Gen X & Y (& Creative Class) are TOAST

Age profiles like Baby Boomer or Gen X are good for one thing and one thing only. They tell us how old someone is! This kind of profiling demonstrates a triumph of spin over science.

Demographics and socio-economics are similarly hopeless at giving us anything beyond age, gender, income and one or two other bits of simplistic information. And while income is important (you can't spend without income) the real surprise is that those with money don't automatically have any desire to part with it. Additionally, this kind of uni-dimensional profiling offers nothing about what makes consumers tick; why they fall in love with one experience but not another; why they spend on brands that ignite their spirits. Even more sophisticated research into consumer values doesn't ascribe any value; doesn't link spending capacity with spending propensity.

It's better at an individual enterprise level, but gaps and questions remain: can you, for example, identify those in your customers database who, while they may not currently be spending, have the highest potential to deliver profit? Banks call them hidden customers. So it's clear a new body of scientific knowledge is needed.  And to enable the capture of extra profit from high-value consumers, it needs to:

• Define the rich personal characteristics that drive high-value consumption in a way that is actionable in the design of products/services, marketing content, sales and service approaches, and brand strategies
• Be easily operationalized, with deep behavioural and attitudinal insights
• On the screens of every significant media planner
• Facilitate the flagging of high-value consumers in customer databases
• Enable targeting of high-value consumers in the economy via direct marketing or general media
• Enable managers to evaluate performance in attracting and retaining high-value consumers against the competition; across market segments and countries; across consumption categories

This was the starting point for 9 years of Psychonomic research that resulted in the identification of the New Economic Order and in the formation of NEO Consulting to show clients exactly how to unlock extra profit from NEOs.

Gen X & Gen Y use 1 demographic factor - age. Socio-economics uses 3 demographic factors - education, occupation & income. Psychonomics - uses a sophisticated mix of psychology & economics - 194 factors: 12 spending, 100 behavioural and 82 attitudinal factors. It identifies and describes NEOs. And that makes Gen X & Y toast.   

Richard Florida's Creative Class or NEOs?

A critical analysis

The Creative Class was defined by North American academic Richard Florida; and NEOs were defined by Australian consumer behaviorist Ross Honeywill.  

Florida combined all occupations he considered innately ‘creative’ to produce a demographic segment of creative people he termed the Creative Class. The US government’s Economic Research Service (ERS) found that Florida’s Creative Class was simply a proxy for any job requiring higher levels of education (check the ERS website): “In practice, this turned out to be virtually all occupations where incumbents tend to have high levels of schooling.”  

Honeywill combined 194 attitudinal, behavioral and spending factors to identify the behavioral and attitudinal mindset underpinning the consumers with both (a) the highest social intelligence; and (b) the highest spending behavior. Because of their influence on society, politics and economic wellbeing, he called them the new evolutionary order or new economic order (NEO).

NEOs are 4 times more likely than the average population to have a university degree and have an average social intelligence quotient ( SQ) of 140 (compared to the 100 average of the population).  

Similarities  

Both the Creative Class and NEOs are well educated and creative.  

Both NEOs and the Creative Class live in urban settings: hotbeds of artistic activity; centres of aesthetic and ethical commitment: imaginative, professional, evolving communities. In short they seek out cities like Denver (Colorado), Vancouver (Canada), San Jose (California), Melbourne (Australia), San Francisco (California).  

Both NEOs and the Creative Class dominate professional and executive roles; account for the majority of discretionary spending (93 per cent of NEOs are in the top third of discretionary spenders in the economy) and opt for quality ahead of price and a ‘deal’.  

When ERS applied more rigorous modeling to Florida’s approach, they found that the urban dwelling Creative Class accounted for 23 per cent of the US adult population. When Honeywill applied his 194 behavioral, attitudinal and spending factors to the US population, he found that NEOs accounted for 24 per cent of the adult population.  

Of Honeywill’s 10 top NEO cities in the United States, 7 are on Richard Florida’s top 10 Creative City list.  

Differences  

Applying a critical analysis to Florida’s Creative Class, what emerges is a socio-economic profile with two basic factors: education and occupation. This is a passable proxy for the highest level of Socio-Economic profiling (ABs are the top quintile of socio-economic value i.e. the highest educated, the highest income, and the highest occupation). Even though there are only 3 factors in Socio-Economics (compared with 194 for NEOs) it’s a reasonable demographic segmentation. That said, it is just a demographic segmentation. And the Creative Class only has two of its defining factors.  

Conclusion  

Both Florida’s Creative Class and Honeywill’s NEOs are market-leading typologies. Florida’s because he has done a great job in popularizing a relatively limited demographic segmentation methodology; and Honeywill’s because of its social methodology, depth of behavioral and attitudinal insights, and its robust root database of 120,000 respondents each year from North America, Britain, New Zealand and Australia.  

A final piece of analysis: