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.