The Art of Selling to the Affluent

How to Attract, Service, and Retain Wealthy Customers and Clients for Life

Matt Oechsli

• Publisher: Wiley
• Year: 2014
• ISBN:
  9781118849101
• Edition: 2
• Topic: Business
• Subtopic: Business General
• Index: Business

Attract and retain affluent customers and clients

Much has changed since the original The Art of Selling to the Affluent was published. The financial crisis has affected the affluent as well as the less affluent. This book brings you up to date with today's affluent and helps every salesperson understand what adjustments need to be made in order to successfully attract, service, and retain lifelong affluent customers and clients. Completely updated and revised, it is based on The Oechli Institute's latest 2013 comprehensive research.

• Explains how the financial crisis elevated the level of anxiety and how this has affected major purchase decisions
• Offers step-by-step guidance on how to navigate the process of overcoming social self-consciousness during the sales process
• Author Matt Oechsli is one of the leading authorities regarding marketing, selling, servicing, and developing loyalty with affluent clients, and one of the most sought after speakers in the financial services industry

The Art of Selling to the Affluent, 2nd Edition offers a detailed landscape of today's affluent. Put yourself ahead of the competition by knowing how the Great Recession has affected purchasing behavior and where the opportunities are moving forward.

Chapter 1

The World of Today’s Affluent

Sometimes, what the affluent don’t do speaks volumes.

For almost a year, Mr. and Ms. “Elliot” observed the construction of a beach house across the street from their vacation home. On the way to the shore, they often stopped to talk with the owner, “Brad,” as he supervised the building contractors.

Brad was always up for a neighborly chat. He loved talking about the quality of the building materials and the workmanship. He loved giving tours of the house as it rose from the vacant lot. This was his family’s third house—his retirement home on the beach.

One day, however, Brad stopped coming to the house. Instead, a Realtor’s sign appeared in the front yard. The sign stayed there for many months until it, like Brad, simply vanished.

At this point, Ms. Elliott asked Mr. Elliot for his views on purchasing the property. After all, they knew the house was high quality. They’d inspected every square inch of the place. What’s more, while their current beach home would be great for their children, it wasn’t something she wanted for their retirement years. Why not purchase the luxury beach house, and let the kids stay in the old house during their visits?

Two hours (and a few phone calls) later, Mr. Elliot negotiated a cash deal for the beach house, which included all of the furnishings. Two weeks later, they closed on the house.

What the Elliots did was straightforward. They bought a house.

What the Elliots didn’t do is less obvious, but it illustrates: (1) how today’s affluent make major purchase decisions, (2) who makes the decisions, and (3) whom they trust. Note the following:

• The Elliots did not seek counsel from their financial advisor before buying the house. Scarred by the recent financial crisis and the “Great Recession,” they no longer had full faith and confidence in their advisor’s ability to manage all their assets.
• They did not contact the Realtor (the one who planted the sign) to broker the deal. Instead, they went directly to the owner—someone they knew, liked, and trusted.
• Mr. Elliot (the traditional “pater familias”) did not initiate the deal. Ms. Elliot spearheaded the purchase and had the final say.
• As of this writing, the Elliots have not informed their siblings and friends of the purchase. Ms. Elliot’s explanation was simple: “I don’t want anyone getting the wrong impression [the impression that we’re wealthy].”

Is every affluent household like Mr. and Ms. Elliot’s?

No, but the Elliots are representative of how affluent consumers make major investment and purchase decisions in today’s climate—in the new world produced by the Great Recession.

Since 2008, the economic landscape has radically changed, and nobody is more aware of this than the nation’s affluent households. Bernie Madoff and his Ponzi scheme; financial products so complex that few people understood the risks; a government that failed to oversee and regulate financial institutions; people taking out mortgages they couldn’t afford . . . nobody paid closer attention to these calamities (and their aftermath) than the affluent.

As a result, affluent attitudes have undergone a metamorphosis. Among other things, the affluent are much more discriminating and much more skeptical than they once were, and this skepticism requires companies to dramatically adjust their marketing and sales practices. Keep in mind the following. . . .

Today’s affluent don’t trust salespeople (they’ll say anything).

They don’t trust politicians (of either party). They’re skeptical of large corporations (too big to fail). They don’t trust the news media (entertainers exploiting people’s fears).

Despite this cynicism and the drubbing they received during the financial crisis, the affluent are back—with plenty of cash to spend. They’re making major purchases with greater frequency than any other population segment. While some nonaffluent consumers have retreated from the stores, the stock market, and real estate markets, the affluent are marching forward. While many people learned nothing from the financial and real estate debacles, the affluent have adjusted their attitudes and behaviors to ensure they won’t make the same mistakes again. While prosperous households have money to spend and the will to spend it, the average salesperson had better learn how to earn this group’s confidence if he or she hopes to benefit.

