Attract Luxury Customers by Talking to the “HENRYs”

Advertisers who want to reach "High-Earning, Not Rich Yet" Americans online must employ the art of seduction

For a lot of advertisers, the term "luxury spender" conjures an image of that distinguished fellow in the Patek Philippe ad with graying sideburns and a mahogany yacht. Or Thurston Howell III. Or some Real Housewife of Beverly Hills.

And that's great -- if you've got a storefront on Rodeo Drive. But those advertisers marketing luxury online need to change the marketing channel -- they need to tune in to the "HENRYs."

HENRYs are "High-Earning, Not Rich Yet" people who take home between $100,000 and $250,000 a year. They're not the wealthiest Americans, and they don't buy $1,000 jeans or wristwatches that cost as much as a four-bedroom house. But they do account for the vast majority of luxury spending in the U.S. -- more than 80%.

Getting to know the HENRYs

The HENRYs represent a very lucrative market for high-end brands. But, surprisingly, a lot of these brands give the HENRYs a passing thought at best, both online and off.

"Luxury brands are chasing people with incomes of $250,000 and above, this small number of high-spending-households," says Pam Danziger, founder of luxury-market research firm Unity Marketing, and author of Putting the Luxe Back in Luxury. "They largely ignore the HENRYs, even though there are 10 HENRY households for every ultra-affluent household."

Perhaps this is due to the fact that reaching the HENRYs is a little more complex than luring ultra-acquisitive ultra-affluents, especially if you're selling luxury in a recession economy -- and most especially, if you're doing it online.

"We're doing research around the HENRY category and we're finding that they're looking at luxury in new ways," says Yahoo! director of B2B Strategic Insights Edwin Wong. "The economic downturn has been a time of reassessment and reckoning, and consumers we spoke to said they need a reason to buy. There's a new notion that luxury purchases have to be earned, a reward for something accomplished."

The (online) art of seduction

Still, even if the HENRYs are now more rational in their approach to high-end shopping, that can be surmounted if advertisers can create a properly seductive environment. Trouble is, that is hard to do online.

"We asked these consumers what the luxury shopping experience should feel like," Edwin explains. "They said things like 'exciting' and 'seductive.' But the online experience sucks the air out of the luxury shopping process---and the online advertising experience is even worse."

Edwin also says that luxury brands that want to effectively communicate with HENRYs online should think about the "five P's": person, platform, production value, price and placement.

For example, if a person is concerned about justification, a brand needs to provide an emotional experience to overcome those doubts. And if the platform is right, a brand can create that experience with rich layers of multimedia, including video.

"HENRYs want to be swept off their feet, so brands need to be creative and seductive," Edwin says. "If a HENRY sees a banner ad for Nordstrom, or Saks advertising 80 percent off, it's like a cheap date -- or a date with someone who's easy. They're showing you everything under the kimono before, when they really should be seducing you in. Brands need to focus on emotional triggers and hint at exclusivity, even if it doesn't really exist."

The research shows that a lot of HENRYs are open to spending, and plan to do more of it in the near future. Better still, the study shows that they're avid shoppers, with 39 percent browsing for luxury goods on a weekly basis, and 29 percent shopping with intent to buy. "They're ripe to be spoken to but it shouldn't be done through advertising that cheapens the brand," Edwin concludes

In online advertising, as in life, seduction is a subtle art. But the payoff is usually worth the time and effort it takes to get it right.

-- Tom Stein and Tim Devaney

Tom Stein and Tim Devaney are writers based in the San Francisco Bay Area. They have contributed to numerous business and general interest publications including Wired Magazine, the San Francisco Chronicle, San Francisco Magazine, and Tennis Magazine. See their previous articles on the Yahoo! Advertising blog, "New Niches You Should Consider Now" and "Ãberusers: Overlooked?."

Posted by mattism