Affluent millennials are a small but very powerful millennial segment, but their attitude towards money management and spending is specific, so brands would do well to tailor their approach, writes FutureCast.
Millennials and money are two terms that we don’t often associate together. After all, millennials have taken on more student debt than any previous generation. In fact, the Federal Reserve Bank of New York reported an increase of over $500 billion in student debt over the last eight years alone.
While many people seem to love stereotyping millennials as a generation full of jobless, homeless, indebted coach surfers, a new millennial segment is fuelling a different story.
“ This group holds a huge influence over the entire millennial generation in both dollars and impact ”
Currently, there are over 6.2 million millennials aged 18-34 with annual household incomes over $100,000. However, these millennials don’t all look the same. There are four unique segments of this group (you can read my previous series on affluent millennials) that differ not just in demographics, but behaviours and attitudes as well.
What’s important to recognise about this group is that while they only account for less than 10% of the 18-34-year-old population, they hold a huge influence over the entire millennial generation in both dollars and impact.
It’s safe to say that affluent millennials are a group of consumers who are constantly on the move. In order to command such a high income, it makes sense that they lead busy lifestyles.
“ Affluent adults will be settling into a new lifestyle with altered buying habits ”
However, affluent millennials are busy, not just because of the strides they are making in their careers, but also because many of them are checking off major milestones in their personal lives.
Many affluent millennials are transitioning into married life and starting families of their own. In fact, 57% of affluent millennials are currently married and 6% are currently engaged. These figures are significantly higher than non-affluent millennials, who are also less likely than affluent millennials to be expecting a child in the next 12 months.
For brands, this means that as soon as all these changes take place, affluent adults will be settling into a new lifestyle with altered buying habits. Similar to a rock thrown into the sand displacing all the grains, everything will ultimately settle back into place in a new order.
Part of what has made the millennial generation so important to modern brands is their influence on the general population of millennials. We often look to millennials as the influencers for the general consumer market, but who are the influencers among millennials themselves?
Looking at millennials with affluence, it’s very apparent that this group is the one fueling millennial trends because of their ability to act on millennial aspirations. Unlike non-affluent millennials who often say one thing and act differently (most millennials will say they buy organic but then run through the store register with the off-brand peanut butter), affluent millennials are unfettered from issues of general affordability. They do not have to trade up or trade down; they simple buy the things they want.
Essentially, they can buy the products and services that fit their general millennial mindset – fresh, organic, fast, high quality – and do not have to trade up to get it. They can take the great adventures, chart the less traveled paths and embrace the risks they wish to pursue.
“ The goal for brands connecting with this segment should be to maintain a hands-off marketing approach ”
So how can brands engage this highly influential cohort of millennials? Our research shows that compared to non-affluent millennials, affluent millennials feel more confident in their decisions and don’t require as much hands on assistance from brands.
Therefore, the goal for brands connecting with affluent millennials should be to maintain a hands-off marketing approach and instead be available for consumers when they need them, acting as a critical resource instead of noise.
This is especially true for brands in the financial industry. As affluent millennials continue to gain wealth, they place high value on brands that will help them secure their financial assets and are more likely than non-affluent millennials to seek out quality financial advice regardless of cost.
“ Since millennials in general are creatures of content, there is a huge opportunity to reach them ”
Since millennials in general are creatures of content, there is a huge opportunity for financial institutions to reach this increasingly growing segment with information and tips for how to spend and save for their futures.
Charles Schwab is a brand that has won over affluent millennials through useful content. In comparison to other brands in the financial services sector, Charles Schwab ranks significantly higher in regard to Quality and Reputation among affluent millennials. This is due in large part to the attention the company had paid to creating an engaging platform for young adults with high incomes.
Charles Schwab recently created an automated investing service that embraces tech-savvy consumers who are looking for easier and more transparent accessibility, but also looking for help and tips on the market. This type of relationship is key for affluent millennials because it established Charles Schwab as a resource for affluent consumers with the goal of empowering their financial decisions rather than taking the reigns and making decisions for them.
Other brands like American Express, Uber, Venmo and Bose Sound System have won over affluent millennials through empowerment and attention to the entrepreneurial spirit of affluent young adults.
These brands understand that unlike non-affluent millennials, those making more than $100k annually have a greater aptitude to make their own financial purchase decisions. By creating an environment where the quality of the product speaks louder than the actual brand messages and by offering clear proof regarding their brand story they are creating more unique and meaningful brands and brand experiences.
Overall, affluent millennials are a small but very powerful millennial segment. Their actions and behaviors continue to fuel the millennial mindset and their purchase decisions are reflections of how many millennials aspire to one day build their own lives.
These young adults are putting millennial aspirations into action and their money is doing all the talking. If you want to talk with them, you will have to embrace a new customer relationship model that strays from the traditional hands-on approach.
To further investigate the millennial consumer on Luxury Society, we invite your to explore the related materials as follows:
- Understanding Segments of Affluent Millennials Part 4: Calculated Go-Getters
- Understanding Segments Of Affluent Millennials Part 3: Big City Bachelors
- Understanding Segments Of Affluent Millennials Part 2: Pragmatic Parents