18 Feb 2012

Get to Know Affluent African Americans

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Get to Know Affluent African Americans

The Internet has changed their purchasing patterns By Andrea Hoffman, founder, Diversity Affluence, Fenimore Fisher, managing partner, R. Fenimore Fisher Group

Let’s meet today’s Affluent African Americans, or, as my co-author Leonard Burnett and I call them in our book Black is the New Green, the AAAs.

AAAs are doctors, lawyers, business leaders and influencers. There are approximately 816,500 AAA individuals in the U.S., representing more than 35 percent of the 2.3 affluent ethnic individuals (those earning a minimum of $75K annually) in the U.S. Furthermore, AAAs earn about $185 billion annually, and possess $87.3 billion in purchasing power. And with racial and ethnic minorities being the fastest growing segments of the American population, those numbers are sure to grow over the coming decade.

What’s interesting is how and where those AAAs are using that purchasing power. While many consumers have embraced Internet retail, AAAs have followed this path more aggressively. This is due, in part, to negative experiences they’ve had interacting directly with the brick-and-mortar service and consumer industry.

My marketing communications consultancy, Diversity Affluence, explored this in a report we produced called The Online Purchasing Patterns of Affluent African Americans. Among some of the key findings:

  • In 2004, 13.5 percent of AAAs used the Internet to shop. By 2008 that number grew to 95.5 percent.
  • Focus group participants indicated that “the Internet has leveled the ‘race’ playing field.”
  • AAAs are shopping online at record levels. Almost half of survey respondents made at least 30 percent of their retail purchases online. More than 22 percent of AAAs made at least half of their retail purchases online.

AAAs have changed the way they purchase goods and services. They go online based upon their in-store experience, their responsiveness to print and traditional media advertisements and most importantly outreach done exclusively to them through social media. The retail impact of AAAs is significant, as African American consumers often set the trends that others follow.

AAAs are not just about spending. It’s also important to take note of how they manage wealth transfer (aka estate planning) and philanthropic giving. The value of wealth transfer in the African-American community is expected to go from $1.1 trillion today to $3.4 trillion by 2055. At the same time, charitable giving by African Americans remains higher than from other groups. A recent analysis by the Urban Institute found that predominantly Black zip codes gave 5.1 percent of their income to charity, while only 3.3 percent of income was donated from zip codes identified as predominantly White areas. This is why charitable groups today are being encouraged to work closely with high-income African Americans and to nurture connections with young, African-American professionals who will become the next generation of AAAs.

What does all this mean for CMOs today?  It’s foolish not to tap into this wealthy buying segment, yet that is exactly what companies do all too frequently. Sometimes it’s because marketers are unaware of the AAA segment; sometimes its because they’re baffled about how to reach out to this segment; and sometimes it’s because they think they lack the resources to make a credible effort. But the payoff can be high, as AAAs generally over-index in terms of brand and retail loyalty. AAAs have been under-appreciated and overlooked. The time is now to tap into this market and to embrace a constituency that will have a lasting effect on your bottom line.

One Response to Get to Know Affluent African Americans
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