Give Them Some Credit

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There is an analogy ethnic marketing consultants love to trot out: At just over 30 million individuals, the Hispanic population in the United States is larger than the entire population of Canada.

That's a substantial marketplace. And given some of its characteristics-on average, seven years younger than the general populace, with larger families (3.4 members per household, as opposed to 2.5), and more likely to have young children-they comprise a prime market for just about everything.

Yet a primary purchase mechanism-the credit card-is underrepresented among this population. According to Simmons Market Research Bureau's 1998 Hispanic study, slightly less than 50 percent own a credit card, compared with 72 percent of the general U.S. population. The market certainly is affluent enough. More than 20 percent of the Hispanic population have household incomes in excess of $50,000; 15 percent earn between $35,000 and $50,000. Another 15 percent report incomes between $25,000 and $35,000. It is a community wide open for credit card issuers with specially targeted offers. But there are nuances to offering credit cards to Hispanics, and ignoring them can turn a campaign sour.

Beyond simply translating offers into Spanish, there are cultural and demographic factors to consider. The '80s and '90s saw an influx of adult immigrants entering the United States. According to Marvin Shaub, president of Princeton, New Jersey-based Teletienda Inc., a consulting firm specializing in direct marketing to the Hispanic community, 37 percent of all Hispanic Americans were born outside the United States.

Before designing promotional material aimed at these recent immigrants, marketers should understand the factors that brought them to the United States. Economic advancement is often the chief reason, although not among the more affluent Cuban and South American populations, both of whom, along with Central Americans, mention war and political pressure, Shaub says.

Those citing economic concerns often come from disadvantaged backgrounds. Their knowledge of financial products is minimal, so the uses and benefits of a credit card need to be spelled out. "The issue is how, for a foreign-born recent arrival, you do an introductory communication strategy," says Isabel Valdes, president of Cultural Access Group in Los Altos, California. "Assume people have never seen a credit card before. You have to not only give them information, but dispel misinformation [such as] when people steal your card, you can lose your possessions, and that interest rates can be 25 percent."

Felipe Korzenny, president and CEO of Hispanic & Asian Marketing Communication Research in Belmont, California, agrees. "Many of them do not understand what minimum payment [on their statement] means," he says.

But if the rules of credit cards are explained, experts agree, Hispanics seem to be more responsible about paying off their debt than other consumers. In fact, the Hispanic consumer comes with an attitude that not being in debt is a sign of status, and often large-ticket items-even houses and cars-are paid for with cash.

Just as owning a credit card is a status symbol, says Alex Lopez Negrete, president of Houston-based Lopez Negrete Communications, being rejected is demoralizing for the Hispanic customer. He advocates not soliciting the Hispanic market unless the credit card issuer has a secured card product to offer potential targets who fall below the cutoff for the credit scoring system. "The last thing we need is to fill out a form [for a credit card] and get back a letter saying 'You are not good enough,'" he says.

Telemarketing has potential for missteps as well. When calling Hispanic consumers, telemarketers should be prepared to spend more time on the phone. "You have to warm the customer up differently," says Lopez Negrete. "First, establish that you have the right to call me. Pronounce my name correctly. Screen for language preference-and make the financial screening process more discreet."

Spending the additional time pays off. "We give [targets] a chance to get educated," says Arleen Garza, senior vice president of affinity marketing for Bank of America. "In one of our first telemarketing programs [to the Hispanic community], we contracted with a vendor that had worked with us before. He came to us and said his firm had an average time-per-call limit to make calls cost-effective, and that he was spending twice as much time [on calls]." Garza told him to take whatever time was necessary to make sure the consumer understood the program.

Regardless of whether your direct marketing campaign is through the phone or the mail, should you approach this population in English or Spanish? A higher-and growing-percentage of the community lists itself either as entirely or predominantly Spanish-speaking at home. But determining the appropriate language of a target has pitfalls. Marketers should not rush to provide English-language pitches, even if they learn that a consumer speaks English. According to the Yankelovich Hispanic Monitor, two-thirds of all Hispanic adults in the United States were born abroad. Of those, 66 percent say they get more information when a product is advertised in Spanish, and 56 percent cannot understand commercials in English. Lopez Negrete usually hedges his bets by recommending bilingual offers. Surnames are a poor qualifier for single-language use. "What if a non-Hispanic wife [of a Hispanic individual] is being targeted?" he asks.

Database Management, New York, a division of Stevens-Knox & Associates, distinguishes between its "Hispanic" lists, which consist of English speakers, and its "Spanish-speaking" lists, which are culled from respondents to Spanish-language promotions. The market for Spanish-language lists is relatively new, coming into its own only within the past ten years. Both Univision and Telemundo, two national Spanish-language media consortiums, also have lists of respondents to Spanish-language sweepstakes and product offers. Use of lists like these is increasing. "More success is achieved with Spanish-speaking lists," says Rick Blume, president of Database Management. "The English-speaking Hispanics have been reached before, but the Spanish-speaking consumers have not. The same marketer can expect to receive a 50 percent to 400 percent increase in the Hispanic market."

This is largely because, in addition to being underprospected by the credit card industry, the market is overlooked by mailers. In a DraftWorldwide study of 1,700 Hispanic consumers, 40 percent reported that they receive just ten direct mail pieces a year. Nearly three-fourths said they always read direct mail, and 39 percent want to get more.

And it's not that this market is adverse to financial products and services: Both Western Union and MoneyGram appeared, as numbers 12 and 30, respectively, among a list of the top 50 advertisers to the Hispanic market, as compiled by Hispanic Business magazine. American Express, at number 49, was the only other financial-related company to crack the list.

American Express was probably not pushing credit-related offers. According to spokesperson Judy Tenzer, American Express does not market cards to specific ethnic groups. Instead, it prefers to offer products based on lifestyle needs, such as business or travel use, or "life stages," with different card packages tailored to college students and senior citizens. Other issuers seem to be following American Express. According to Competitive Media Reporting in New York, none of the major credit card companies-American Express, Visa, MasterCard, or Discover-purchased network advertising last year on Telemundo or Univision, two major Hispanic TV outlets. A few financial institutions advertised their own branded card: Banco Popular, for instance, spent $2.1 million to air commercials that promoted its Visa card on Univision.

Given the receptiveness of the Hispanic population, why are credit card issuers sluggish in marketing to them? Consultant Shaub hazards that since credit cards are among the most profitable areas within banks, decisions to alter marketing strategies are often made at the board level-and bank boards may not have the exposure to the community, nor is change something they necessarily embrace. Maybe they haven't heard that, by 2040, the Hispanic population is anticipated to reach 80 million from its current level of 30.5 million. The credit card issuers with loyal consumers 40 years from now will be the ones making inroads into the community today.

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