The Internet has become the channel of choice for wealthy consumers in dealing with the firms that serve them, according to a recent survey.
In fact, 38 percent of respondents in the “Enhancing the Customer Experience of the Wealthy 2006” survey prefer to purchase luxury goods online, versus 33 percent who favor face-to-face transactions. Similarly, in services, 37 percent of wealthy consumers want to close the deal online, compared to 30 percent who prefer buying in-person. Twenty percent prefer making purchases of both goods and services via the telephone.
The survey—conducted by the Luxury Institute, a New York-based research institution dedicated to the high net worth consumer—polled consumers with a net worth of at least $750,000 and minimum annual income of $150,000.
By far, preference for digital channels is strongest in the area of research, according to the survey. A resounding 88 percent of wealthy consumers cite a preference for using the Internet and email to research a luxury services firm, and 85 percent prefer these channels to learn more about a particular service.
More than half prefer using Internet and email channels to contact a services firm about both new and existing services, while about two-in-five prefer the telephone, the survey reports. In luxury goods, nearly 80 percent of consumers turn first to the Internet or email to learn about companies and the products they sell, and 53 percent prefer contacting goods providers online about new products (versus 38 percent who prefer the telephone). When finding out about an existing product, online and telephone channels are equally popular among wealthy consumers for contacting luxury goods firms.
While enthusiasm and acceptance certainly run high for Internet and email channels among luxury consumers overall, older and wealthier consumers still prefer the phone. Wealthy consumers 50 years of age and older tell the Luxury Institute that telephone chats ­ with real people, not with machines ­ are their preference when dealing with firms that provide luxury goods or services.
Also preferring the telephone to the Internet and email are individuals with a household income in excess of $1 million, as well as those with a net worth north of $5 million. Although men overall prefer the Internet, their second favorite channel preference is the telephone. For these important customers, the apparent convenience of the Internet cannot trump the immediacy and accountability of speaking to a company representative directly on the phone.
The Internet is not the best channel for all occasions. As a rule, when there is a problem, wealthy consumers are much more inclined to pick up the phone or to pay a personal visit. For example, 68 percent prefer a face-to-face meeting when seeking to resolve a major problem with a luxury goods firm, while 14 percent prefer the telephone. In rectifying major issues with a luxury services company, the phone is more popular than in-person meetings (65 percent to 15 percent).
Only nine percent seek resolution of major problems with goods or services firms through emails, although 44 percent find that Internet and email channels will suffice for resolving minor problems. The telephone—cited by just under half of the wealthy—is the preferred conduit for resolving small issues with providers of both luxury goods and services, according to the survey. It is also the most popular channel for filing complaints with luxury goods and services firms; 32 percent prefer delivering their gripes to service companies online, while 28 percent prefer this channel when filing complaints with goods providers.
Internet and email channels are the best ways for luxury firms to reach out to the wealthy and present offers for goods or services; telephone solicitations, unsurprisingly, are the least popular, according to the survey. While there is a fine line between “spam” and tasteful invitations to spend, almost three-fourths of luxury consumers want offers from goods and services providers with whom they already have a relationship to arrive via email. Just under one-in-five prefer that these offers arrive via “snail” mail.
The propensity of the wealthy to welcome unsolicited email from firms with whom they have no existing relationship drops to 56 percent and their inclination to receive these offers through the U.S. mail doubles to just below 40 percent. Only six percent welcome a telephone pitch from any source.
Wealthier consumers may prefer the telephone to online channels when dealing with providers of luxury goods and services, but they are the most avid users of the Internet for both shopping and research, the survey reports. A whopping 93 percent of individuals worth $10 million or more tell the Luxury Institute that they have purchased a luxury product over the Internet in the past 12 months, compared to just 55 percent of all wealthy consumers surveyed who bought luxury goods online; 71 percent of the wealthiest made online purchases of luxury services, while only half of the wealthy overall did the same.
Eighty-six percent of deca-millionaire consumers used the Internet to conduct research on goods and services providers, while only 57 percent of the overall group did so in the past year. Eighty-six percent also did online research about a luxury good, versus 73 percent of wealthy consumers overall.
The wealthy between the ages of 25 and 34 are the laggards in going online to conduct research on firms, goods, and services. They are also the least likely to have purchased luxury services online (42 percent vs. 52 percent for those 35 and up).
Individuals earning between $500,000 and $1 million a year are by far the most likely income bracket to use the Internet for research and shopping. Eighty percent have researched goods and services online; 73 percent have gathered information on firms using the Internet, while 57 percent overall have done so. Seventy-one percent have purchased luxury goods and 62 percent have bought luxury services online.
There appears to be a slight online gender divide, especially involving using the Internet for consumer research. While 78 percent of men have gone online to research information about a luxury service and 77 percent have researched a luxury good, those percentages drop to 70 percent and 68 percent, respectively, for women.
Nearly two-thirds of wealthy men (64 percent) have researched luxury goods and services firms online, but just over half (51 percent) of women have done so. Interestingly, it was men who cited the telephone as their second most preferred channel for dealing with companies, while women named “email” as their runner-up to the Internet.