By any measure, the number of Americans that can claim millionaire status is rising, and rising rapidly. No matter how it is measured, whether by total net worth (including homes and other assets) or by financial assets alone, there are many more people living the life of luxury, or at the least, a life free from the worries that plague the less financially endowed.
On the surface, with millionaires being thick on the ground, it should be easier for marketers to sell to them. Yet with the millionaire class more numerous, they also are becoming more diverse, distinguished by greater diversity in gender, marital status, age, ethnicity and other demographic characteristics, but more importantly in consumer behavior, values and lifestyles. It is complicating the marketers’ job to identify them and communicate effectively with them.
More millionaires is both blessing and curse for marketers today .
Millionaires by the numbers
Estimates of the number of American millionaires varies by source and how millionaire status is measured. Credit Suisse’s Global Wealth Report puts the number at 15.4m, with predictions that their ranks will grow by some 16% by 2022 to reach 17.8m. Further they claim the number of millionaires grew 7.7% from 2016-2017.
Spectrem Group, which services the investor community, reports a more conservative 11.5m American millionaire households, based upon financial holdings, including some 172,000 households with a UHNW status in excess of $25 million, whose numbers increased by 10% from 2016 to 2017.
Bethesda-based WealthEngine, which compiles detail data about more than 240m US consumers, pegs the number of millionaire households at some 16m, including all financial assets, in a new study The 2018 US Millionaire Report. WealthEngine estimates some 7% of American adults enjoy a millionaire’s lifestyle. But with so many, the challenges of marketing successfully to them has grown exponentially.
To help marketers understand how to succeed in marketing to today’s millionaires, I sat down with Patrick Bischoff, who heads the company’s professional services team and Rick Nichols, who works in WE’s Atlanta office. They tell me a one-on-one marketing strategy is what is required to tap the tremendous spending potential in the millionaire market.
One-on-one marketing succeeds where mass-marketing fails
Before it was fairly easy to target millionaires in a marketing campaign. You simply identified publications that aimed at the high-end market or bought lists in high-end residential zip codes and voila, you could reach your target. But not anymore. “Not all millionaires are created equally,” the report states. “As the millionaire population has exploded and wealth has spread across multiple generations, there is no longer one millionaire persona.”
Today’s millionaire class isn’t like it used to be. As it has grown bigger, marketers need big data to effectively target millionaires based upon increasingly granular lifestyle data. “We have a lot more accumulation of wealth but it has broken through the traditional boundaries of age group,” Bischoff says. “There are many more wealthy young people that can afford an S Class Mercedes, but they are driving Zip Cars instead because owning a Mercedes, or any other car for that matter, doesn’t matter to them.”
While the wealthy still tend to skew older, there are rising numbers of under 45 year old millionaire households, accounting for some 18% of the total according to the Federal Reserve Board’s 2017 Survey of Consumer Finance. And these younger millionaires are at a life stage where their appetite for buying and purchasing luxury goods and services is growing fast.
One-on-one marketing that targets the specific lifestyle interests and values of millionaires is required to succeed in targeting the increasingly diversified millionaire market. “The dynamics are not only does somebody have the capacity to spend, but also do they have the propensity to buy or consume your services,” he says.
This is where the WealthEngine database comes in, which compiles 1,200 data points about individuals in addition to wealth and age, including spending habits, causes they care about, numbers of children and homes, work history, hobbies and interests. Bischoff gives an example of a marketer selling luxury Aspen resort vacations as compared to resort vacations in St. Barts. The demographics of who can afford each may be the same, but the Apsen marketer will be far more successful and invest less money by targeting only those wealthy who also have an infinity for winter sports. “Everything today goes towards one-on-one marketing,” he stresses.
Millionaires all own homes
Regardless of the growing diversity in lifestyles and spending habits of the wealthy, one thing that they all have in common is home ownership. Virtually all own a primary residence and an astounding 46% of those in the top 10% of households based upon net worth (which starts at $1.2m) have other real estate holdings, according to the Federal Reserve Board SCF. And the higher you go up the wealth ladder, the more homes are owned, some 10.1 on average based on WealthEngine’s count of those with net worth of $500m or more.
Given that fact, the extraordinary power of WealthEngine’s database can be immediately realized by marketers selling to the wealthy’s home needs, including real estate, home furnishings, interior design and other home services. But many of these marketers are small and mid-sized businesses unfamiliar tapping the power of big data, unlike their big business brethren with teams of marketers and data analysts.
For example, as our society have gotten more mobile, millionaires are moving their primary residence or buying second or third homes in far-flung places, presenting special challenges for real estate professionals and development firms. And those homes may be smaller in size and price, but together add up to $3-$5m in value. “There aren’t that many $5m+ homes for sale on any given day, but there are millions from $500k-$2m available. This is where our data gives marketers a real edge,” Bischoff says.
Taking his Lake Oconee community outside of Atlanta as an example, Nichols says success in home sales there depends on looking beyond the usual suspects living in the regional tri-state area. “Many people are moving in from Boston, Connecticut, Washington, DC areas. It’s a golfing and boating community, so the greatest success will be found by targeting those with both the capability to buy and a propensity for the lifestyle,” he says.
Developing millionaire marketing programs for small businesses
“The value of our information is very much understood by the large globally or nationally-operated organizations, but it’s not on the forefront on the small business side,” Bischoff says. “They are still stuck in the dark ages when it comes to individualized, highly targeted marketing programs.”
Making such granular data about the wealthy accessible and useable for small marketers with modest budgets has been a priority for WealthEngine, which got its start developing contact lists for non-profits and advocacy groups.
“Data is data,” Bischoff shares. “We make it ‘stupid-simple’ to use our graphical interface to develop contact lists including mailing addresses, email addresses, sometimes mobile and land lines, so that a small business, selling boats for example, can draw a 25-mile circle around Lake Oconee zip codes, find those with over $5m in net worth who have an affinity to water sports and drive a luxury vehicle. These are the people boat companies need to know.” Bischoff assures me that WeathEngine can offer small businesses with a $5,000-$10,000 budget a way to more precisely target the best customer prospects in their midst.
Luxury marketers, large and small, need access to this level of consumer detail to find the new customers on which their future depends. With their vast financial resources, millionaire’s opportunities to spend it are endless. The marketers that get to those consumers first with a message that speaks personally to their needs and interests stands the best chance of making a connection and a customer. Marketing one-on-one is the best way to target the millionaire next door, in the next town or on the other side of the continent.
Are these 10 myths holding you back marketing to millionaires?
As the wealthy have become more numerous and diverse, the old ideas based upon the popular images of how the rich live and what they want have changed. Shows like the recent CNBC Secret Lives of the Super Rich and reality shows like Lifestyles of the Rich and Famous and Real Housewives, present an idealized and romanticized vision of the wealthy.
How well do you know and understand the wealthy? Is your brand’s marketing plan based upon the ‘conventional wisdom’ about the wealthy that you’ve seen on television and in magazines and newspapers? If so, your marketing program may well be filled with misconceptions, misunderstandings and myths that will derail your plans for growth.
This 50+ page report, Marketing to Millionaires: Exploding 10 myths Disrupting Success in Marketing, will correct your misunderstandings. Presenting factual data about the top 10% of US households based upon net worth from the nation’s authority on wealth, the Federal Reserve Board’s Consumer Survey of Finance, this report unpacks 10 popular myths that hold marketers back from marketing success with this most powerful and important market segment.