buyer behavior changes in the luxury market
TRANSCRIPT
Buyer Behavior changes in Luxury Travel
a June 2017 update for
Chief Digital MarketerEd Alexander
Buyer Behavior changes in Luxury Travel
Resources used in this report
American Affluence
Research Center
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What has changed? How should agents change?
Agenda: This is the future now
Trendspotting - new, now, next
Adapting – to keep pace
Transforming – to lead change
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Get these right, and you could succeed in attracting Wealthy and Mass Affluent customers.
Opening Conclusions:
• Travelers are notoriously early tech adopters • Travelers prefer Authentic Experience over Luxury Brand• Brokers & Agents regain relevance as choice proliferates • Behavior shifts affect luxury travel
What has changed? How should agents change?
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a)User Generated Content (UGC) – welcome it!Support & curate it with: interactive planning, group collaboration, social chat
b) Clients become Ambassadors and Evangelists- if they like how you make them feel. (see item (a) above)
c) Use tech to enhance the human connection. Seamless facilitation for buyers (see item (a) above)
What has changed? How should agents change?
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Travelers are notoriously early tech adopters
Upshot: Hire tech savvy talent
Interest Over TimeLuxury Yacht; Yacht
Boating
2004 2008 2012 2016
2004 2008 2012 2016
What has changed? How should agents change?
Q: Do these trends coincide with wealth concentration?
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Authentic experience vs. luxury brand
Luxury Travel Travel Reviews Travel Blog
2004 2008 2012 2016
What has changed? How should agents change?
(call it something else) always relevant; what’s your rep?
table stakes now
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Authentic experience vs. luxury brand
Upshot: Blog / socialize
The Mass Luxury Challenge
Digital Strategy – 3 topics
18%
Influence Disruption Activation
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The Mass Luxury Challenge
Digital Strategy
1. Digital’s growing influence
% of Luxury Sales
2015: 6% ($14B/$224B)2025: 18% ($70B/$390B)
2015 2025
18%
Influence Disruption Activation
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$14B
$70B
Upshot: Hire tech savvy talent
The Mass Luxury Challenge
Digital Strategy
2. Digital Disruption
Pre-digital (was): Brand-centric exclusive brand image
Post-digital (is): Buyer-centric frequent, relevant engagement
Influence Disruption Activation
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Upshot: Blog / socialize
The Mass Luxury Challenge
Digital Strategy
3. Digital Activation
Marketing spend cranks up to address:Multiple touchpoints Single view of client
Influence Disruption Activation
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Upshot: Get media tech-savvy
The Mass Luxury Challenge
Digital Strategy
3. Digital Activation
Marketing spend cranks up to address:Multiple touchpoints Single view of client
Social channels crank up to: Build online communities Create purpose Leverage convenience
Influence Disruption Activation
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The Mass Luxury Challenge
2. Discretionary Spending Trends
The Shift to Thrift
Global Spending Power
Mass Affluence
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Travel issues:
Over-tourism Sustainability Security Privacy
What has changed? How should we change?
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Upshot: Know the locals
2017 Luxury Brands
Can you name them all?
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The Shift to Thrift
Upshot: Address frugality
About the HNW:
Who are they? Where are they?
How do they buy? How do we sell?
How are they changing? How are we adapting?
f
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Global Spending Power
About the NHW: Who are they? Where are they?
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2000 (41,000)
2015 (128,000)
Worldwide UHNW (>$50M) Population Growth, 2000 - 2015
$50M $100M $500M
14,000 1,200
45,000
4,300
25,800
78,700
3X
Global Spending Power
Upshot: More Buyers
About the HNW: Who are they? Where are they?
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Global Spending Power
The new luxury hotspots, based on luxury property growth
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Global Spending Power
The Growth Markets: Who are they? Where are they?
Urban World: The New Global Consumers
❶
❷
❸
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Upshot: Learn Chinese?
Urban World*: The 3 Global Consumers to Watch (McKinsey, 2016) *91% of global consumption will occur in cities.
❶ Retirees in US, W.EU and NE Asia (>60 YO)
• Will grow by 1/3 to 222M in 2030 (US:+10K/day)• Will generate >1/3 of global consumption growth • Per Capita spending will DOUBLE –
2005: 30%; 2030: 60%
❷ China's working age consumers (age 15 - 59)
• Will grow 20% to 100M by 2030• Per capita spending will DOUBLE• Optimistic about financial future • 2x more willing to pay more for new products
❸ N. American, working age (15-59)
• Inequality rising - Median net worth of top 20% is 8x the other 80% (up from 4x in 2000)
• Incomes under pressure - suggests multi-tier pricing • 20% more likely to use sharing economy services;
this may require customized strategies
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Concern: overinflated economy
US Concerns: High Debt Low Savings
❶
❷
❸
$$ $
$ $$Why Watch These Groups?
