By Dr. Stephen Kraus and Dr. Jim Taylor

Turbulent markets are rarely as bad as the media portrays. And, as we have all learned the hard way, market upswings are often built on the weakest of foundations, another fact that the media is inclined to overlook (at least while the money is flowing).

We have spent much of the past decade studying top performing salespeople in a variety of high-end categories, and have found that one trait they share is the tendency to see opportunity in good times and in bad. Indeed, it turns out that this is one characteristic they share with their upscale prospects. Throughout the last year, the affluent and wealthy who considered real estate “a real opportunity” outnumbered those who considered it “a real risk” by two-to-one. Among those with at least $10 million in assets, the figure rises to three-to-one.

Today’s economic turmoil has certainly removed the “aspirational” customer from most timeshare and fractional markets. But among the truly upscale customers who do the bulk of the buying and traveling, there has not been the whole exodus from the market one might expect. Among those with at least $100,000 in discretionary income (roughly the top 10% of economic spectrum, encompassing just over ten million households), approximately 15% own a timeshare, and 2% own a fractional property – figures essentially unchanged by the economic gyrations of the past few months. That is not to say, however, that the market hasn’t changed. Expectations, goals, hot buttons – all are significantly different from just a few months ago.

Sales strategies must evolve with the times, and to that end, we offer five keys for selling to the affluent and wealthy, in good times and bad. These insights come in part from an extensive series of studies about wealth in America which culminated in our book, The New Elite: Inside the Minds of the Truly Wealthy (AMACOM, 2008). The cornerstone of this research effort has been the Annual Survey of Affluence and Wealth in America, a continuous tracking study that is psychographically- and demographically-representative of America’s financial elite. We produce this research in conjunction with American Express Publishing, an organization that truly has its finger on the pulse of the wealthy population by publishing titles such as Travel + Leisure, Departures and Food and Wine.

Understand the myths and realities of wealth today
Over 80% of the general U.S. population believes that most wealthy people inherited their wealth. In reality, less than 10% inherited their wealth, as the vast majority created their own wealth through entrepreneurship and corporate leadership. And that’s not the only prevalent misconception about the wealthy. Our research has found that they are widely viewed as lazy, self-centered, insensitive to the concerns of others, and focused on conspicuous consumption. Instead they tend to be hard-working, modest, and more prone to a philosophy we call “stealth wealth” rather than conspicuous consumption.

These common misperceptions are not limited to the average person on the street. In a survey we conducted with AgencySacks, an advertising agency specializing in the luxury market, we discovered that even CEOs and CMOs of luxury companies profoundly misread the market. These senior executives also vastly overestimated the appeal and prevalence of conspicuous consumption. They believed, for example, that a majority of wealthy people want others to know they are wealthy; in fact, less than one-in-five feel that way. Similarly, nearly half of the wealthy agree “luxury items like expensive watches, jewelry and cars are a waste of money,” while the senior executives predicted that less than one-in-five would agree with that statement. They also misread other elements of their target’s profile as well, underestimating how happy the wealthy are (it turns out that money can buy an extra bit of happiness), and overestimated how many are divorced (despite stereotypes of “trophy wives,” most are still married to their first spouse).

Sell value
Another misconception about the wealthy, among laypeople and marketers alike, is that they spend freely and are insensitive to price. In fact, a profound value-orientation runs deep in consumer psyche of the affluent and wealthy. This mindset has its roots in their middle-class upbringings, played a key role in their business and financial success, and has intensified in today’s economic uncertainty. Even among consumers averaging $10 million in assets, eight-in-ten describe their sense of financial security as shaken, and nearly half are worried about running out of money.

A strong value proposition is certainly a must for selling in today’s market. But it is important to remember that selling value does not necessarily mean offering the lowest price. In fact, price is an important cue that sophisticated buyers use as one indicator of quality, and price drops can raise questions about value among prospects. Moreover, it potentially frustrates a salesperson’s most valuable resource – relationships with past clients – by making them feel less-than-smart for having purchased at higher prices in the past.

