By now, it should come as no surprise that the very wealthy are very wealthy. The top 1%, as Occupy Wall Street has made clear, owns 50% of all stock. And they shop, spending $70,000 to $80,000 a month, much of it (in order of importance to them) on cars, fashion and ... travel.
The extremity of wealth in households falls off pretty quickly after that, but those in the top 10%, with a median income of $275,000, still have a bit more than $100,000 of disposable income each year to save, spend thoughtfully or squander.
At the American Express Publishing Luxury Summit held in Point Dana, Calif., last week, Jim Taylor, vice chairman of the Harrison Group, presented his company's survey of affluence and wealth in America.
And amid details about asset distribution, brand loyalty and intention to spend, Taylor gave name to two fascinating sub-classes of the wealthy: the Worth Dominant and the Deal Dominant.
The Worth Dominant embrace the concept of luxury. They seek the sublime almost to the exclusion of all else. They are proud to own the best of everything and value craftsmanship. Luxury goods both remind them how lucky they are and are also a reward for hard work. Luxury has personal meaning to them; it says, "Job well done!"
For the Deal Dominant, purchases represent victory over the vendor. They see themselves as smart shoppers, not spenders. They believe no luxury is a necessity. The word "luxury" to them signifies "overpriced."
There is an interesting subtext that informs both groups. The wealthy today tend to perceive that the economy is in much worse shape than it actually is and that they are among the very few who have maintained wealth. They believe, wrongly, that there is widespread hostility and resentment toward them, and as a result, they tend not to talk (or brag) about purchases, as they once did. They live in a state of presumed disgrace.
Consequently, luxury becomes very personal. The Worth Dominant discover who they are through purchases. It is not about the gold content of the ring, Taylor said, but the projected meaning of the ring. Luxury is a perceived expression of love, and price is not the issue. Ownership is the issue.
Worth Dominant families will spend $58 billion this year on luxury goods and services. The Deal Dominant will spend $33 billion. And they will both obtain about the same number of luxury objects.
And when it comes to resorts and fine hotels, the Worth Dominant will spend more than twice as much as the Deal Dominant.
So, clearly, the Worth Dominant among the wealthy produce most of the margin for sellers of travel and other luxury goods, and the takeaway, Taylor said, is that there is no need to discount. Instead, understand how to sell to the Worth Dominant, and apply yourself thusly:
- Recognize that whatever you say, even to the Worth Dominant, will be tested for truthfulness.
- They are not looking for differentiation, but distinction. It is the little details that make something sublime.
- Communicate with care, and elevate the relationship. Confide in clients, and listen. Nothing has more impact than a hand-written thank-you note saying what a joy it was to work with them.
- Be a docent for the product. Know the story of the company and insider details.
- Radiate empathy. Inflate the worth of memories. These buyers find themselves to be better human beings through what they buy.
Is there a downside to selling to the Worth Dominant? It turns out that among this group, there are a higher percentage of what Taylor labels "ego eminent" but describes with one word: "assholes."
He even created an asshole index of sorts. To earn that label, you would agree with three of these four statements:
- I think there are people who are out to get my money.
- I think it's important to stay on top.
- I can't stand it when I don't get the attention I deserve.
- I won't do business with people who don't understand how valuable my time is.
While the "ego eminent" comprise only 16% of luxury buyers, they represent 36% -- more than a third -- of Worth Dominant buyers.
Perhaps next year Taylor can sort out which types of products this subset prefers. Travel advisers might want to reshuffle their portfolios accordingly.
Email Arnie Weissmann at [email protected] and follow him on Twitter.