They stimulate consumption growth. Was: new spenders, until pop. growth ↓ Is: same spenders - per-capita spend ↑
Marketing Challenges - are you equipped for:
1 : 1 Relationships - retargeting and recommendations-based buying
Profile each target buyer
Age •Income • Ethnicity Shopping preferences • Buying habits
Where they are • What they want What drives their spending
Urban World*: The 3 Global Consumers to Watch (McKinsey, 2016) *91% of global consumption will occur in cities.
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$ Was: New Spenders
Is: Same SpendersUpshot: Embrace analytics
❶ Retiring & elderly in the developed world
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❶ Retiring & elderly in the developed world
In the US, this group will represent more than 40% of consumption growth in:
40%↑
Housing Transport
Entertainment
spending
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❶ Retiring & elderly in the developed world
In the US, this group will represent more than 40% of consumption growth in:
2006: 33%
2011: 50%
Home Improvement: A decade ago, people aged 55+ accounted for <33%of US spend on home improvement. By 2011, this grew to nearly 50%.40%↑
Housing Transport
Entertainment
spending
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❶ Retiring & elderly in the developed world
Home Improvement purchase growth trend may also signal an affinity market for luxury travel sales. Why?
=
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❶ Retiring & elderly in the developed world
(a) Both require planning assistance (b) Older citizens are likely buyers of both
Caveats: 1. Home improvement trend may signal frugality (underwater mortgages), yet some older homeowners have mortgages paid off, freeing cash for entertainment and travel 2. Over 90% of all affluent retirees are self-made, accustomed to running things – not idle rich.
Home Improvement purchase growth trend may also signal an affinity market for luxury travel sales. Why?
=
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Agents wanted!
Upshot: Agents relevant
Entertainment is multifaceted. Affinity markets matter.
❶ Retiring & elderly in the developed world
=
In the US, this group will represent more than 40% of consumption growth in:
40%↑
Housing Transport
Entertainment
spending
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Upshot: Find partners
❶ Retiring & elderly in the developed world
Travel plans:
1. YES! Travel is in just about everyone’s plans.2. Price is not a dealbreaker, but it needs proof. 3. Bucket List items vary with wealth and life stage4. Hot spots are, of course, hotspots 5. Connecting while away is “table stakes” for some, but not all6. Fun and family are primary drivers of travel
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❸ North America’s working-age population
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Impact investing
EntertainmentWarm Climate
Active Lifestyle
Romance Culinary SustainabilityWorld Sport
2000 2016
4x 8x
Top 20%
Other 80%
Net Worth
Affluent young consumers They are fewer (15% of all Millennials), but also more affluent - increasingly so.
❸ North America’s working-age population
15% 8x$$$
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2000 2016
4x 8x
Top 20%
Other 80%
Net Worth
Affluent young consumers They are fewer (15% of all Millennials), but also more affluent - increasingly so.
❸ North America’s working-age population
15% 8x$$$
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Today, the median net worth of the top 20% of young-adult households is 8X that of the other 80%, up from 4x in 2000.
❸ North America’s working-age population: who are they?
About those affluent Millennials ….
ETERNAL OPTIMISTS
ENGAGEDDECISION MAKERS
OPEN MINDED
SOCIAL CENTRIC
HUNGRY FOR INFO
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Upshot: Content is King
2017 Luxury Market Shifts Buyer Profile
Media Social, not traditional
Behavior“NET SET”: Global citizen, midcareer, tribe-aligned
Preference Experiences vs Things
Value trend Lease / share vs. own
Engagement Frictionless, online
Environment Tech-enabled
Channels Digital (mobile, social, app)
ValuesSpirituality, well being, conscience, ethics, taste
Source: Luxury Society
Brand Centric
“What I own”
Buyer Centric
“Who Iam”
❸ North America’s working-age population: where are they?
( )
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was: is:
How are we adapting to reach them?
• Referrals and Influencers
• Events and Activities (passion, partner, charity)
• Web, Social, AI (1:1)
• Chatbots (on-demand CSR)
❸ North America’s working-age population
About those affluent Millennials ….
Source: The American Affluence Research Board
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❸ North America’s working-age population
They are mobile …
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Upshot: bemobile-responsive
❸ North America’s working-age population
Source: The GrabYourWallet.org top list of businesses to boycott
2/2/17
They vote their conscience when aligning with brands
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2017 Luxury BrandsThey vote their pocketbooks, too.
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35 - 66 College educated
White collar Married
Caucasian F.I.R.E.
About the 1%: Who are they?
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The 1%: How do they buy? How do we sell?
