ROB: Then let’s move on to: change. And let’s start with the second topic you raised, marketing to the affluent. Why should my real estate agents owners be eager to learn about and do this?
DAN: Without delving into the kind of statistical and in-depth detail that I’ve assembled and presented in the book, let me paint a broad strokes answer. Domestically, here in the U.S., all the real spending growth is toward the top. The middle class is shrinking, with 1/3rd moving down but 2/3rds moving up. That 2/3rds is literally a new class of ‘middle-class millionaires.’ These mass-affluents’ buying behavior has also served to motivate more status spending by the affluent. Across the three groups – mass-affluent, affluent, ultra-affluent – there has never been more discretionary income and more spending on a broader and more diverse range of premium, premium-priced goods and services including newly invented categories. Further, there is convergence and overlap with the biggest part of the boomer population hitting their peak discretionary and non-necessity spending years, spurred on by very different attitudes about both retirement and spending than the previous generation. Anyone who has the sense that money is tight, consumer spending restricted, prosperity not rampant is simply deluded; paying attention to the wrong information. Essentially, there’s a gigantic growth industry, an unprecedented boom underway, getting rich by selling to the rich, near-rich, soon-to-be-rich. Many business owners’ knee-jerk reaction to this is either to deny it because it is not their personal experience or to feel it is not what their business is about or that these exceptionally valuable clients are somehow beyond their reach. Well, ignorance is forgivable and fixable, but as comedian Ron White says: you can’t fix stupid. My NO B.S. MARKETING TO THE AFFLUENT book gets all that b.s. out of the way, so you can focus on opportunities instead of excuses. If that sounds harsh, it’s supposed to. Earlier I said that THE question is always: where’s the profit in that? There’s never profit in making the lists of why we can’t do something, why we can’t capitalize on emerging opportunities. Making such lists is low-grade, low-pay work. Any idiot can do it. If you want high pay – especially at times when a lot of business owners are taking pay cuts – you have to do more high pay work. And certainly, finding ways to follow the money, to appeal to and attract more affluent, willing to spend clients is such work. Making excuses, sucking your thumb is not.
So, the basic facts: 22% of the U.S. households own 55% of the earned income. The spending power is concentrated with 1 out of 5. Rob, real estate agents have three basic choices: one, promote himself to anybody and everybody, taking whatever he gets….statistically insuring he’ll get more of the 4 out of 5’s than the 1 out of 5’s and risking getting none of the 1 out of 5’s. Dumb. Two, he can – out of ignorance, denial, fear, low self-esteem, sloth – actually focus on the 4 out of 5’s. Dumber. Incidentally, the overwhelming majority of the competition is at the bottom, broad base, not toward the top of the economic power pyramid. Wal-Mart does just fine there, and recently has had a renewal of growth, of same store year to year growth, and is undoubtedly helped by recession, so I bought Wal-Mart stock in the $40’s. And again in the low $50’s. And if I can, if it drops there anytime soon, I’ll buy more. But do you really want to be butting heads with Wal-Mart and every other large and small competitor vying for customers for whom price is a major factor in buying decisions? Only if you can offer and deliver THE lowest prices while making satisfactory profits. Otherwise, there’s no benefit in offering the almost-lowest prices. Or three, re-tooling any and every aspect of your business you must, in order to target market to, appeal to, attract, not just satisfy but thrill, and grow with more affluent customers….for whom price is a non-factor…and who are least and last affected by recession. My two new books, combined, in concert, can help you successfully act on the third option.
