LifeHealth.com : Affluence in America: A Changing Wealth Landscape

Affluence in America: A Changing Wealth Landscape

by Jane Crossan and Mike Mancini

Jane Crossan is vice president of the Financial Services Group and Mike Mancini is vice president of Data Product Management, both divisions of Nielsen's Claritas Services. This material is excerpted from a special report by the authors that explores how financial services companies can better serve their varied consumers. It is reprinted with permission.

PART III: The Market is the Message
"We've found that the mass affluent market consists of many segments characterized by different behaviors and attitudes," says David Toth, Director of Marketing at PNC, the Pittsburgh-based financial services group. "To be successful, we have to differentiate our message, tweaking the language and the proposition to the different segments."

After classifying its customers by P$YCLE segment, PNC targets its affluent clients not to sell a product but to develop a personalized relationship. A bank official will call a customer who owns a CD with an offer to use online banking, streamline a loan process or obtain wealth management services. The campaign positions the bank as a trusted guide, helping customers through the maze of financial challenges and investment options. "We've learned that it's more important to connect with customers on the basis of who they are than what financial product they want," says Toth.

Successful bank marketers are always on the lookout for "swing segments" that have varied financial needs but exist under the radar of many banks. One Florida bank marketer cited the fifth wealthiest P$YCLE segment, Power Couples, as just such an attractive market. The most affluent Baby Boom segment, Power Couples is characterized by high-earners with college educations and income-producing assets in excess of $500,000. Yet these consumers still seek out professionals for help in managing their savings and investments, and they're omnivorous in their financial tastes. Although older P$YCLE segments often prefer deposit products like annuities, while younger segments want loan products such as home equity lines of credit, Power Couples sign up for both, and at rates twice the national average. "These are the kind of affluent customers a bank wants, someone with big tastes who isn't overly marketed by other banks," says a vice president at the Florida bank. "Our job is to find more of them."

But New Mass Affluent households also value their privacy. Jaded by relentless sales pitches, they have become a tough audience for marketers.

Despite their differences from one another, the New Mass Affluent segments do share an appreciation for luxury and status-symbol products. Information from Mediamark Research & Intelligence (MRI) shows that the New Mass Affluent segments have high rates for owning vacation homes, taking foreign vacations and buying the latest technology. Compared to the U.S. average, they're nearly three times as likely to belong to a country club, more than twice as likely to donate to NPR and twice as likely to own a big-screen TV. In response to psychographic questions, the members of this group say they'll pay more for quality, acquire a product that suits their image and seek out an environmentally safe brand. While there's no survey question on whether money can buy happiness, Claritas data show that, at the very least, it can buy lots of high quality, environmentally-friendly, technologically-sophisticated toys.

But New Mass Affluent households also value their privacy. Jaded by relentless sales pitches, they have become a tough audience for marketers. Compared to the general population, they're 29 percent more likely to complain that most ads are "annoying" and "have no credibility." While this view applies to nearly every media channel, they make an exception for online marketing. High-earners are 55 percent more likely to say they trust the Internet, in part due to their fondness for its personalized interaction. Over the last decade, online banking users have grown from nine percent to 56 percent of the U.S. population in 2007, according to Claritas Market Audit. But among America's high-earners, 73 percent do their banking over the Internet.

And while they may appreciate the good life, the nation's New Mass Affluent lead a more prosaic lifestyle than one might imagine. According to MRI data, the eight top P$YCLE segments are more likely than the general population to shop at discount stores, wear costume jewelry and drink domestic beer. Nearly half patronize discount and warehouse stores like Sam's Club and Costco, a significantly higher rate than the national average. And coupons are surprisingly popular among this group. These households are a third more likely than the norm to clip coupons.

The bottom line is that many of today's New Mass Affluent simply don't think of themselves as rich. Although they constitute the top fifth of U.S. wealthy, and spend selectively on luxury items, they are thrifty in other ways. Many grew up middle-class, earning rather than inheriting their money. Having survived the bursting of a stock market bubble and the 2001 recession, they've emerged as a levelheaded group who don't take their affluence for granted. They know the way to get rich is to not spend themselves into the poorhouse.