One obvious effect of today’s economic slowdown is heightened price sensitivity among buyers; but paradoxically, it has also created something of a flight to quality. When it comes to vacation and real estate spending in particular, today’s upscale consumer is very hesitant to trade down in terms of quality. When we asked how the economy was shaping their personal travel spending, the most common answer was expecting to stay in the same quality of  accommodations, but expecting to get a better deal. Value expectations are high, but so are expectations about quality and service. In this environment, the most successful salespeople will be those who are able to hold the line on pricing, while building perceptions of value. This might take the form of building an economic case for the likely future value of the property, as well as enhancing their portfolio of value-added services (such as rental management, exchange programs, concierge services, etc.).

Remember that the angel is in the details
Indeed, when we ask the wealthy what they like about particular brands, the list is typically topped by quality, craftsmanship and service. The social and emotional benefits of brands – feeling or looking successful, for example – have dropped in dramatically in importance as the economic slowdown has taken hold. At the intersection of quality and craftsmanship are details – the subtleties of design and experience that are proof of extraordinary quality.

It is subtle, even sublime, details that define the world’s most exceptional brands, and most impressive properties. A salesperson should be armed with the detail-rich stories that engage the imagination about the property, the destination, the amenities, the design, the architecture, the local culture, and more. Travel and vacation-home ownership are about value, but they are still fundamentally about allure of far-off places, and the wanderlust that lives deep in the human species. It is details, not adjectives, that stir these emotions.

Sell to the team, and the new team leader
Regardless of who the primary breadwinner is, it is the female head of household who ultimately makes most major decisions in today’s affluent and wealth families. Yes, when asked about travel spending and real estate purchases, over 80% of both genders describe the decisions as shared. But make no mistake about who is really in charge; the vast majority of women today – across all income levels – agree “In the end, my opinion determines the family financial decisions.” We’ve called it The New American Matriarchy, or more colloquially, the rise of the Mom-ocracy.

Women are in charge, and they have a decidedly different approach to purchasing, and to family leadership, which must be acknowledged. Her decision making is collaborative and consensus-building; every family member’s opinion matters, and everyone’s input is respected, including that of the kids. A salesperson who strives to impress the male will implicitly patronize the female and fundamentally misread the best opportunities for closing the sale. Women lead the trend toward a stronger emphasis on value, and although it may be an unfair generalization to label half the population “risk-averse,” it is fair to point out that they generally weigh risk and reward differently from men. As one of our colleagues put it: “Lehman Brothers went bankrupt. If they had been Lehman Sisters, they’d still be here.”

Love your job
Most wealthy people didn’t set out to be wealthy. They set out to pursue a passion, did it well, and found that wealth was a largely unexpected outcome of their efforts. Acknowledging your love for your work can be a powerful way of connecting, and for easing the unspoken class distinctions that can make both the prospect and the salesperson uncomfortable. Keep in mind that wealthy prospects have finely-tuned BS detectors, honed by years of successful business experience. Expressing your love for your job only works if it is authentic, and it will likely be detected if it is not.

About the Authors

Jim Taylor and Stephen Kraus (along with Doug Harrison) are co-authors of The New Elite: Inside the Minds of the Truly Wealthy, hailed by Publisher’s Weekly as “indispensable to marketers.”

Dr. Taylor is Vice-Chairman of Harrison Group, a marketing research and strategy firm. A widely-recognized authority on marketing to the affluent, he was once named Marketer of the Year by BrandWeek, and is honored as a Distinguished Alumni at his alma mater, Michigan State University.

Dr. Kraus is a Vice-President with Harrison Group, and holds a Ph.D. in social psychology from Harvard University.

The data cited in the article are from The Annual Survey of Affluence and Wealth in America, which Harrison Group produces in conjunction with American Express Publishing. The authors’ next book, on selling to the wealthy, is slated for publication in 2010. The authors can be reached at www.HarrisonGroupInc.com.

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Tags: affluent, America, fractional, The New Elite: Inside the Minds of the Truly Wealthy, timeshare, Wealthy