The Millionaire Next Door

Good Business in Bad Times

An article recently crossed my desk which indicated that donations to noble causes by the affluent had declined significantly during the latest economic malaise.  If your job is to raise money for one or more of these causes, how should you respond to this news?  It’s logical to assume that your business will decline parallel to the overall trend.  This is the wrong attitude to take.  There are still plenty of people who judge their ability to give based on their wealth and not on their current  reduction in income.  Work harder; work smarter.

I read another article about a  millionaire next door type who recently had part of his substantial car collection auctioned off in a general housecleaning move, not because he needed the money.  I understand that the collection was so impressive that it brought a higher amount of revenue than was expected even in the best of times.  The auction generated $9.2M.  My experience is that not one fund raiser ever contacted this collector during the time when he was euphoric about his major upswing in cash flow. 

Many wealthy people do, in fact, encounter wide variations in their cash flow.  If you intend to market to the affluent, you should time your solicitations to coincide with a prospect’s upward swings in liquidity. 

But that is not the whole story.  In Marketing to the Affluent, aka marketing to the millionaire next door, I discussed the importance of focusing on convoys of wealthy prospects, i.e. affluent affinity groups such as trade and professional associations.  In so-called bad economic times, what industry/affinity group enjoys record profits?  Here’s a hint.  The auctioneer who sold the above mentioned car collection received 10% of the $9.2M which was generated from the sale. 

More than two dozen millionaire respondents in The Millionaire Next Door listed their occupation as auctioneer.  Full-time/professional auctioneers are extremely productive in transforming their income into wealth.  They are more than ten times as likely to be millionaires than the typical American household.  The combination of high income and living in a small town [low consumption neighborhood environment] contributes to their ability to accumulate wealth. In fact their cost of housing is about 60% of that of people with similar incomes who live in or near metropolitan areas.

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