A recorded masterclass discussion with Dan Kennedy about marketing strategies for affluent customers, explaining how wealthy buyers behave differently in economic booms versus recessions. Kennedy emphasizes that both ability and willingness to buy matter, identifies questions marketers must answer about affluent buyers (who they are, what they spend on, where to find them), and frames affluent customers as high-value but sometimes less accessible targets.
Chapters
During the big crash in affluent neighborhoods, new car sales dropped because even though this family could afford one and they were due to get one, they felt bad about getting it when their neighbors were getting laid off from their executive positions. So they had the ability to buy, they just didn't have the willingness to buy. So we need both of those things in order to be successful. So by and large, when you climb up the money ladder, you get more ability to buy and more often than not, you have more willingness to buy.
Hello and welcome to this month's Masterclass with Dan Kennedy. Today we are talking about the no BS Guide to the Affluent to Marketing to the Affluent, the third edition. And Dan, in this third edition of the book, it was written in 2019, but it was originally written back in 2008 as a survival manual of sorts for an economic crash or recession. How is it that it presents a winning business strategy for tough economies but also for booms?
Well, so in booms, the affluent customer, either high income or high net worth, they kind of behave the same, although they shouldn't, or both. They literally live anxiety free for the most part. So they're pretty free with their spending you. So in booms, it's a great advantage to be selling to people for whom price is not a determinant factor of virtually anything they buy right now. To show you how radically it can change, there is a trend right now of high income individuals, mid six figure income households who have never done it before shopping in dollar stores. They're going to Dollar General and the other dollar store chains to buy stuff where it doesn't seem that there's much of a quality difference between whether they buy it there or they buy it, you know, at Nordstrom's there. And there's a reality TV star, one of the housewives of whatever city it is, who's now making herself kind of a rich person, prudent buying expert YouTube channel and so forth. And she's like making the case, why would you buy party supplies for a themed party for your kid's birthday anywhere but a dollar store? Yeah, because you're going to use them once. You're going to throw it all out. It doesn't matter how well it's made, why pay five times more, right? But see now affluent people feel the weight of a impending recession. They're smarter about money than people that don't have any. So they pay attention to and they can like stitch together some facts and they have a sense of that we may be getting ourselves into real trouble here. And so in some categories now, they will pull back. So during a boom, they're kind of category free. It's best price for everything. Now the reason they're an opportunity in a tough economy is that they're an essential opportunity. We need, we always need. For whatever it is we're selling, we need two things, right? We need ability to buy. So that means the financial ability to buy. They can pay for it or they can credit qualify for it whatever whatever. In B2B, they need to be the decision maker who can afford it, right? So they have to have the ability to buy or they're, they're dead to us. They're useless to us. They're nice people, but get out of here. They also need to have the willingness to buy, which is always in part psycho emotional, not necessarily related to their actual ability to buy. During the big crash in affluent neighborhoods, new car sales dropped because even though this family could afford one and they were due to get one, they felt bad about getting it when their neighbors were getting laid off from their executive positions. Yeah. So they had the ability to buy, they just didn't have the willingness to buy. So we need both of those things in order to be successful. So by and large, when you climb up the money ladder, you get more ability to buy, and more often than not, you have more willingness to buy, and you have a willingness to buy disconnected for price, price elastic over a more diverse category of goods and services. So you don't have to be selling something that is actually essential. You can make it feel essential and price will not necessarily get in your way. So in difficult economic times, the higher ground, when the flood of sewage comes, the higher ground is with more affluent customers. In booms, the boom is with the affluent cost. Yeah.
So your book promises to answer kind of four important questions. So what are those?
So one is who are these people that have this elastic ability and willingness to buy? And I don't mean like what are their names, I mean, I mean who are they demographically, psychologically and by other facts. Right. So in your product or service or business category, are the people with the most elastic ability and willingness to buy? Are they old? Are they young? Are they of any particular ethnicity? And a particular ethnicity does not play that way. Are they in a particular geography? Rural, suburban, urban, red state, blue state? Are they married? Are they single? Are they on the second marriage? Are they on the third marriage? Do they have kids? Do they not have kids? Right. Who are these elastic people? Price elastic. Price elastic in your, in your category. Right. So we know for example, that affluent people who buy a new home, whether primary residence or second residence or third residence, almost never leave. Leave it alone. They buy it and they change it. Anywhere from leveling the damn thing and starting over to immediately remodeling. This part, this part, this part, this part. Right. Much less affluent people buy a new home and it might be a vacation residence or it might be a primary residence, but they are much more prone to leave it alone, at least for a while. Okay, I don't really like the bathroom, but, you know, we just paid for a house. We'll leave the bathroom alone. Right, Right. So who are these people in your category? That's question number one. And the more you know about them and understand about them, the better. Secondly, what are they spending money on? Because what people buy, they tend to buy, they tend to buy. They tend to buy. What people don't buy, they tend not to buy. So what are they spending money on and why are they spending money on it? What is it that they're really trying to achieve? What do they really want? Right? And so there's research, there's statistical information. Typically, every industry, the trade association, does a fair amount of this research. You say you can buy research, you can focus group, you can drive around and look at them, you can go watch them in a buying environment, you know, et cetera, et cetera. What are they spending on? Right. And then third, where are they hiding? By that, I mean now, how. Where are we going to find them to connect with them? Because the more fluent they are, it tends to be true, the less accessible they are.
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