Stealing The Rich
Some financial services companies exude arrogance in the belief they have a great deal to offer Australia’s very rich convinced if only they could find them their business would be all the more profitable.
At the guts of this rationale is some simple arithmetic – fewer clients with more money and more complex needs equals greater profit.
The math’s are, by and large, correct as far as our research reveals - the richer the person, the more complex, adventurous and profitable the business is likely to be.
The reality of marketing to the rich is they invariably already have financial services relationships with their needs to a large degree already taken care of, either by themselves or by someone else.
If you want to market to them then you are going to have to break relationships – in effect steal them from someone else.
Indeed in the past three years we have been tracking the buying habits, needs and wants of three distinct rich groups.
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Australia’s millionaires (defined as a million or more to invest outside their home and super).
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Tri-millionaires (our research shows buying behaviours and service needs shift significantly when net investable assets exceed three million).
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Penta-millionaires (the research shows the behaviours change again at $ 5million.)
The research suggests millionaires tend to be unsatisfied within their current service relationships and are often open to switching these relationships to someone or a group they perceive can offer better value.
They are more often than not searching for better advice, tips, businesses or a person they can trust.
Millionaires are hard to please and loyalty among millionaires it seems is both hard to achieve and a precious commodity.
Indeed the big mistake a lot of companies make is they assume the people who form the millionaire group in Australia have no opinion about them or their brand.
Nothing it seems could be further from the truth.
The reality of many of the rich in Australia, especially those with between $1million to $3 million to play with is they tend to be first generation millionaires - that is they made the money themselves usually by being in a small and medium sized business and there is no group in Australia more routinely lied to or abused than the small business person.
On Sunday CoreData conducted another focus group with seven of Australia’s self-made millionaires in a harbourside restaurant and grilled them over bacon and eggs about how they want to be served and which businesses are in the box seat to serve them.
The focus group is one of a handful which will form the base of a questionnaire which will be emailed out to CoreData’s database of Australians with more than $1 million to add some quantitative data around the ideas that have been popping up in the focus groups.
This will be incorporated into the latest piece of research to be conducted on the segment.
When it comes to their thoughts and opinions on Australian financial services brands, one preliminary suggestion is that the biggest mistake a bank or a fund manager can make is assume their brand is well known and well loved by people with money.
The reality is many of Australia’s millionaires are well aware of the vast majority of Australian financial services brands - from the big to the very small, and have almost certainly had some form of relationship with them and are coming to every transaction with an imbedded opinion.
One of the more interesting decisions we are seeing being made is the internal dialogue ruling large banks and/or fund managers is being translated into a marketing decisions.
So before you get seduced by some of the more exciting numbers (more than 50% of Australian millionaires do not have a financial advisor, more than 60% of them would be happy to change their banking relationship for a better deal, more than 50% of them think they receive poor or very poor service from their financial services provider) think hard about who you are, what they know about you and what you are going to have to do to win their business.
So if you are thinking about marketing to millionaires - here are some things that we have previously learned.
1. They Know Who You Are And What You Stand For
If you are one of Australia’s self-made millionaires - you are likely or very likely to have an imbedded opinion on many financial services companies in Australia. This means as a marketer you are not starting of with a blank tablet and one of the biggest mistakes you could make is trying to bend your brand to suit a new purpose.
For example - of you are one of the giants of the banking industry - don’t try and convince the millionaires you are chasing that you are small and nimble or exclusive or running a high service model. They have dealt with you in the past and they won’t believe you, unless you segment your business. There’s a reason that American Express have a gold, platinum, black and titanium card, it’s called manufacturing value and in the case of titanium - manufactured scarcity.
2. Offer Something New
It’s relatively easy to establish where these people live and how much money they have - they are under a constant siege from people and businesses trying to sell them something. Unless you are building something significantly new and or better, don’t bother with another me too offer – even if it is seriously discounted, it just isn’t going to cut it. Yes, they are unhappy with their current service provider, but they really can’t be bothered changing for a small benefit.
3. They Can’t Really Be Marketed To
The truly annoying thing about the rich and very rich in Australia is that you can’t market to them effectively - the only way to really reach out to them is to build something interesting and let them find you.
The focus groups preceding the latest piece of research on the subject revealed two interesting examples.
First, Macquarie Bank’s new “Prime” product has just been launched and they had all read about it and talked about it and could talk about it with some level of detail.
The reason this was very interesting is that at another recent focus group, Macquarie’s new advertising campaign had also been discussed, and the group was split firmly into two groups – those who had not seen it and those who disliked it intensely.
So when it came to the end of the group and we were asking them the age old question - between one and five, where one is not at all interested and five is very interested, how interested are you in talking to Macquarie Bank, the business suddenly jumped, up from a pretty good but relatively pedestrian 3 on the five point scale to a 4.2.
The second thing which came up at the focus group was the new ANZ private banking suite at double bay. CoreData hasn’t visited it yet but one of the members of the focus group is a customer and he said “it’s the future of private banking in Australia - ANZ are really doing a good job…” and as if to illustrate the first point, Palm Pilot’s and note pads were produced and the telephone number, address and name of the banker were copied down with enthusiasm.
4. Knowing What’s On Their Mind
You can’t really sell them something they are not interested in buying - at CoreData we have been tracking their investment sentiment since 2004 on a quarterly basis - but the thing that was most discussed over bacon and eggs last Sunday morning was wealth preservation.
“How do I lock in the gains of the past three years and still give my self access to the upside that mig
ht be hanging around”.
Any takers?
Charles L says:
Excellent article. But the truth is to do this the adviser would have to do more than be a salesman – some of them are and some of them aren’t.
Do the skills to provide the services you describe exist within the remit of the current financial planner?
I don’t think the businesses are set up to do this – the big players like AMP and AXA just want them to sell product rather than provide service
MORCDM says:
You make a very interesting point…one that is overlooked by ALL (without exception) of the financial planners that I have talked to. You say “the only way to really reach out to them is to build something interesting and let them find you.”. How true this is but the real upswing is (or downswing for the FP’s) is we have more than a clue about what is available.
So please don’t insult us by saying that (for example), the best place for your cash component is in a cash management trust which pays say 5-5.5% interest less you fees for managing it when we all know anyone can get 6.8% from places like Bank West with arguably better security. Even the major banks will offer us 6.5%+++ for a bog standard term deposit.
For my $20k ++ PA fee charge I will need to see value adding well in excess of this coupled with correct taxation advise and suitable trust structures.
I have not really seen this yet.
ps
Arre there really 30 FP’s under investigation from APRA over their dealings with Fincorp
Ditto says:
This is a very good article. Who writes these and how can we get access to the research. burningpants is like a really badly named McKinsey quarterly, only weekly.
Jeffrey Tidswell says:
how can you help me get some of these as clients?
Peter Nonnenmacher says:
This is the type of article that is of value to my business. thanks
Freddie says:
“The truly annoying thing about the rich and very rich in Australia is that you can’t market to them effectively – the only way to really reach out to them is to build something interesting and let them find you.”
How true this is, and how little it is acknowledged. And don’t bother unless the offering is new and clearly of benefit to us.
Spud Murphy says:
Your article exposes the biggest lie in this profession put forward by arogant licensees and fund managers, my millionaire clients walk around in old clothes, drive seconhand cars, live in normal houses not Penthouses and are just down to earth people. We have noticed that they get turned off by smart Alic Sales people who think the Sun shines out of their own “you know what”. We have found that they like us, just want to be treated with respect and helped. I changed Licensees reciently, all clients said they didn’t care about the licensee, what really delightes us was that they all said they trusted me.
When I asked why? they said it was because you care about our families just like your own family and that’s the way we like it.
Hows’s that?