Under normal conditions, only 10% of consumers always buy by price, their decisions governed by price – because they have no option. This group is largely made up of “working poor”, low wage working people with more mouths to feed than they can afford food for. Nothing wrong with them as people. A lot to admire – except the choices they make that keep them poor. But no good reason to have them or, worse, seek them out as customers. Yet, strangely, most business owners focus 90% of their energy on price even while only 10% of the customers decide based on price. In recession, this percentage may jump as much as 3X, to 30%. However, there are 20% who make most buying decisions with little weight given to price or cheapest price and 5% who never consider price. In the middle, people who consider price in context and only buy by price in absence of other persuasive information. That top 5% is admittedly considerably more difficult to get to and satisfy, but infinitely and disproportionately more valuable. The 20% is a little more difficult to get but also considerably more valuable. So, picking up rocks from your driveway is easy and cheap to do but rocks have value only in giant bulk. Mining diamonds actually uses the same skills as picking up rocks applied differently, with admittedly the difficulties of traveling beyond your driveway, investing in mining equipment, etc., but each little diamond you find is worth more than ten tons of rocks. What’s important to face up to is that you choose the business you’re in. Rocks. Diamonds. Up to you. If you feel you’re working too hard to make a living, have no leverage, aren’t gaining and may even, now, be losing ground, I’ll safely wager you’re in the rocks business. Ultimately, all suffering and all prosperity, self-inflicted.
ROB: But, Dan, the question that pops, what about the recession? Surely this isn’t the best time to be re-directing my real estate business at selling to an emerging affluent market – that’s what people will think. That the timing is bad. Better to think about this when “things get better.”
DAN: 1000% wrong. To be brief, if there is a protracted recession, across a wide swath, or in segments; either way, I’ll prefer investing as much of my resources as possible in selling to those least and last affected by recession. And a number of business owners are already, quickly finding themselves in deep and worsening financial trouble by not being agile about this, by continuing to waste their resources selling to people with dwindling resources, easily and quickly affected by a rise in the price of gas and Starbucks, and easily and quickly scared silly. There’s no better time, and it is arguably an urgent time to move to where the money is in the hands of confident spenders.
I think my MARKETING TO THE AFFLUENT book is URGENT reading for most business owners. There is a fundamental path to progress, all progress, that looks like this: Step 1 – Awareness, Step 2 – Decision, Step 3 – Resources, Step 4 – Action. In the MARKETING TO THE AFFLUENT book, I provide a whole new, thoroughly documented and truly fascinating new Awareness of the mass-affluent, middle class millionaires, affluent and ultra-affluent populations, their psyches, their buying criteria and behavior, who they are, what they buy, why they buy, how they buy – plus an even broader awareness of why and how money moves from person to person and place to place. Step 2 – I guide you in making informed decisions about how you can best connect your business (products/services/practice) to the best segment of this affluent market for you. And I get you convinced, confident and motivated to do so. Step 3 – I hand you the resources. For example, specific instructions for finding and directly reaching out to the best affluent clients for you, in your area. For example, a detailed, diagrammed, step-by-step ‘affluent entrapment system’ for your marketing. Step 4 is then up to you. This can quickly change your fortunes. It can rescue you from and immunize you to recession. It can convert an ordinary business providing ordinary income to an extraordinary business providing exceptional income, spinning off extraordinary wealth. Within this context, incidentally, are very specific ‘price strategies’ that have led to huge income breakthroughs. It’s all illustrated with real-life examples. And the book comes with an audio CD inside featuring highlights from my Price/Profit/Power Seminar, which cost $995.00 to attend, and was recently attended by more than 600 people.
But to zero in: your key to changing your income for the better, even at a time when peers’ and competitors’ incomes are changing for the worse, is: changing the “who” you are deliberately attracting to do business with.
And further, Rob, you want your real estate agents to consider equity not just income. Income is what you make and take home today. Equity is the actual value of your business, represented in a number of ways, including its sustainability; its resistance to ups and downs, even to recession. In its ultimate exit-strategy value. Well, the value of your business is actually the aggregate total of the value of each of your clients. Amass low value, financially weak, fickle, easily discouraged customers; own a low value, fragile business.
This fantastic interview with Dan Kennedy will be continued in Part Three. If you would like to have this next post, and all future posts, automatically emailed to you so that you don’t miss them, simply add your email address in the box on the top right hand side of my blog!