a decrease in this demographic, according to previous findings by Wealth-X.
Wealth-X’s “American Ultra Wealth Ranking 2014-2015” found that the UHNW population of the U.S. is primarily concentrated in major metropolitan areas across the country, while some states boast more than one city with a large demographic of wealth. Having access to this information can help brands and retailers determine the best areas in the U.S. to expand or fine-tune their retail footprint to better serve this discerning consumer segment (see story).
Another option to a deeper understanding can also be found in a brand’s own consumer data.
“Uncover who they are, they may already be in your data, they may already exist there,” Ms. Raynault said. “They could already be connected to your brand, that is the easiest low hanging fruit.”
Final Take
Nancy Buckley, editorial assistant on Luxury Daily, New York