Research what they buy, who sells to them, and how
Purchase Habits • Websites • Social Channels Set Alerts • Nurture & Support Partnerships for co-selling
Ultimate Status Symbols of the Super-Rich (partner opportunities)
Private island Unlimited First Class Air Travel PassPrivate jet Exclusive designer handbags - Birkn, etc. Electric supercar Limited edition cars Children's car Submarine Luxury treehouse Expensive stocks (ex.: Berkshire Hathaway) Robot butler Membership in elite club Enchanted forest (legacy trees) Amex Centurion Black Card Kiteboard Mega-mansion Attractive bodyguard Superyacht
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Upshot: Exploit Your niche
Philanthropy Sports Travel Reading Art Cultural events Fashion and style Golf Politics Dining Wine and spirits Hunting Boating Jewelry Health and exercise Fishing Automobiles Watches Collectibles (cars, etc.) Skiing
Top Hobbies of Billionaires (more Partner markets)
Hmmm… How and where do they socialize about these things?
Source: businessinsider.com
?
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Upshot: Exploit your niche
2017 Luxury Market Shifts Source: Luxury Society
Even More Partner Markets Relevant Influencers (consider engaging)
Concierge Personal Assistant Private Jet Charter Sports (Tennis, LaCrosse) Business and Leadership Self improvementFinance – Stocks, Bonds, Real Estate
Good Read (Forbes): “Luxury Market Travel Trends Shift as Affluent Millennials Act on Their Aspirations”
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Currency devaluedEconomy cooling
Geopolitical effects
Luxury Cities, Millionaire Migration Source: Luxury Society
Buyers Partners Brand HQ
+11,000
+10,000
+8,000-12K
-9K
-8K
+4,000
-6K
-6K
Migration Factors: EducationSafetyClimate Healthcare Cleanliness
Source: New World Wealth
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Key HNW Issues Source: US Trust
1. Health - a top factor in "living well".
2. Life purpose – this would not change, even if all money were lost.
3. Social impact - top investing interests:38% Enviro. protection & sustainability 35% Healthcare quality and access 35% Disease prevention, treatment and cure 24% Access to education 23% Veterans' assistance 21% Child and youth development
4. Family - #2 after Health (career = #3 during peak earning years)
5. Equality - Women and men contribute equally to household wealth
6. Financial planning - essential to financial success.
7. Wealth / Health balance – difficult to do.
Formative Family Values Charity Academic achievement Financial discipline (recession-induced thrift)
Rich people are cheap! Brands they shop:
Millennials' Outlook Confidence in future is high Connections are a big success factor
- includes mentors and Board members
- Regardless of age
①
②
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Upshot: Address shifting values
14%29%
Target market
Affluence in America – long term trend
Source: CEPA Report - Stanford Center for Economic Policy Analysis, March 2016
The US HNW Market is expanding
Share of affluent & high income households has doubled in US since 1970
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Affluent
High Income
Hi-Mid Income
Lo-Mid Income
Low Income
Poor
Marketing to the HNW
If Luxury is - by definition - exclusive, and the NHW is expanding …
Q: How do you market broadly, yet remain exclusive?
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Marketing to the HNW
How do you market broadly, yet remain exclusive?
A: Do both.
If Luxury is - by definition - exclusive, and the NHW is expanding …
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Marketing to the HNW
If Luxury is, by definition, exclusive...
Market Broadly.
Create aspirational products and experiences that
appeal to broader audience interests
Align with shared values: transparency, privacy, impact, adventure, sustainability …
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Marketing to the HNW
If Luxury is, by definition, exclusive...
Remain Exclusive. Cultivate insider relations with:
Clients Influencers (values and relevance)High potential prospects
Deliver exclusive benefits
High value content Members-only Perks
VIP-Exclusive Experiences
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Cultivate “insider” relations • Clients • Influencers (value, relevance)• High potential prospects
Deliver exclusive benefits • Members-only Perks • VIP-Exclusive Experiences • High value content
Marketing to the HNW
If Luxury is, by definition, exclusive...
Be Exclusive.
Connect with a key Influencer’s affinity groups based on his/her engagement with your brand.
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Marketing to the HNW
2 words about privacy: It depends.
So, maybe … ask about it?
Ultra HNW: Highly Guarded
New HNW:
Digital Native:
Less insistent
Online sharer
Less affluent: Less concerned
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Upshot: Personify integrity
Top Trip Types across generations
Significant decline
over 2016
Balearic Islands Costa Rica Bali Cuba Bermuda Fiji Bora Bora Galapagos Islands Cancun Sardinia Corfu Seychelles
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Get to know:
Who they are Where they are
How they buy How we sell
How they are changing How we adapt
The US HNW Market is expanding
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Hire tech savvy talent
Blog and get social
Get media tech-savvy
Know the locals
Address frugality
More Buyers
Learn Chinese?
Embrace analytics
Agents relevant
Content is King
Exploit your niche
Market broadly
Offer exclusives
Personify integrity
Address shifting values
Upshot:
Be mobile-responsive
Thank you!
For in-depth, tailored assistance, or if you have a question, contact:
Ed Alexander, Chief Digital Marketer [email protected]+1 781 492 7638 USA East
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Appendix
Industry info
Tactical Approaches in Specific Markets