• by Lena Bourgeois , Columnist, October 12, 2016

Recently, the concept of the HENRY — High Earner, Not Rich Yet — has become very popular with marketers, especially those looking for audiences with the potential for high discretionary spending. Advertisers looking to reach consumers on their way toward affluence have likely viewed this audience as the perfect target for their advertising campaigns. In some respects, they’d be correct, as HENRYs represent consumers who likely meet many of the qualifications for affluence. 

But HENRYs aren’t a cure-all because they are not a homogenous audience. While high income can be an indicator of a consumer on the path to affluence, their savings and spending habits most likely will change as HENRY consumers mature. In fact, the age range of HENRYs is considered fairly broad, so understanding differences in generational attitudes is critical for affluent advertisers. HENRYs are an attractive starting point, but any strategy that uses this audience requires further segmentation for best effectiveness.

To better illustrate this, let’s look at those very desirable HENRY qualities. The basic qualifiers of a HENRY are a household under 55 years old with an annual income of more than $100,000 which has yet to amass investable assets of $1 million. IXI Services’ data suggests that 13% of U.S. households meet these criteria, with an average of $214,000 in assets and an income of $136,000. They average $68,000 in annual discretionary spending per household and love to shop online. 

That’s all great news but, remember, HENRYs really aren’t one uniform group. The age gap between the youngest and oldest households is more than 30 years. Consumers under the age of 30 can behave differently from those over 40, even if they have the same income. Any business looking to reach this desirable audience needs to view HENRYs as the starting point, and then further segment from there to develop their marketing strategy. 

So, start with the basics. HENRYs are typically concentrated in areas with higher costs of living, which means more of their income goes to living expenses. Hence, evaluating them on discretionary spending capability, rather than just income, can help marketers focus on a group that can more likely afford a brand’s products.

From there, marketers need to dive into the generations. For example, according to the IXI data, Millennial HENRY households average $86,000 in annual discretionary spending, nearly $20,000 more than the group average. This is likely because this age group may not have high fixed costs, so they are willing to spend on purchases like organic food, eating out and indulging themselves, rather than setting aside a lot of money for savings. If you’re marketing products such as wine, a high-end bicycle, a travel package, or luxury clothing, this can be an attractive audience. 

But there may be more curveballs coming. Marketers can’t simply lump HENRYs together by generation, either, because even those consumers have different behaviors. Some Millennial households have children, which means that money previously earmarked for restaurants may now be going toward childcare. Some own their homes, and some rent. Some live in areas where they don’t need a car, but others may own or lease two cars. Each of these distinctions can make a difference in how much these HENRY households are able to spend. 

HENRYs represent a juicy, attractive audience that is worth paying attention to. After all, these are high-earning, active consumers who are spending their money. But rather than view HENRYs as one big audience block, think of it as a pre-qualifier for a marketing audience, and then divide the group into sub-segments. Young HENRYs, HENRY families, and HENRYs reaching retirement age will all spend, save, and invest their money differently. Marketers that take that into account when developing their strategies will have an easier time matching the right message to the right segment of the HENRY audience.