Real Family Values: Take a New Look at the Data Ties that Bind

Marketers need to rethink the way they consider the total value associated with families. Historically, we’ve always approached things at an individual or a household level. And the reason was straightforward. That was typically the best level of information available. Measures like household income and household net worth have been used as key inputs to gauge purchasing power, share of wallet, and potential lifetime value of customers and prospects.

But in restricting ourselves to household level information, we miss out on critical information that may be relevant today – and will certainly be relevant tomorrow. Consider the case of a 25-year-old living in Phoenix, AZ. He’s a renter and earns $23,000 per year and has a net worth of approximately $5,000. For a credit issuer, he may be an okay risk for a low credit limit. For a company selling long-term insurance, he’s not on the radar screen. For a company selling family vacation packages, he’s irrelevant. For a full-service brokerage, he’s a dud. For a multi-line bank, maybe he’s a candidate for some checking and savings offers, but the wealth management group isn’t interested. And retirement communities? Please.

Now, does he magically look different if you know that his parents in New York have a $4 million net worth? And that he has a brother and sister-in-law and two nieces who live near him in Phoenix? And the whole family is considering an extended family cruise in the coming year? And that the New York parents are starting to look at luxury retirement communities that are closer to the “adult children” and grandchildren in Arizona? Of course he looks different. The whole context of how we’d market to him, to his parents and to his extended family changes because we have a much more holistic view of their needs and their value as a family.

There is a substantial range of products that can be marketed far more effectively by understanding extended, intergenerational family relationships. In the coming decades, as life spans continue to increase, and as unprecedented amounts of wealth are transferred from one generation to another, for marketers to fully capitalize on opportunities (and to avoid enormous missteps) they’ll need to avail themselves of the generational and beyond-the-household family linkages that tell the full story of a family’s value.

Consider this scenario as a very basic one: in a major financial institution, 16% of its high-value customers were known to have next-generation/descendant family members with whom this financial institution had no current relationship. If the institution actively targeted the 2.9 million future inheritors, not only would they be prospecting for business today, but they’d also be proactively taking steps to retain their deposits and investment assets which could, without action, migrate to their competition over the course of the next 10 years.

Family relationships are not bounded by the walls of a home. They extend across time and across geographic boundaries. They influence patterns of behavior, critical purchase needs, near-term purchasing power and long-term wealth flow. And yet, as marketers, we too often think of a family based solely on who lives in a given household. By looking at beyond-the-household familial relationships, by examining opportunities and risks associated with targeting (or not targeting) prospects who are relatives of current customers, and by establishing new metrics that take total family value into account, marketers will be well on the road to understanding the real value of a family.

David Danziger is the senior manager of innovation at Acxiom Corp.