Without a doubt, the ability to close deals with well-heeled consumers is an invaluable skillset for any entrepreneur or salesperson. Selling to the affluent is a great way to become affluent yourself. But that’s easier said than done.

The Realtor who listed that luxury beach house should have cleaned up, but she blew it—big time. She blew it because she approached the job in a perfunctory, “paint-by-numbers” manner—like a zombie imitating the motions of a living salesperson. She listed the home, staged open houses, and showed the property to interested parties.

Yawn. A robot could have done that.

With just a little extra effort, this Realtor could have cultivated relationships with homeowners in the area, asking if they knew of anyone who might want to join the neighborhood. She could have initiated a word-of-mouth buzz, spreading the news to dozens of prospective buyers that a handsome piece of real estate was suddenly available—a property unlikely to stay available for very long.

Had the Realtor done this, she might have connected with Ms. Elliot. She might have accelerated interest in the house, brokered the sale, and earned a hefty commission. Instead, this Realtor—like many salespeople—didn’t have the slightest idea what makes the affluent tick. In fact, she didn’t even know that she didn’t know.

PROFILE OF TODAY’S AFFLUENT

So who are the “the affluent” and what makes them tick?

For one, they are highly educated. Fifty-five percent have a graduate degree. Thanks to this level of education (and the lessons they learned from the financial crisis), the affluent are the savviest of all American consumers.

For the purposes of our research, we define affluence based on two criteria; participants must meet one or both to be considered affluent:

1. Investable assets ($500,000 or greater). We find it helpful to start with $500,000 in investable assets as the baseline. Many salespeople targeting the affluent are looking for “millionaires,” a group that took a nosedive with the collapse of the stock market in late 2008 to a low of 2.26 million individuals with $1 million or greater in investable assets in the United States. Yet, as the economy recovered, so did the number of millionaires; up to 3.44 million in 2012.1 Note: Investable assets are not synonymous with net worth. The assets must be so liquid that the family can apply the funds toward a major purchase or investment with relative ease and speed.

2. Household income ($250,000 or greater). The higher the household income, the greater the purchasing power. Today’s affluent households are purchasing more goods and services than their nonaffluent counterparts, which is why salespeople should master the art of selling to this key demographic.

Adjusted to 2011 dollars, the Congressional Budget Office (CBO) calculated that in 1990 the minimum required for being one of America’s top-quintile income earners was $92,092. In 2011 the entry point had risen to $101,582. In other words, the top-quintile household has at least $9,490 more to spend today than it did 21 years ago.

If we focus on just the top 5 percent of income earners, we learn that households had at least $27,943 more to spend in 2011 than in 1990: $186,000 versus $158,057.

The affluent are spending more money today because they have more money to spend.

AFFLUENT MACRO SHIFTS

Two key findings reveal how the Great Recession fundamentally changed the affluent approach to major purchases. Not surprisingly, both findings hinge on trust:

1. The gender shift: Ms. Elliot isn’t the only woman spearheading major financial decisions in affluent households. For various reasons, affluent females are taking a more active role in every aspect of their families’ finances.

According to our research, affluent women assign greater importance than their male counterparts to metrics, including communication, personalized service, and trust. If the woman of an affluent household wants a new kitchen, her husband might be tapped to negotiate with the contractors, but the woman will probably call the shots. If she has reservations or complaints about the contractor, she’ll dump the company in a heartbeat, regardless of her husband’s opinion.

Whether an investment involves real estate, landscaping, remodeling, automotive purchases, jewelry, travel, or a cruise, the salesperson must understand the needs, wants, and expectations of the female heads of affluent households.

2. The relationship shift: The second affluent macro shift involves client relationships. For example, our research on trustworthiness in advertising rankings of financial advisors show that only 44 percent earn “some to full trust” from affluent clients. This places them on the same level as automotive salesmen (at 42 percent).

I know many outstanding financial advisors, but since the profession as a whole received an unfavorable survey ranking, it illustrates the magnitude of the affluent attitude shift, especially when we divide advisor–client relationships into two categories: (1) purely business, and (2) business and personal.

We uncovered a strong correlation between positive client attitudes and having a business-and-personal relationship with the salesperson. If an affluent client feels she has also developed a personal relationship with, for example, her financial advisor, her overall assessment of the advisor tends to skyrocket. Consider the following from our survey regarding financial advisors. The percentages shown reflect those who rate their advisor as performing “very well” to “extremely well”:

• Being trustworthy, having our family’s best interests at heart

Rankings:	Business relationship only	38%
	Business and personal relationship	61%

• Delivering high-level personal service

Rankings:

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