The political clamor of the past couple of years rammed home the point to just about every American citizen that the economy is in the hands of a disproportionately small percentage of people. Smart marketers have long known this – in a surprising majority of cases, 80% of business comes from just 20% of the customer base.
These are the “affluents,” citizens fortunate enough to pull in at least $100,000 in income per year. People who qualify, for example, for the new mobile app from SMART Jets, so they can “book (and pay for) a private jet in less than 10 seconds” with nothing more than a smartphone.
One could easily trick oneself into thinking the supply of affluent consumers is a constant – just multiply our ever-growing 315-million-plus headcount by 20%. Unfortunately, there’s that “$100,000 annual income” requirement.
Analysis by Unity Marketing, renowned consultants to companies that target the affluent, suggests that fewer and fewer people are going to clear that $100,000 bar.
Unity created a beautiful chart of the number of affluents, from the year 2001 onward, in two age brackets: 35 to 44 years of age, and 45 to 54. It is beautiful in its illustration of two main points:
>>> In 2001, there were roughly 20% more affluents in the younger bracket than in the older one. As the group aged, they were able to maintain their income status, thus pushing the older bracket’s bar up incrementally in the subsequent years’ charting. Yet, the crap economy of the early 2000s kept newer 35-to-44s from joining the club, if you will. The younger bracket’s 2001 headcount had fallen by 15% as of last year. And Unity Marketing doesn’t see any appreciable growth until 2019.
>>> Because the younger bracket took on fewer new affluents over time, the growth in older affluents hit a peak in 2011, and will fall as this cohort ages. Combine the observation in the first point above, and you end up with annual declines in affluents overall, until well past the year 2020.
Of course, an improving U.S. economy later this decade could boost the number of affluents and perhaps offset or override their projected decline. Except that an improving U.S. economy is about as likely as you buying a winning lottery ticket today.
Businesses whose survival is dependent on affluent consumers should prepare not for “growth,” but for “share.” Start planning for raging battles around (a) share of market and (b) share of wallet.