"New Affluents" account for 15% of total US spending, but their views are not what marketers might traditionally expect. Visa has investigated - with some revealing results.
A new study released by Visa shows how dramatically today's young, new affluent consumers reject traditional views of wealth, aligning their perceptions and values more with their parents' middle-class approach to living; trading prestige and luxury for value, pragmatism and the adventure of doing more with what they have. The study was designed to help Visa Member financial institutions and merchants to better identify relevant types of rewards programmes and benefits for these affluent customers.
According to the poll, conducted by Visa Signature, "New Affluent" consumers, just 7% of the American population (but representing 15% of the total US spending), primarily consisting of individuals aged 35-54 whose household income is at least $125,000, clip coupons more than other Americans, report embarrassment in being identified with wealth and status, and are more concerned about passing along honesty and integrity to their children than money or status.
According to demographic expert and author, Michael J Weiss, "As the New Affluent bring their largely middle-class values and identity to bear in the way they believe, live and shop, the rules for marketing to upper income consumers are being rewritten. Their tastes are a lot more mid-scale than their wallets." As high-achievement individuals, Weiss says that New Affluent consumers tend to have worked extremely hard for their wealth and overall success. With the knowledge of how hard it is to "make it," they are ultra-vigilant about spending wisely.
Among the report's key findings:
- Nine out of ten New Affluent consumers surveyed identified themselves as "middle class" or "upper middle class," while only seven percent - most with incomes in excess of $500,000 - described themselves as "affluent."
- Nearly three quarters (72%) of New Affluent consumers surveyed said they are embarrassed by, or dislike being identified by terms such as "wealthy" or "well off," while acknowledging these terms accurately describe their situation.
- Less than one third (27%) of New Affluent surveyed consumers said the term "status" has any meaning to their lives.
- "Honesty and integrity" topped the list of important things that New Affluent consumers surveyed would like to pass along to the next generation, while "social status" and "money" were ranked at the bottom.
- Almost three quarters (72%) of New Affluent consumers surveyed reported that they clip coupons, significantly higher than the national average of 65%.
- More than a third (34%) of upscale consumers surveyed reported they have hunted for bargains at garage sales in the past year, and about the same number said they shopped for deals at "going out of business" sales.
- Two thirds of New Affluent consumers surveyed said they regularly shop at club discount or warehouse stores. This compares to less than half of the general population sample doing the same.
- Almost four out of five (78%) of New Affluents surveyed said they have a payment card that enables them to earn rewards and enjoy perks. This is significantly higher than the general population (38%). Sixty-five percent of New Affluent consumers surveyed said they like to do everything they can to maximise rewards on their payment cards.
- When travelling for pleasure, well over half (57%) of New Affluent consumers surveyed said they choose mid-range hotels that provide the basics for a good price, while only 13% said they choose high-end hotels.
"The power and potential of this consumer group is enormous," said Elizabeth Buse, executive vice president, product development and management, Visa USA. "The more clearly we understand their beliefs and needs as distinct and different from earlier models of wealth, the more effective we can be in helping our Members and merchants unlock this potential."
New affluents earn nearly half of the total US household annual income and hold nearly half of the nation's net worth with an average of US$100,000-US$1,000,000 in investable assets. According to US Census and Federal Reserve studies, people in this segment earn more than US$3 trillion in annual household income and hold more than US$6 trillion in net worth. Visa research estimates that their average monthly credit card spending is 2.5 times that of other credit cardholders.
Visa has developed Visa Signature, a set of payment card offerings geared to meet the needs of this consumer segment in a combination of rewards and benefits, like tailored loyalty programmes, remarkable purchasing power, the Visa Dining Privileges programme, a 24-hour concierge service and attractive merchant offers and events.
The Visa Signature New Affluent Poll was conducted in November 2004 and compared attitudes and reported behaviour among a sample of 800 adults with annual household incomes of $125,000 or higher, and an equal size sample of adults that demographically mirror the nation. The survey was conducted by the research firm Fabrizio, McLaughlin & Associates.