Wealthy individuals under 40, mostly millennials, generally perceive luxury differently than their parents. Their life experiences are unique to their age group and traditional luxury consumers.
Eighteen years ago, during a presentation to a large group in Palm Beach, I quoted a Harrison Group statistic that 80% of the world’s most affluent individuals were raised in middle-class families. The audience scoffed at the statistic. That wouldn’t happen today. Their best clients, those who are consuming products and services, are younger, more diverse, and more open to new brands. For marketers of luxury products and services, old assumptions and old strategies are increasingly ineffective. It’s important to know that your brand’s status is in play.
Beware of terms that are trendy, overused, or subjective. For example, CURATED is a grossly overused term that’s become meaningless. BESPOKE is a strictly British term. A learned affluent consumer may assume brands are poseurs if they misuse the term for brands that aren’t British. LUXURY is equally perilous.
Luxury is an immensely personal term. It means something different to every person. We tend to use the term to communicate that something is superior or of a certain class of quality. Sometimes that works for you, and sometimes it works against you.
If you search online for a Lincoln automobile, the descriptor begins with Luxury SUVs. Not so if you search for a Bentley.
Knowing a prospect well enough to know which terms to use and which to avoid is essential when serving high-net-worth clients. A 60-year-old client who’s earned millions through their business acumen and hard work sees luxury very differently than one of their children who was raised surrounded by wealth.
Caviar isn’t a luxury if you eat it every day.
I recently attended a private event with several friends who are serious boaters. All of them owned a vessel that exceeded 24 meters. My take on the stories had little to do with their narratives. I learned their yachts aren’t a luxury. It’s just how they live. Living without their boats is as unimaginable as living without their Tesla, which isn’t luxury either. It’s just how they live. Don’t refer to it as a luxury.
There is a continuum that ranges from conspicuous consumption to inconspicuous consumption. Those who are younger or new to wealth will often more highly value the status that luxury brands provide. They are conspicuous consumers. Those who’ve had wealth for longer periods are less likely to desire to be conspicuous. Examples are Mercedes-Benz and Ralph Lauren. In both cases, the more expensive the product, the smaller the logo. A Ralph Lauren polo costs about $70, while a Brioni polo at Neiman Marcus will cost you $650. The Brioni polo has no logo. Meanwhile, you can order your ‘Light Polo Shirt’ in Vicuña from Loro Piana for $5,500. They’ll include free delivery, but no logo.
The behaviors of residents from countries where wealth is expanding are very different from similarly affluent individuals from, for example, France.
The age of your client and from whence their wealth comes is important to understand how to relate and sell to them. Misuse of terms will undermine your credibility. If you refer to something as a luxury, then it needs to be a luxury on their terms. If it’s not luxury as they define luxury, then you undermine your credibility because you don’t share their values.
A group of us were recently invited by a large company to visit their corporate headquarters. We met at a private terminal until the Gulfstream 650 was ready to board. The behaviors of some of my colleagues embarrassed me. Flying private was new to most of them, a luxury. It wasn’t to me as my father was Chief of Aviation for a Fortune 100 company. I spent many Saturdays at Allegheny County Airport and often sat in the jump seat to far-flung places. Flying private isn’t a luxury to me; it’s what Dad did.
Economic slowdowns and recessions are new to many millennials. If they were raised in a wealthy family, then it’s likely their finances are in order, and their wealth is secure. Those who are new to wealth will respond differently. They are more likely not to have the personal infrastructure, such as multiple homes, families, and savings. If they’re investors, they’re possibly seeing their wealth evaporate and may feel impotent to do anything about it.
In a fragile world, you may expect them to spend judiciously. Uncertainty is new to them.
The consensus is that those with wealth will continue to spend through a recession or a difficult political year. Don’t be so sure. We’re experiencing and seeing things many of us have never imagined. For example, the Knight Frank Luxury Investment Index fell 1% in one year, pulled down by falling values in rare whisky, classic cars, handbags, and furniture.
None of this means they don’t want to buy a new home. In fact, Knight Frank also tells us that 22% of UHNWIs are planning on buying a new residential home in 2024. They still have the financial capacity to acquire anything they desire. But it may also mean they won’t acquire everything they desire. You will overcome these shifts in consumer values by being a more aggressive marketer and minding your words as carefully as you mind your manners.
Ultimately, marketing, selling, and serving must resonate with a client for it to be effective. Understanding their background and values helps ensure you serve them in the manner they desire and expect. How they define luxury determines how you should use the term.
If it’s part of their life, then it’s not a luxury. It’s just how they live.
By Christopher P. Ramey of The Home Trust International
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