The World Ultra Wealth Report 2018
Despite their collective wealth, at a 2018 population of 255,810,1 ultra-high-net-worth (UHNW) individuals are a small market in absolute terms — even for niche luxury brands that are created for the most discerning consumers. Though many of these elite organizations covet the patronage of this consumer group for the prestige and spending power they bring, they can be a difficult group to understand and target with effective luxury marketing initiatives.
Some luxury marketing teams have taken a direct approach to shining a light into the world of UHNW individuals, in order to understand them as a separate group of consumers. At Porsche, Marek Grzebin is responsible for a dedicated UHNW-focused strategy team formed because of these clients’ fundamental value to the business; “They are spending a lot, buying very, very expensive models, and spending even more on personalization. We need to treat them differently.”
This recognition of difference and perceived value does not always mean that luxury marketing teams specifically engage this group, particularly if their larger target audience has greater aspiration potential — luxury hospitality being a prime example. These brands need to ensure they welcome those who can afford the experience at the same time as maintaining an association with an elite audience of influence. Adelina Wong Ettelson, Head of Residences Marketing at Mandarin Oriental, recognizes UHNW individuals as “a natural and organic segment for a five-star luxury hotel group” — albeit one they do not actively target.
However, their influence is undeniable. In the modern world, the individual influence of powerful people is one of the greatest tools brands have available. “These people are very, very successful,” says Grzebin. “They are role models and they are influential in their communities.” Being able to attract the custom of the most discerning consumers in the world is especially advantageous for brand image. “Other people looking up to them see that they can afford any car on earth,” says Grzebin, “but they drive the car they drive because they love it.”
It is not, however, a one-way relationship; UHNW individuals can be highly demanding and, being able to make additional resources available, they expect more from luxury brands. For them, the garden variety of luxury product or service may not be sufficient, or even desirable, and it can be a constant battle to attract and keep them. “The main challenge,” according to Wong Ettelson at Mandarin Oriental, “is how to engage and stay relevant to UHNW individuals…they are interested in personalization and sophisticated yet authentic offerings.”
Grzebin at Porsche agrees: “We are seeing a very strong, solid demand for the limited editions and special models — this target group doesn’t want anything off the shelf. And even when they buy a limited model, they personalize it even further.” While this can be good for business, it does present problems when supply fails: “When they don’t get a limited model they want, they get disappointed, writing letters to our board members” — a natural hazard of upsetting the best-connected individuals in the world.
To appeal to them beyond product then becomes ever more important, to ensure they feel special and appreciated. This is particularly valuable when UHNWs get to experience things not ordinarily available, and certainly not accessible to everyone — even those with comparable resources. “They are always looking for money-can’t-buy experiences, and this is something we try to provide,” says Grzebin. However, this can be difficult to achieve when you don’t fully understand what makes them tick, what matters to them: “It’s very much about personal contact, so very one to one,” says Grzebin.
How easy is it to get close enough to UHNWs to understand them? To provide them with moments of delight in experiences they value and can’t get elsewhere? It is a paradox, says Wong Ettelson; they want to be known, but not known: “It has been increasingly challenging to reach and connect with UHNW individuals. Privacy is a real concern and yet they want to be alerted to what they care about from our hotels and residences. We have to find the balance between catering to their needs while also respecting their privacy.”
An important question to consider is whether the recent annual addition of 30,000 individuals — almost three times the UHNW population of Hong Kong — to the world’s ‘hard to please, hard to know’ UHNW population is alarming. “On the one hand it would be easy to say so,” says Porsche’s Grzebin, “but we will not be the right brand for every new UHNW…and we will not just develop a product simply because the population is growing. This wouldn’t be the Porsche way.”
This points to another issue that tends to rear its head when luxury marketing professionals analyze this fast-growing but still rather tiny group — the assumption that they are one amorphous group and are all relevant target consumers because they have great wealth in common. The reality is that the population of UHNW individuals is not only truly diverse — a microcosm of the wider world’s cultural, educational, and commercial variety — but is also changing, albeit gradually.
Historically, ultra wealth has been associated with older men, a reflection of the time it has traditionally taken to build industrial and commercial empires, but now there is greater age diversity as fortunes are begun by younger individuals and built in shorter time periods. Our archetype of the Asian Industrialist in World Ultra Wealth Report 2018, for example, shows an average age in the late 50s — young for UHNW wealth, and a far cry from the octogenarian titans of the first industrialist age. Another development that proves the evolution of this group is the record high of nearly 35,000 females in the global UHNW population, with a growth rate of 31%: “Women as a high growth segment is encouraging,” says Wong Ettelson. Grzebin agrees and notes that they have already seen increased interest from UHNW women in certain parts of the world; “We have, on average, the highest number of female customers in China, for instance, compared to Europe and North America.”
Over the next four years, Wealth-X estimates the fastest growth will be achieved in the Asia-Pacific region (with a compound annual growth rate of 8.3% 2018–2022), a continuing trend in recent years. “The general trend of UHNW growth in Asia is consistent with our experience,” claims Wong Ettelson. And it is not just a China story; six of the top ten fastest-growing UHNW populations are in the Asia region. Are luxury brands worried they aren’t prepared for a population of UHNW individuals that is bursting through the 300,000 mark in a little over a year? Cautious optimism seems to be the tone, balancing client satisfaction — all of whom will expect VIP status — with commercial and brand success. This will be challenging, thinks Grzebin; “Even if we don’t need to offer them something that is expensive to make them happy — speaking to a designer, getting behind the scenes access — we can only open doors for a few. It becomes almost impossible if you have to offer such exclusive money-can’t-buy-events for 5,000 people.”
1 Wealth-X, World Ultra Wealth Report 2018