What Real Estate Professionals Need to Know About the Luxury Consumer

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The old saying “money can’t buy happiness” proves itself time over time when dealing with real estate amongst demographics of affluence. In order to relate better to their audience, luxury real estate professionals need to understand the psychology behind this and what it means for marketing the luxury home.

The Institute of Luxury Home Marketing is leading the pack in training relatable, invested, and successful luxury home and estate agents. Behind their students’ success is the priority to understand the psychological foundation of what the luxury consumer really wants.

Without understanding the means and the motives behind the luxury home consumer, real estate professionals will continue to strategically market to the wrong audience with little success in connecting on a deeper level.

When trying to cater to the luxury consumer, one cannot solely base the consumer’s will to purchase on their income level. Simply put, more wealth does not automatically guarantee more money spent. Many of the affluent consumers from previous generations are adopting a less lavish lifestyle and are carefully considering where they invest their excess income. Baby Boomers now make-up only between 15 and 20 percent of the population and are past their consumer peak. “Nearly half of luxury shoppers are older Millennials or younger Gen X” (Experian Marketing Forward Blog). Younger generations will increasingly hold the spending power and the marketing trends will continue to change.  

An article in The Wealth Engine covering key evolving trends in luxury marketing agrees: “In order to maximize your sales and keep attracting prospects, you’ll have to realize that all wealthy prospects are not the same. “Affluent” and “wealthy” are no longer one category to lump all high net worth individuals into” (Changing Trends for Luxury Marketing by The Wealth Engine).

Money does not Equal Luxury – How it Feels Matters

A Princeton study conducted in 2010 showed that after a household income totals $75,000 annually, happiness is at its peak. If we adjust the numbers due to inflation, an average household today still only needs around $85k annually to consider their lives satisfactory and enjoyable. Having a larger income doesn’t prove to provide any more happiness.

While our luxury consumers are bringing in, on average, over six-figures, this study shows marketers that more income does not necessarily a) equal the desire to buy luxury products or b) make for a happier life.

So, if “less is more” is the motto many are now adapting, it is the marketer’s job to understand what constitutes as “more” for their consumer. Showing off all of the “bells and whistles” might not cut it with today’s luxury consumer. Quoting Jackie Graziano from The Wealth Engine, “Whether in fashion, jewelry, auto, real estate – it’s not about the statement, but all about the sentiment. It’s about how that brand or product makes them feel.”

Finding the Perfect Match

There are a couple of questions luxury home marketers should ask themselves when designing their marketing plan: “Who is my consumer and what are their wants and needs?” And, “What features are in the luxury home that would appeal to my consumer and increase their amount of pleasure and personal success?”

Whether a home is located on the lake, has an impeccable wine cellar, or includes a large outdoor space for entertaining, the lifestyle that these amenities will offer actually becomes the product you are selling. If the lifestyle of the consumer doesn’t match the qualities of the home you are showcasing, you can almost guarantee your consumer will feel misunderstood. This, in turn, will result in less sales, less confidence, and untrusting customers. This generation is more than willing to spend money for experiences and the lifestyle they wish to obtain, the luxury home real estate agent just needs to determine the best way to relate to their client.

Targeting the consumers based on what THEY need and the lifestyle they are trying to achieve is the most efficient instrument in today’s luxury home market. Trust us. When dealing with luxury, understanding your consumer is not only a suggestion, it is necessary.

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