As we start working with our new clients, we listen very carefully to how they define their current marketplaces and target audiences. According to Webster’s dictionary, affluent means “having a large amount of money and owning many expensive things.” When we follow up and ask marketers what they consider to be “a large amount of money,” their responses usually focus either on their customers’ household-income levels or their customers’ net worth.
When their focus is on household income, our clients tend to target two household-income levels: $100,000 or more (25% of American households) or $250,000 or more (3% of American households). When they target their customers by their net worth (usually referring to how much their customers have in personal liquid assets — i.e., cash, savings, or securities easily convertible to cash), the target level is often $1 million or more (about 8% of adults report they are millionaires by this definition according to our most recent survey).
These three affluent targets describe very different groups of consumers. The following are just a few examples of the many differences of which we are aware:
The average household income of adults who live in the 31 million households with household incomes of $100, 000 or more is about $190,000, while adults in the 4 million households with household incomes of $250,000 have household incomes of about $475,000 on average. In comparison, millionaires — 19 million adults in total — have average household incomes at just about the same level as adults in households with $100,000 or more in household income. Depending on the products or services an affluent marketer is selling, the sizes of these three affluent target groups and the range in their average household incomes make a big difference to a marketer’s probability of being successful in selling products and services.
In short, while affluent adults' financial status based on their household incomes, their net worth, or potentially both, sets them apart from average Americans, they also have their own differences, including very substantial generational distinctions. Quite simply, not all affluents are alike, and marketers who are targeting them would be wise to understand these differences in more detail and how these differences may be used to enhance their outreach efforts.