High Net Worth (HNW) individuals. Highly desirable to brands, keenly sought after, and growing in numbers. But who are they these days? What do they want from brands? And how can brands connect with them most effectively?
Leaders in branding from the luxury industry came together at a Campaign Breakfast Debate, in partnership with Times Media, to dissect challenges and share strategies. The jumping-off point for the discussion was fresh research from Times Media into what makes HNW individuals tick (see overview of findings below).
The changing face of High Net Worth individuals
The HNW consumer is easily stereotyped: more money than sense, splashing the cash on a whim, and interested only in status. Like most stereotypes, however, this is entirely wrong.
Not only that, whatever might once have been true of many HNW consumers is now out of date. Their motivations and concerns are changing - and disrupting the ways brands need to engage with them effectively.
“People underestimate this audience and often treat them as a walking wallet, presenting them with a shopping list of the most expensive things to buy just because they're rich,” said Victoria Trimmer, client director - fashion and luxury at Times Media. “The reality is they're an incredibly sophisticated, discerning and curious audience.”
And while HNW consumers have shared passions and enjoy being part of a tribe, said Faye Lovenbury, head of marketing at Seiko UK (parent of the Seiko, Grand Seiko and Credor brands), they are also “uber individuals”. Catering for both is a delicate balance. Understanding their passion points and how they feed into purchasing decisions is crucial.
Areas of particular interest to HNWs these days are travel, health and wellbeing, sport and sustainability. Nearly two thirds (63%) of respondents in the Times Media research said sustainable travel, or destinations being environmentally-friendly, was important to them.
And luxury consumers are entering the market more quickly than previous generations, making Gen Z and younger Millennials increasingly influential.
“Our consumer is changing rapidly, and they’re becoming a lot less formal,” said Pip Landers, director of advertising and brand research at Mandarin Hotel Group.
“People used to arrive at a Mandarin in a suit and tie, and have a porter bring their luggage through. Now they’re turning up in jeans, and some don’t want to come to check in at reception and would rather do that with a QR code so they don’t have to interact with anybody. So the HNW consumer is changing, and our strategies need to change with them.”
Usership is the new ownership
One word often associated with HNWs is “status.” But what does that mean in 2023?
Once, status was all about ownership: the expensive car, the big house, the timepiece watch. Now, that’s becoming less important, the brands and agencies at the table agreed. It’s all about usership instead.
“We’re seeing a shift in customers needs’ with the rise of usership, alongside the traditional ownership attitude," said Benjamin Moncrieffe, head of strategic foresight at JLR. "Our vehicles’ rental and subscription services - The Out and Pivotal - are growing in popularity, especially with younger and more diverse clients. What clients seem to like is the personalisation, convenience and the overall experience these services offer them as a user, rather than being an owner.”
This feeds into another key trend for 2023: quiet luxury. Rather than ostentatious splurges, HNWs prefer thoughtful purchasing and considered investment pieces. They are interested in the experience of driving a new electric car or taking a sustainable holiday in Costa Rica, for example, rather than owning a flashy car or jet-setting to the Bahamas. Less brash, more discreet.
“It’s interesting for us to track the change in what status means,” said Charlotte Parks-Taylor, co-owner & CEO at Cream, an agency which specialises in the luxury sector. “Increasingly, we’re seeing HNW individuals moving away from how beautiful an object or product is. Now, the status is increasingly linked to the story and what you say about the thing you own or the brand you buy into. A lot of our work in the HNW space is increasingly around storytelling.”
Awareness vs performance
The pressure to drive sales is acute. The constant focus on ROI and having to prove the case to the board for next year’s marketing budget means it’s more challenging than ever to justify long-term, brand-building spend.
But, perhaps more than in any other market, long-term brand-building, awareness and storytelling are essential for capturing and engaging the HNW audience.
Awareness vs bespoke personalisation
HNWs don’t want to be bombarded with constant advertising and marketing, however, everyone at the table agreed. Instead, they want a one-on-one relationship. They want to be looked after. And they want to invest in a story.
“A focus on driving sales and footfall in the short term can be detrimental to long term brand-building,” said Trimmer. “We're trying to help clients see the value of digital display from an awareness perspective, as it plays an important part in building brand perception & consideration over time.”
Another issue for luxury-brand marketing is this: luxe brands tend to have less frequent contact with consumers than high-street brands. A customer won’t buy a watch every month, or a car every week. So how to keep the conversation going and win loyalty in this environment?
The experts agreed that a diversity of touchpoints is one solution. There’s a growing trend in luxury-brand extensions - a luxury restaurant group opening a chain of mid-range cafes, or a high-end property developer selling homeware products. The result? Brands keep the conversation going between purchases and are there for their customers in more moments. Some luxury fashion brands also increase their touchpoints by offering rental options.
However, as all voices around the table strongly agreed, such extensions are only possible if brand values are adhered to firmly.
The importance of trust
Brand-building and loyalty are largely built on a relationship of trust with consumers.
“For the last two years, the Edelman Trust Index has placed businesses as the most trusted institutions above governments and NGOs. Consumers, particularly younger consumers, are looking to brands to provide a level of leadership," said Moncrieffe. "At JLR, we are transforming into a sustainable, luxury house of brands. A huge part of this focuses on our wider impact across society. This includes doing business responsibly, with integrity, and acting as a global citizen for sustainable development in the communities and environments we operate in.”
Nearly half (45%) of Times Media’s HNW readers agreed newspapers play a key role in raising brand awareness and improving perceptions of brand. And readers gave The Times’ and Sunday Times’ journalism an 80% trust score.
“Content and context are super important across all media,” said Kate Anthony, chief client and transformation officer at Spark Foundry. “We have a responsibility to protect our brands, so framing them in the right environment where they’re going to be safe is important. That’s why newsbrands are so liked by the luxury brands we work with. Because newsbrands have an audience built on trust itself.”
Soundbites from the table
Rachel Walsh, marketing and digital director, TAG Heuer: “We look at desirability, rather than a specific audience: what does desirability mean for us, and how do we continually create that? So, everything we do as a brand, and particularly in media, has to cut through and create impact; it has to be something people will see and share.”
Caitriona Henry, head of strategy EMEA, Hearts & Science: “It is easier to target [in the digital space], but it’s not very easy to connect meaningfully. So it’s really important to make sure it’s the right brand experience, the right messaging, and to respect the consumers’ time and attention. Don’t be irritating to them, particularly if you’re a luxury brand. Understand the importance of personalisation, but respect the right environment for the consumer.”
Faye Lovenbury, head of marketing, Seiko UK: “It’s key to show up in the right channels, and say the right things in each channel. You can’t just say one thing and hope it will work across all channels - you have to understand how HNWs interact with the different touchpoints and ensure you’ve got the right story in each.”
Emma Ellis, managing director, Interbrand: “We look to evolve our thinking around whether a brand is luxury or an individual is HNW, to thinking about what arena the brand is operating in. We call this arena the 'express arena'. What you're looking at there is how consumers want to create [and express] an identity for themselves, so it's not necessarily about the badge they're wearing, but the experiences they want to go on - it's the brand they want to be seen with rather than necessarily own.”
Samantha Chapman, head of global marketing & sustainability, Stephen Webster: “Make sure you build a brand from all touchpoints. Digital’s important, but it’s important to also build your brand on non-digital channels.”
Kate Reardon, editor-in-chief, Times’ Luxx magazine: “At Luxx, we have to meet our readers where they are, and similarly, brands need to meet customers at every touchpoint: in sport, in music, in art. Perhaps in this secular age, people are turning to brands for cultural leadership. And if you are seen as a brand that is culturally valid, then you can sell anything...”
Back row, l to r: Spanier; Lovenbury; Parks-Taylor; Reardon; Ellis and Moncrieffe. Front row, l to r: Anthony; Henry; Walsh; Trimmer; Landers and Chapman.
Times Media Research: the highlights
The Times Media research involved interviews with 400 online panellists and 264 Times subscribers at the beginning of 2023. All respondents were either HNW (38%) or ultra-HNW (62%). Their average personal income was £246,000, with an average asset value of £2,500,000.
What defines a HNW individual? Someone who owns between £1m-£2m assets or more than £250k assets and between £100k-£200k personal income. There is also a level above this: Ultra-HNW, who have more than £2m assets or more than £200k personal income.
“What we wanted to do with this research was bring to life who they [HNWs] are, what they are doing, what they care about, and what their attitudes and preferences are,” said Victoria Trimmer, client director - fashion and luxury, Times Media. “Traditionally, they’re a difficult audience to get to fill in a survey or be interviewed, so there wasn't a lot of research already out there on this audience.”
Trimmer pulls out three key themes from the results: HNWs have a plethora of passions, an enduring love of physical in-store retail, and a strong loyalty to newsbrands.
Key insights include:
46% would always choose to buy luxury goods in a physical store/boutique vs online (23%).
70% agree they are willing to pay a premium to buy from a brand committed to sustainable/ethical practices.
84% say that holidays are a reward and a time to indulge, so are worth the extra cost.
65% buy luxury goods as a reward to themselves.
1 in 4 HNW Times subscribers expressed a desire to attend exclusive in-store events.
45% of Times’ HNW readers agree that newsbrands play a key role in raising brand awareness and improving perceptions of brand.
The Times’ and Sunday Times’ journalism achieved an 80% trust score.