10 Popular Myths About Wealth and Luxury

 

The following ’10 Popular Myths About Wealth and Luxury’ comes from our friends at the Luxury Insitute.

1. The Wealthy made their money easily and spend their money easily.

Most wealthy individuals spend far more hours working, embrace far more risk, and create far more value for society than their mainstream counterparts. Even today, for most, it still takes years of immense sacrifice to achieve wealth. Wealthy consumers are therefore very value conscious and discerning when they buy luxury goods and services. As a luxury provider, you need to recognize and acknowledge their achievements, deliver compelling emotional benefits, and position your offer as a complete experience that delivers a fitting reward.

2. The Wealthy are conspicuous consumption machines living in another reality.

The minority of wealthy individuals who live ostentatious, opulent lifestyles are often portrayed as stereotypical wealthy consumers. In reality, most wealthy consumers are value creators, who seek quality and value, including authentic prestige, in luxury goods and services. Like many of us, some of their biggest concerns include taking care of aging parents and raising well-educated, generous children. When marketing to them, acknowledge their basic human values and show you understand them as the well rounded and balanced individuals they really are.

3. The wealthy can’t really define luxury.

Put a list of brands in front of the typical wealthy consumer and she, or he, will not only be able to articulate the attributes that constitute a luxury brand, but will also discern differences between brands better than any luxury marketer. The ability of wealthy consumers to define true luxury, individually, and as a group, is laser-accurate. Ensure that your brand is truly unique and exclusive and worthy of being rated a luxury brand.

4. Luxury goods are a far larger industry than luxury services.

Luxury goods such as couture fashion, watches and jewelry, get all the attention, yet, are dwarfed by the size of luxury services such as wealth management, travel and leisure, security, etc. Innovative services, including those as basic as nanny services, concierge services, and medical services, aimed at the wealthy, will grow faster and more profitably in the future. Many luxury goods firms are busy transforming themselves into services, or adding services to add value. Time to rethink your luxury business model, or invent a new service-oriented offering.

5. The wealthy don’t participate in consumer satisfaction surveys.

Wealthy consumers provide feedback and respond to surveys, sometimes more that the general population. Most wealthy consumers are highly educated businesspeople. They recognize the value of feedback and will provide theirs candidly to brands they trust. No metric is more highly correlated with financial success than customer satisfaction. Brands that fail to solicit and measure their customers’ feedback and continuously seek to improve customer satisfaction will become extinct.

6. The wealthy don’t go online.

A recent survey by the Luxury Institute found that the vast majority of wealthy consumers are regularly online. The wealthy work long hours, are more time-starved than the general population, and use the internet more heavily for researching luxury goods and services, and conducting transactions. If you are not selling your full luxury offerings online, you are giving your competitors an edge.

7. The wealthy don’t use ratings and reviews to make purchasing decisions.

A recent survey by the Luxury Institute found that over 80 percent of wealthy consumers use ratings and reviews sites to facilitate purchasing decisions. While the wealthiest may rely on a few trusted experts, many have middle class values and lead regular lives that include seeking information from ratings and reviews sites and publications. The difference is that these savvy consumers steer clear of biased websites and publications and “Best of” lists that pretend to provide non-conflicted advice. Keep your brand clear of conflicted and biased recommendations that will turn off savvy wealthy consumers.

8. Luxury marketers should be targeting only the wealthiest clients.

Luxury brands that seek to serve only the $100 million plus net-worth consumer are usually small and often have fairly low profit margins. The truly under-served wealthy, in luxury goods, and, especially in luxury services, are households with a net worth from $ 1 million to $50 million. Their lives are busy, and often complex, and require many types of trusted advice. There are far more of these individuals globally, and growing in numbers. They are the core customers of most luxury goods and services firms. Ignore them, or treat them badly, at your peril.

9. Wealthy clients do not give referrals.

Research with wealthy and ultra-wealthy consumers indicates that the vast majority are willing to refer trusted brands to friends and family. Yet, ask luxury goods and services CEOs what their client referral rates are, and the answer is usually well below 50 percent. This disconnect is due to the fact that most luxury goods and services firms rely on individual salespeople for referrals rather than creating a company-wide referral program. It is one of the greatest revenue opportunities in luxury today.

10. Wealthy consumers are not very loyal since they can go anywhere.

The majority of wealthy consumers are among the most loyal customers. Their loyalty must be earned with great service. Ratings show that most luxury goods and services firms have yet to internalize what brands such as Ritz-Carlton, Nordstrom, Neiman Marcus, and Bessemer Trust inherently know: That the entire customer experience, from A to Z, must be at a level that makes customers happy to do business with the brand. This is the greatest, and easiest to implement, opportunity for luxury goods and services brands globally today.

I suspect there’s a lot of truth in most of these, but I’d be interested to hear how many of the ten points our readers agree with.

Comments (5)

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  1. Jacqueline says:

    The part about wealthy customers not going online is very interesting to me – I would assume that they would be less likely to check out product reviews as opposed to relying on the help of a trusted salesperson (of course, this is assuming that they can find quality salespeople in every area or product category, which seems highly unlikely or at the very least pretty difficult).

    It actually does make perfect sense though, especially given the growth of recommendation engines (and now that I think of it, there is actually that is focused on luxury goods as well – http://www.3luxe.com) and all the many social shopping sites (way too many to name).

    The part about the luxury marketers only targeting the top is interesting too – especially because those have a net worth of $1-50 million are probably huge consumers of luxury brands and services as well. I wonder how a marketer would focus on that group in particular without sort of blurring the lines and just targeting wealthy people in general, however. I wonder if this accounts for the people who may splash out one thing (luxury travel, for instance), but not in other areas. After all, there are degrees of wealth (and spending habits).

  2. Nina Zapala says:

    Your post was spot on. As a pr professional for luxury hotel brands part of my job is identifying what the mind-set is for those of means, and I oftentimes find myself explaining what you stated so clearly is that people of wealth have the same values, and concerns that most people have. It’s pretty simply and boils down to one trait; human nature, and that hasn’t changed for thousands of years.

    What I find most often is that a truly “authentic” travel experience will win over a “tourism created” travel experience with all things being equal in terms of quality of service, value etc…

    I also concur with your thoughts on the wealthy providing referrals and word-of-mouth recommendations. They do talk about their favorite wines, hotels, cars and clothing brands; in fact they like to brag about them especially when they feel they got a great deal and that doesn’t necessary mean a sale it could mean a level of service i.e. time saving service, a new experience at a favorite haunt, or an upgrade.

    The wealthy are different in that they do work hard and they do take risks, willing to lose it all. That is a critical issue to keep in mind as well when marketing to this demographic.

    Thanks for the great post.

  3. Zena says:

    Yeah??? Well I have seen rich people go lie on applications and take government cheese, and go buy up a bunch of clothes and stuff at the second hand store, so much so they raised the prices on their stuff making it even harder for the poor to get anything decent at a fair price. It didn’t make me love them.

  4. 999s9s99s9s says:

    By definition there are only a few true luxury brands. So it is ridiculous for someone to make a post on the internet beliving that half of the pepole who read it own luxury brands and will need his advice.

  5. Kay says:

    Very interesting, thanks. I suppose everyone selling anything on the Internet – whether via a blog or other means – wants to attract the affluent who might actually buy something using your links.

    I found a lot of food for thought in the ten myths and the responses and will bear them in mind. I suppose you have to figure out exactly who your target audience and how to give them what they want. Yes, I know it sounds obvious, but it doesn’t hurt to get back to basics sometimes.

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