RISMEDIA, Sept. 24, 2008-Whether the economy is booming or braking, affluent homeowners still spend on home improvement, fine dining, personal improvement and entertainment, according to RSVP Publications, an upscale direct marketing firm specializing in marketing to affluent homeowners.
“That doesn’t mean affluent homeowners haven’t changed their spending patterns during this economic downturn,” says Larry Golden, RSVP’s co-CEO. “Several emerging patterns provide valuable clues for businesses selling to this market. And, in turn, there are tips to help affluent homeowners get the most for what they spend.”
Trends or blips?
CNN and other sources have reported on what’s been called “staycations,” in which individuals have replaced their destination trips with a stay-at-home experience or home project. Although much information is anecdotal, it appears to demonstrate some changing spending habits.
Suzie Boland, owner of Tampa-based public relations agency RFB Communications Group, decided to forego her annual trip to Europe in favor of redoing her kitchen. “For what this will cost, I could have taken an awful lot of trips, but this will be something I’ll be able to enjoy for a long time,” she says.
Others choose to invest in a second home, like Julie and Bob Kindle of St. Louis. “We’ve both retired early and know we’ll enjoy spending time at our country home,” says Julie. “This will be the first year in some time that we haven’t taken a major trip, but everything we want now is right here.”
Even in light of changing spending habits, Golden says the recent problems in the housing market only serve to indicate that affluent homeowners are a more desirable target than ever. He notes they often own two homes and are therefore in a position to remodel two kitchens and multiple bathrooms, as well as purchasing landscaping, furniture, yard and patio goods.
Maybe the glass is really half full
Although much has been reported in the media about problems in the homebuilding industry, niche contractors who provide specialty remodeling services to affluent customers feel the pinch less if they are willing to work with their clients.
“Contrary to what people think, some contractors are busier than ever,” says Hal Hrasna, owner of Tampa contracting firm Harold James Builders. “The difference is that many of the homeowners we’re working with are now ordering a series of back-to-back projects, rather than a full remodeling. The total cost is probably the same, but they are reluctant to commit to an entire remodeling job at once.”
Statistics reported in a variety of sources support the continuing popularity of remodeling projects. As reported by Packaged Facts in 2007, 14% of affluent households did major home remodeling that year, compared with less than 9% among other households. That same year, the American Affluence Research Center said that 2.3 million affluent households would likely undertake a home remodeling project in a given year. Using a conservative estimate of $15,000 per project, that represents $34.5 billion annually.
Reaching the affluent homeowner
Golden says that affluent homeowners are not only a desirable audience, but are also relatively easy to reach, receptive to advertising and more likely to respond to sales messages – in addition to spending more money when they do so.
Here are some pointers for business owners looking to reach this audience, based on the experience of RSVP Publications:
— Make an offer – even the affluent clip coupons and watch for deals! A report from Packaged Facts found that the affluent are attracted to incentive offers such as rebates, they are willing to drive farther to find a good deal and spend time looking for value.
— Tailor your message. As with any demographic, there is not one best way to reach affluent homeowners. Marketers should vary messages based on the geographic region, products and services, age, sex and other factors.
— Take advantage of the Internet. A study conducted by the U.S. Postal Service shows that the affluent are likely to do their homework on the Internet before they make a purchase.
— Combine various media to heighten return on investment. A recent Media Usage Forecast by Target Marketing indicated that 34% of direct marketers believe direct mail still delivers the strongest ROI for customer acquisition. Another survey, conducted by International Communication Research, found that 73% of respondents prefer to receive new product announcements by mail and that fewer people discard unsolicited direct mail, compared with e-mail. Golden points out that using direct mail to direct people to a website can significantly increase response rates and sales, as well as allowing the business owner to track and analyze response rates.
— Loyalty programs work. The affluent expect to be treated well, so loyalty programs that include memberships and special privileges are effective in gaining and retaining customers. However, programs must be carefully crafted to differentiate the marketer and encourage customers to spend more.
— Quality matters – especially in home remodeling. When marketing to affluent homeowners, it pays to convey a sense of quality, particularly when it comes to home improvement, where quality and customer service are paramount.
How the affluent homeowner can make the best choices
Do affluent homeowners feel they have a target painted on them? Not really, says Golden. “These are people who want to purchase, have discerning tastes and are willing to take the time to look at their options. We believe direct mail is a critical part of the marketing mix, since it provides options for their shopping needs and is in front of them on a consistent basis.”
Golden offers the following tips for affluent homeowners looking to make the best choices:
— Do your homework. Many direct mail and advertising opportunities direct recipients to the appropriate websites, where they can conduct research at their leisure.
— Be thorough. Review direct mail and advertisements and ask friends and co-workers for referrals.
— Check references thoroughly … and then double check. Particularly in the field of home improvement, knowing what previous customers say about the quality and timeliness of the contractor is critical.
— Ask for more favorable credit terms. Contractors and suppliers who are experiencing leaner sales may be willing to make concessions. Be leery of large start-up deposits.
— Ask for discounts or special incentives. The worst that can happen is a negative response, but the upside could be considerable.
“An economic downturn offers great opportunities for both buyers and sellers,” concludes Golden. “Looking at these opportunities, this may well become the ‘best of times’ for affluent homeowners and those seeking to sell to them.”
For more information, visit http://www.rsvppublications.com/.