Why CEOs Are Missing The Hispanic Market
Tapping It requires an Institutional Commitment.
July 1 2005 by Gary Berman
More than 40 million Hispanics live in the United States, representing $850 billion in purchasing power. Now growing at more than three times the rate of the general populace, Hispanics represent a consumer demographic CEOs simply can’t afford to ignore. Yet most company leaders continue to struggle with how to best reach this segment.
The chief roadblock for most companies is that they can’t seem to align internal corporate culture change with external culture changes taking place throughout America. They’ll spend millions on a commercial in Spanish, for example, but they haven’t done the necessary work on the back end of the organization to serve those new customers properly and to start building loyalty. To truly succeed at this, corporations must undergo a profound, affirmative transformation.
A key first step is understanding that Hispanics are not monolithic. The term “Hispanic” includes people from a variety of countries with different degrees of assimilation and multiple approaches to their pursuit of the American Dream. While Hispanics do share core values-among them hard work, the use of Spanish and the central role of family-the manner in which these core values are expressed differs significantly based on country of origin, length of residency in the U.S., education and economic factors.
Next, CEOs and their top management teams need to adopt the right motivation for Hispanic business development efforts. Rather than adopting the traditional defensive posture-hiring the right people so they don’t get sued, for example-taking an active integrated approach is much more likely to be successful. To do that, CEOs need to attack some stereotypes that have taken root. Many financial services companies, for example, have let false, negative stereotypes-that Hispanic people don’t have money, that they don’t save, that they don’t invest and can’t buy homes-affect their marketing decisions.
Bank of America, on the other hand, has been getting it right for many years, in part based on their heritage of doing business among newly arrived Americans. One hopes that, with its recent spate of mergers, Bank of America won’t lose its focus, as consolidating companies often do.
By not institutionalizing the Hispanic market as a core business focus, the CEO is leaving money on the table. The best-in-class companies include the Hispanic point of view in every aspect of decision-making, from asset allocation to clearly defining metrics for success. Companies such as Allstate, Disney, Ford and McDonald’s, for example, have taken the best practices approach and have profited.
They’ve also put money behind these efforts-instead of forcing a small group of passionate individuals to “pass the tin cup” to get the budget to meet objectives. The smart companies set up achievable goals and measure return on investment. Telecommunications companies are ahead of the curve on their ability to measure Hispanic ROI because they can immediately track the destination of the call, profitability on a per minute basis, and in large part, who is making the call. Verizon is winning this battle, maintaining a focus on the market and shaping products to meet the needs of this demographic. That includes 800 customer service numbers in Spanish and bilingual billing and online capabilities. AT&T, one the other hand, once the dominant carrier among Hispanics, lost its focus when it tried to be too many things to too many people. It was looking the other way when a disproportionate number of Hispanic customers left for competitors.
Getting the right approach takes time. Our corporate culture has grown increasingly oriented toward short-term results. But CEOs must be prepared to invest a minimum of three years to begin to build brand loyalty in the Hispanic community, because it’s not just an ad campaign or Spanish translation. The sales culture has to adapt to this new customer. Hispanics tend to shop in groups and are more likely to require more time and information at the local level. The Hispanic customer-handling approach, or “The Abrazo (Embrace) Approach,” as we call it, is truly valued by Hispanics. The payoff-a loyal customer base spreading the good word about your company and growing by leaps and bounds-will be applauded by shareholders for many years to come.
Gary Berman is a partner with Si Change Consulting in Miami.