For a growing number of affluent consumers, experiences are more important than possessions, a trend that bodes well for travel agents focusing on the luxury travel market.
Understanding the changing mindset of luxury consumers is crucial for travel sellers, marketing expert Pam Danziger of Unity Marketing emphasized during a keynote speech at the 2012 Affluent Traveler Symposium in Scottsdale, Ariz., this week.
“The first principle of marketing is understanding the customer,” said Danziger. “The more you know about customers and the types of customers you face, the more successful you're going to be in delivering services to those clients.”
Market exceeds expectations
Danziger conducted research on 1,500 affluent luxury consumers and discovered that the potential untapped market for travel agents exceeds expectations.
According to Danziger, the top 20% of U.S. households can be considered affluent. One-third of those are ultra-affluent, making $250,000 a year or more.
That top tier, the ultra-affluent, is the sweet spot for agents, she suggested. The average annual income of a luxury affluent traveler is nearly $300,000, Danziger’s research found. (By contrast, the average household income for the entire country is approximately $65,000.)
“As the middle class gets weaker as a result of the recession, more companies that used to depend on the middle class are starting to look at affluent luxury consumers,” said Danziger.
Luxury is an experience
Travel sellers can revitalize their business prospects by targeting the niche of wealthy Americans looking for new travel experiences, she said.
The recession has pushed the consumer market away from materialism toward experiences.
“Luxury is really, from the point of view of the customer, something they experience and feel,” said Danziger. “It's about all those feelings, experiences and that sense of achievement and accomplishment that luxury consumers want to feel.
“As marketers, we have to embrace a consumer-centric view of luxury. How do people become happier? Research found that people don’t get happiness from the things they have, but from the things that they do.”
Extrinsic or intrinsic?
By breaking clients down into two groups, extrinsic people and intrinsic people, it becomes easier for travel sellers to cater to individual needs.
Extrinsic people have goals that are materialistic in nature and include a successful image, popularity and receiving praise from others. Intrinsic people, however, are more focused on personal growth, community and internal satisfaction. Extrinsic people tend to be least happy, because of their focus on materialism, according to research.
Travel agents should try to understand affluent travelers’ mindset when trying to sell a trip, she said.
“You're really in the business of helping [clients] achieve their personal satisfaction goals,” said Danziger. “The key is to look at ways you can help your client look at the world in a new and different way.”
“You need to innovate in offering new experiences, which are ultimately going to inspire customers and yield significant returns on their investment,” said Danziger. “We want to come back from our trip with a new perspective on who we are.”
Danziger cited culinary travel and sustainable travel as personal experiences geared toward affluent clients.
An April 2012 study by Unity Marketing found that three out of four affluent travelers would rather purchase a luxury experience than a luxury good.
“As we look at American affluent consumers, we're seeing that all consumers are growing increasingly experiential instead of materialistic,” said Danziger. “That is an opportunity for you because your business is delivering an experience to consumers.”