This is all about knowing how to target the right customer, in the most relevant and engaging way, in the right place.
NEOs: the PREMiUM audience
Developed by Dr Ross Honeywill, the NEO typology is an innovative population classification revealing that society is split pretty much into two consumer MINDSETS: the New Economic Order or NEOs, and the traditional economic order or Traditionals.
And their mindsets are as different as truffles and McDonald’s.
The first type is the socially progressive, high-spending, high discretionary-choice NEOs, 91 percent of whom are in the Big Spender category (top third of discretionary spenders in the economy).
Their traditional cousins have decidedly conservative social attitudes, are reluctant spenders and passive investors; and exhibit low discretionary-choice behaviour. Regardless of their income or net worth, Traditionals are price-sensitive and more interested in features, functions, status and the right deal than they are in quality and a premium experience. As a consequence, only 4 percent of Traditionals are in the top third of discretionary spenders.
Consistent with the 200-year-old traditionalist lineage, Traditionals are socially and politically conservative, more interested in the rational than the emotional. They wish the world would stop changing so quickly and just slow down. Traditionals resist technological changes and don’t care that digital devices could give them more control over their lives. They would rather take the path most travelled, comforted by the certainty of crowds, and are happy to follow rather than lead.
Powerful social and business influence
NEOs are far from some small niche in society — they are a quarter of the population, and have powerful social and business clout. They will buy new technology — all those 4G smartphones, tablets, WiFi devices, wearables, and implantables — but they’ll also spend their hard-won rewards on home extensions and renovations, travel, eating in and out, drinking, online banking, investing in shares and online high-interest savings accounts, and an entire range of services that make their lives easier, more individual, and more controllable.
They vote governments in and out, fill our universities, and take professional roles and executive positions.
There are 4.6 million NEOs in Australia and 60 million in the USA.
To qualify as a NEO, a person must be:
- In the top 25% of discretionary spending AND …
- In the top 40% of the 82 defining attitudes and values that determine high spending AND…
- In the top 40% of the 100 distinctive behavioural factors that reveal what they do and how to reach them
A NEO is born a NEO and, depending on circumstances throughout his or her life, will always be either a NEO (24 percent of the population) or an evolving or Aspiring-NEO (26 percent). A Traditional is born a Traditional and will die a Traditional (50 percent). There is no migration between one half of the population and the other.
Why did this occur?
According to Immanuel Wallerstein, all stable systems disrupt, and become unable to continue their regular, slow upward trajectory. Having reached a kind of stable equilibrium during the post-war boom, by the late 1980s the consumer economy was becoming increasingly unstable and chaotic. The result? What Wallerstein would call inevitable bifurcation. The world economic order bifurcated, split in two, creating the New Economic Order (NEOs) and the Traditional Economic Order (Traditionals). This chaotic bifurcation correlated with the failure of communism in 1989, the replacement of the industrial age by the information age in 1991, the global recession that swept the globe between 1989 and 1993, and the overthrow in 1991 of post-modernity by neo-modernity.
The Australian population is split into distinct consumer mindsets:
- NEOs – (24%) 4.6 million
- Aspiring NEOs – (26%) 5.3 million
- Traditionals – (50%) 10 million
There are 60m NEOs in the US, 6m in Canada, 14m in the UK and 146m in Mainland China.
NEOs are socially progressive individualists with a humanist leaning towards social justice. Typically well educated, they believe as much in learning a living as they do in earning a living. Great planners and architects of their own life outcomes, NEOs embrace technology to give them more control over their lives. They are optimistic about the future and juggle an intellectual bent with the desire to look and feel fashionable. Conspicuous activists, they are inconspicuous consumers.
NEOs are largely metropolitan dwellers, with more of them living in urbanised NEO cities like Melbourne, Sydney, Vancouver (Canada), San Francisco (California) than anywhere else.
Fifty-three percent of NEOs are women and 47 percent are men; and while NEOs range over all age groups, they tend to be younger than Traditionals. NEOs exceed the national average in every age profile between age 20 and age 50, while Traditionals exceed the national average in every profile above age 50. That said, there are plenty of NEOs in their sixties.
More than half (53 percent) of NEOs have a university degree, compared to 30 percent of the population or 17 percent of Traditionals. NEOs are as committed to learning a living as they are to earning a living.
Because NEOs are most likely to be in professional or management occupations or to have started their own business, they earn more than the rest of society. Specifically, they dominate every income category above $50,000 pa and are five times more likely than Traditionals to earn in excess of $100,000 pa. But they earn more because they are NEOs; they are not NEOs because they earn more – how much someone earns does not automatically determine how much they spend.
And NEOs spend more … and more frequently … than anyone else – typically, 3 times what Traditionals spend.
NEOs are also, for example, significantly over-represented in Australia’s highest tier of wealth. This is also true in the US.
In Australia, the top decile of net wealth is valued at $4.04 trillion – half of all net wealth in the country. One in five NEOs (19%) are in the top decile, compared to only one in seventeen (6%) Traditionals. That 3:1 ratio directly aligns with NEO / Traditional consumer spending.
NEOs are 87% more likely than the average Australian to be in the top decile of net wealth, and 126% more likely than Traditionals to be in that top decile.
The new wealthy, (NEOs) are very active with their money, while Traditionals are typically passive. NEOs are unafraid of debt to satisfy their desires. This is evidenced by the fact that NEOs account for almost half of all debt in the economy – $510 billion out of $1.2 trillion.
NEOs are 134% more likely than Traditionals to have an investment loan. And NEOs are three times more likely than Traditionals to have charge cards.
The NEO Economy is valued at $512 billion in Australia and the Traditional Economy is valued at $364 billion. Therefore, NEOs are 300% more valuable than Traditionals when it comes to consumer spending.
In the US, NEOs and Aspiring NEOs account for 77% of consumer spending.
NEOs treat the commodities of life as mandatory and focus their real spending and investing in what is known as elective consumption. So, for example, they’re spending less on traditional products and spending more on creating emotional experiences by buying brands and experiences that are authentic and offer provenance.
They’re paying for yoga classes and private trainers; they’re drinking fewer glasses of wine but buying better quality; they’re vacationing in places that enrich their spirit; they’re buying more experiences, more frequently; they’re outsourcing personal services like driving (Uber) and cooking; and they’re paying a premium for premium advice when it counts.
NEOs are inconspicuous consumers. Because they define themselves by who they are and what they stand for, they don’t need to surround themselves with overt luxury or symbols of belonging. They do however want beauty, design, quality, rich information, authenticity, flexibility, provenance and choice.
Guests to Clayoquot Wilderness Resort on Vancouver Island are, for example, responding to the wave started by Clayoquot’s John Caton, paying $US2,000 a night per person to stay in a tent. And Clayoquot’s NEO-powered bookings at the height of the global meltdown were 20 percent up on the previous year.
In Denver, Colorado during ‘Meltdown Christmas’ of the Great Recession (GFC), stores in the major shopping mall were all but empty … except that is for the Apple store where the line was so long a patient NEO shopper was expected to wait 35 minutes to be served. And to pay full price. NEOs are shopping and booking holidays, but only for products and experiences that make beauty linger.
PREMiUM NEOs are passionate, active, involved individuals. Australian marketers & entrepreneurs need to see them as 4.8 million markets of one. In seeking the path less traveled, NEOs still encounter mainstream culture (such as football), but it is their individual twist on the mainstream that distinguishes them and makes them a challenging audience for mainstream marketing approaches.
The NEO Intellectual Property and associated trademarks are the property of The Honeywill Trust, and made available under exclusive license to PREMiUM