H A N D B O O K
UNDERSTANDING AMERICA’S TOP INCOME QUINTILE
Introduction Once upon a time, the name Cadillac was synonymous with luxury. Today’s affluent baby-boomers, however, have forsaken Cadillac for BMW, Lexus, Mercedes, Infinity, Acura, etc., because they demand prestigious cars packed with performance, quality, value and service. Cadillac’s fall from grace stemmed from a failure to understand the affluent, which is rather strange, because there’s nothing complex about understanding the affluent. They want to be served, and then served some more. They want top quality, their money’s worth, and then a bit more. They shop at discount stores, but finding the cheapest 50-inch flat-screen plasma television is not their top priority: they want good value at a fair price. Because most of today’s aging boomers come from middle-class backgrounds, they tend to define themselves as middle class, regardless of their current lifestyles. A middle-class self-image is indelibly stamped into their subconscious. As a consequence, most do not view themselves as affluent. After all, there have been—and always will be— families with more. As consumers, the affluent can be extremely demanding. They do their homework, actively use the Internet, and conduct thorough prepurchase research. Because they’ve become the target of virtually every marketing campaign under the sun, the affluent have developed a “buyer-beware” mentality—i.e., they are a highly skeptical species. It should come as no surprise, therefore, that they don’t like salespeople. That said, the affluent offer an acre of diamonds for any company, service professional or tradesperson who invests time and resources in truly understanding their needs, wants, fears and expectations. You 1
must address their needs and wants visa-vie the products and services you offer, and help them to overcome their fears—all while exceeding their expectations. Because aging, affluent boomers are a walking, talking paradox, they are not an assignment for the weak, the weary or the company looking for short-cuts. It is important to understand how they make decisions, their key motivators, what they like and dislike, and the games they tend to play, both with themselves and others. (By the way, the boomers don’t like to labeled aging or senior—or any other adjective that suggests “elderly.”) Those who remain ignorant of what makes the affluent tick will find themselves increasingly challenged to compete for their attention and their business. Everything in this handbook is backed by comprehensive research, which The Oechsli Institute has been conducting for nearly a decade. We know how the affluent make major purchase decisions, and we’ve uncovered the key motivators that shape those decisions, and much more. The bottom line is that if you work (or spend much time) with the affluent, you will be best served by acquiring a thorough understanding of their psychological profile. In demographics and social research, this is known as “psychographics”—analyzing specific market segments based on values, attitudes, interests and lifestyles. Because aging baby-boomers are the wealthiest generation in history, with so much money in (or about to be in) transition, understanding their psychographic profile is a must. From our most recent research project, we were able to divide the baby boomer profile into Four Key Affluent Motivators for Life’s Decision Making: • • • •
Personal Health Family Health Financial Health Spiritual Health
After reading this book, you will find it difficult to listen to a politician, read a newspaper, watch the evening news, or look at an advertisement without thinking of these key affluent motivators. You will see the good, the bad and the ugly.
In today’s world, the precise definition of the term “affluent” has been blurred. Is it Tiger Woods, lounging on his yacht so aptly named Privacy? Is it Bill Gates, funding his foundation with another couple hundred million dollars? Or is it the family next door with a three-car garage and a condo at the beach, which you rarely see because both parents are working? For most readers, the affluent are the people next door or the face staring back at them in the mirror. This is what led us to conduct our research of America’s top quintile income earners (as defined by the U.S. Census Bureau). These top 20% are the powerbase of Western capitalism. They pay the bulk of the taxes, spend the most money, and are intensely coveted by everyone who is marketing or selling anything. My objective is to help you gain a better understanding of today’s affluent. Make no mistake about it: because affluent boomers control vast sums of money, they need to be very well understood. — Matt Oechsli