Success takes more than using a cookie cutter approach from the general market
In August 2000, the U.S. Census Bureau announced that Hispanics had become the largest minority group in the United States. That announcement was a wake-up call to many insurance professionals who had ignored this growth opportunity. What are the characteristics of this market, and how can we target Hispanic consumers?
Market penetration of financial services in the Hispanic community is much lower than the general market. For example, the overall ownership of life insurance for Hispanics is 34% while the general population’s is 62%, according to LIMRA International’s 2002 report, “Marketing to Hispanics in the U.S.” Similar gaps exist in other financial services. That gap represents an untapped opportunity for professionals selling insurance, investments, mortgages and other financial services.
But reaching this market has some challenges. In general, using a cookie cutter approach from the general market has been unsuccessful. I want to share some recommendations based on direct experience marketing to this segment. These recommendations require that we take a different approach from traditional market sales.
What are the elements of this different approach?
Insurance agents and brokers need to realize there are three different elements in the sales process to Hispanics.
1. Financial education. One of the main drivers of low market penetration of financial services in the Hispanic market is limited financial education. Personal financial planning using bonds and stocks is a foreign concept for many Hispanics. A more common approach is to buy real estate, a small business or sometimes just keep cash on hand. However, Hispanics are open to the concept of planning for the future and will embrace it if they are well informed. For agents and brokers that means spending more time with Hispanic customers teaching the basic concepts of financial planning. This extra time will be rewarded later by increased loyalty and referrals. For Hispanics, the main source of information for financial services is friends and family.
2. The Hispanic market is just a label incorporating many markets. One way to segment this market is by country of origin. Another way is by generation in the United States:
a. First generation Hispanics are people born in Latin America who migrated to the U.S. In general, they prefer to communicate in Spanish. Most learned English as a second language.
b. Second generation are Hispanics born in the U.S. They grew up bilingual and have flexibility to switch from one language to the other.
c. Third generation tends to speak only English but may be able to understand Spanish.
In some regions of the U.S. there are several generations of Hispanics who have been in the U.S. since their territories became part of the Union. One of the common elements of all Hispanics is how proud they are about their roots.
3. There is some confusion about the language of choice of Hispanics. Some suggest that Spanish is the only way to talk to this market, others say that English should be the way to go. In reality, an agent or broker will need both languages to be successful in this market. About 20% of Hispanics in the U.S. don’t speak Spanish. And 20% don’t speak English. The rest range from being fully bilingual to somewhat bilingual. Investments and insurance companies are generally required to conduct business in English only, unless they develop a substantial infrastructure to service foreign languages. Only a few institutions have so far developed such infrastructures. Your role as an agent or broker is communicating this need to your carriers of choice.
If you want to participate in this market, the opportunity is great. Only 68% of Hispanics who bought life insurance purchased it from an agent or broker versus 84% in the general population, according to LIMRA. That is a sign that there are not enough agents servicing this market. If you don’t have Spanish skills we recommend you partner with a bilingual agent.
Financial services companies committed to this market need to have a comprehensive approach. From bilingual marketing materials to advertising, from Hispanic community events to bilingual servicing, from cultural sensitivity to relevant products, financial services companies need to develop a broad strategy to capture your support so that your customers feel more confident buying the products you sell.
Javier Ismodes is vice president of Latino Marketing and Services, Genworth Financial. He can be reached at Javier.Ismodes@genworth.com.
There are three different elements in the sales process to Hispanics