America's New Breed of Millionaire: How to Find and Sell to Them
By Kerry L. Johnson, MBA, PH.D.
He probably wears a $50 watch. You won't see him on a yacht. But you would find him in his office commonly until 7:00 p.m. (even on Saturdays). He is more interested in his local rotary club than the polo matches.
She uses her bank more for making investments than for borrowing. She would have been Robin Leach's last choice for a spot on "Lifestyles of the Rich and Famous." She is more interested in her family and coupon clipping than in champagne and caviar dreams.
Sound pretty average, right? How affluent would you expect these people to be? If you guessed current members of a lower middle class bowling league, you're dead wrong. These people are part of America's new elite rank of millionaires.
How Many Are There?
According to the IRS, there are 7 million households with a net worth of $1,000,000 or more. Acording to Forbes magazine, there are now more than 300 Billionaires in America. But some have taken a beating in this volatile market. Even Bill Gates has lost half of his net worth since the beginning of 2000, decreasing from $80 Billion to just over $40 Billion in 2002. He’s worth Billions but still can’t afford a good haircut.
Mr. or Ms. Millionaire's average age is 44. The average billionaire is only 46. And this doesn’t even include inherited wealth which accounts for a surprisingly low 3% of the wealthy. The Affluent come from a middle class or blue collar background and likely graduated from a state university. In fact, millionaires rarely lead pampered lives of luxury. Of course there are the flashy jet-setting elite who flaunt their well-heeled posh attire and assets with aplomb. But they account for only about five percent of millionaires nationwide.
But who are these people the working class looks to with so much envy? Chances are you know one and didn't even recognize her. She probably lives in the south where the greatest numbers reside. But the highest concentration is in the Northeast, although more make their home in California than any other state.
Where did they get their money? Certainly not from the lottery. According to Dr. Tom Stanley, professor of marketing at Georgia State University, only about 20 percent are born into money. Most millionaires come from seemingly humble beginnings. A few make it big by developing a revolutionary product or a breakthrough technique. But more are simply workaholics who start by owning a small business. They often possess an uncanny knack for hiring and retaining quality people. By the time they reach their late forties or early fifties, they put their name up on the office door.
Where Do We Find Them?
The new breed of millionaire often are not hidden away in the lap of pampered luxury. One percent of the households in America are in the high seven figure income category. Less than five percent have annual incomes of $75,000 or more. If you have prospected for millionaires in the past, you probably searched for social class and the trappings of wealth. Yet only half of these families own and occupy homes of $300,000 or more.
Many people are more interested in appearing to be wealthy than developing the discipline necessary to achieve millionaire status. In fact, many salespeople are trained to hunt big game in the medical facilities. But often the lifestyles of physicians are defined by the expectations of society. Since they are in a prestige working position, they find themselves better credit customers than candidates for expensive real estate. They frequently live beyond their means.
In college, I worked in a hospital as a cardio-pulmonary technician. As a young med student, I was privy to a lot of the doctors' personal and private conversations. It seemed that most drove Mercedes and owned gorgeous homes. But truly, all complained of cash flow problems and seemed worried that the financial cards would one day tumble. Recently a business broker friend mentioned that among the medical practices she handled, few physicians made more than $150,000. In fact, in the 1990's, insurance companies were squeezing physician claims to such an extent that only with the most business savvy will make more than $200,000 per year.
Often the lifestyle of the pseudo-affluent focuses on projecting a facade that consumes nearly all of their disposable income. Since many of the “would be” affluent live in $600,000 homes and drive expensive German cars, feigning the appearance of wealth becomes very costly. Credit card debt and capitalizing homeowner equity seem to be the only way of maintaining the image: albeit for a while.
If not doctors, then where does one snare the real goliaths of the well-heeled? Discovering where they work and live may surprise you. Ten of the most affluent are: commercial printing, dry cleaning (multiple store units), jewelry retailing, legal services (attorneys who own multiple specialty firms who focus not only on bankruptcy but also on corporate and real estate disciplines), specialty tool and die manufacturing boutique, real estate development, refuse services/collection and disposal, real estate brokerage and property management, industrial plastics manufacturing and commercial machines and equipment wholesaling. These don't seem to be glamorous high affluence categories, yet they may be your best bet for trapping prospects who won't say they can't afford it.
How Do You Sell To Them?
How do you hunt for big game? Forget your hard sell "29 different techniques to a close" routine. According to Jonathan Robbin, chairman of the Charitas Corporation, millionaires should be sold to with great deference. The Charitas Corporation which specializes in developing demographic studies for marketers, determined that the elite income earners first ask lots of questions. They also are not as self-consumed as the characters on "Dynasty" and "Dallas" might lead you to believe. They are very concerned with family although most are males with non-working wives. They care also about friends, politics, and work. Their spouses are often kept in the dark about the family's income. Millionaires who were interviewed said they didn't want competition both at the office and at home.
The best way to sell to the highly affluent is to do a good job of networking. These earners don't respond to cold calls. They also are unlikely to answer surveys and telephone machine solicitation. But, they are very likely to take kindly to solid referrals. Once you get to a millionaire and make a sale, the referrals should follow. The single best way to come in contact with the affluent is to use introductions. They are like referrals but you enlist the referral source into a three way conversation. The beauty of this is your referral source will sell you the affluent prospect without you having to blow your own horn. This is the single most elegant and successful way to gain affluent clients.
But, you must also follow up. Recent research by Registered Representative magazine has suggested that the October 1987 stock market crash was devastating in the long-term to the securities industry not solely because clients lost money. The greatest harm was reaped because brokers had neglected to keep in contact with the people who paid their commissions after the tragedy.
Another technique is to focus on industry organizations. The dry cleaning industry for example has numerous association meetings. Every one needs speakers, and one of the hottest topics in America is how to invest and what the future will hold. Offering to write monthly on financial issues for commercial printing industry magazines may make your cold calls into warm calls when you mention how connected you are.
Also, stay sensitive to the rising affluence of women. In 2000, there were more than 200,000 women with a net worth of one million dollars or more. Women's business groups are a great place to position yourself as an expert. Again, this is achieved by speaking, writing, or acting as an expert resource.
Another technique to use in prospecting for millionaires is to acquire an association directory of an affluence-rich industry. A cold call to a member of the state metal electroplating society may meet with less resistance than you think!
There is gold in them thar hills. But the secret is knowing where to look. If you prospect the same places as other salespeople, you're sure to work hard and make a mediocre income. But if you know where the big game are, other salespeople will approach you and ask how you possess so much genius and how can they also gain it. Your future success lies in your skill, not luck. Hunt the big quarry. Let your competitors knock each other out trying to bag the more common breeds.
Dr. Kerry Johnson is a frequent speaker at Financial Services conferences around the world on topics like “How to Read Your Clients Mind” “Marketing to the Affluent” and “Peak Performance: How to Increase Your Business By 70% in 6 Weeks”. He is the author of 6 books including "Mastering the Game,” and “Sales Magic." To receive a free subscription to his monthly newsletter, "The Winning Edge- Online,” subscribe on his web site at www.KerryJohnson.com or call 800-883-8787.