• by Bob Shullman , Columnist, September 7, 2016

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. 

• When profiled by adult generations, Boomers predominate in households with household incomes of $100,000 or more (about 40% are Boomers). The $250,000+ households contain more Gen-Xers than other generations (about 39% are Gen-Xers), while 31% of millionaires are Boomers and 41% are Millennials.

• When we consider affluents’ financial goals, number one for all three affluent target groups is having enough income for their retirement. Notably, though, this is the main goal for a majority of the two target groups defined by their household incomes (62% of the $100,000 or more target group and 55% of the $250,000 or more target group), but only a minority of the millionaires (41%). 

• Finally, when we focus on the “owning many expensive things” portion of Webster’s definition of affluence, we note there are material differences in how many of each of the three affluent target groups reported they bought what they considered to be a luxury in the past 12 months. Sixty percent of the millionaires, about half (52%) of the $250,000 or more household-income group, and only 41% of the $100,000 or more household-income group reported they bought a luxury in the past 12 months.

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.