Emerging market strategies: Gil Zapataniche marketing, Hispanic market, minority population Today, the United States is increasingly becoming a melting pot and the home to people from all over the world. No mortgage professional can afford to ignore the large and growing Hispanic market. Miami's financial district along Brickell Avenue has become the second largest "international" financial center after Wall Street in New York and home to numerous multi-national banks and financial firms as they follow the phenomenal growth of the Hispanic population and Latin American trade. Historically, Hispanics were considered a "niche" or minority population, but with some 36 million people, they now account for 13 percent of the U.S. population. So, one must wonder if the term "niche" still applies. When reading this article, certain references may seem like stereotypes or clichés, but the purpose of this publication is to shed some light onto cultural differences that are important to understanding this emerging market. If you are interested in tapping into this market sector or if you are already marketing to the Hispanic population, simply saying "Buenos Dias" or "Se Habla Espanol" is not enough. As mortgage professionals and as marketers, we need to examine this sector in depth and develop more effective and efficient strategies to market to Hispanics. It was after completing college and returning to Miami that I realized that my Spanish communication skills would not be enough for conducting business in Miami. As a Hispanic who was raised in the United States, I found it quite difficult to understand this market. Many professionals feel that hiring Spanish-speaking staff members, having a Web site in Spanish or advertising in Spanish is enough to capture new clients from this market sector. Yet, nothing could be further from the truth. We need to take into consideration not only the language barrier, but also the other factors that play an important role in marketing to this specific population group. Hispanics in the United States hail from the Caribbean, Europe and about 20 other countries. As a consequence, the political and economic views, and thus consumer behaviors, are not homogenous within the Hispanic market. For example, select a geographic location and determine the Hispanic groups that live in that area. For instance, in Virginia and Washington, D.C., there are large concentrations of Hispanics from El Salvador; in New York, you have Dominicans and Puerto Ricans; on the West Coast (California, Texas, Nevada), Mexicans; in Illinois there are Mexicans and Colombians; and in South Florida, specifically Miami, there is a large population of Cubans. In South Florida primarily, you find Hispanics from the entire Latin American region. Cultural differences affect the different ways Hispanics speak the language. These differences can create barriers even when communicating in Spanish. Thus, there are many factors that must be taken into consideration before launching your mortgage market strategy. To simplify matters, I classify Hispanics into three major groups: the acculturation group, the immigrant group and the foreign national group. The acculturation group Once you have selected your area and understand what country they are from, you need to learn a little about their history. For example, some Cubans, Nicaraguans and Dominicans have undergone the phenomenon known as "acculturation." In other words, Hispanics born in the United States or second-generation immigrants living here for more than 10 years are more likely to culturally embrace the "American" lifestyle. This includes acquiring "American" media habits, which may mean buying over the Internet, watching television in English, etc. However, even though they are more assimilated into the American way of doing things, these Hispanics tend to be very proud of their heritage and their cultural background. They may be watching a football game and then watch a bilingual ad on the same network. This tends to increase their level of acceptance of the ad because of their cultural background. Aside from their level of pride, this Hispanic group also tends to retain cultural habits that are common among Hispanics. Family is the number one priority for most Hispanics, ranking at the top of the priority list. Hispanics are usually brought up to make sacrifices for their children. It is the story behind almost every Hispanic immigrant. Their ancestors washed dishes so their children can go to college is a common story in Latin America. So, marketing to Hispanics via advertising, Web sites and other marketing channels, in my opinion, should be "family friendly" and revolve around the importance of the family. The acculturation group was educated in the United States; many have college degrees and are employed in all professional fields. This group is more apt to shop around and will ask informed questions. The complex process of understanding mortgage financing and all its relevant details will not be a major obstacle for them. Also, completing phone applications and obtaining information via fax, e-mail or the telephone will not be a major issue either. So, when marketing to this group you also must think about what products you will market to them. For instance, they will likely search for sophisticated products such as 80/20 combos, home equity lines of credit, interest-only programs, negative amortization mortgages, variable rate products and ways to invest in real estate. They can more easily understand these concepts than the Immigration or Foreign National groups. The immigration group This group is comprised of those Hispanics who have been living in the United States for less than 10 years and speak mostly Spanish. This group may vary in age; it may be an older group or first-generation immigrants. Generally, this group likes to obtain all of their information in Spanish. And, they may have a certain level of distrust of financial institutions due to historical experiences with the underdeveloped and ill-functioning financial sector in their countries of origin. They distrust complexity, preferring simplicity instead. If they feel that it is to complex, they will generally tend to shy away and withdraw from the transaction. They like things to be explained fully and dislike surprises. Their incomes are in the median- to low-income range. This does not mean that they lack the adequate education because, as first-generation immigrants, they have had to take jobs to defend themselves as they try to improve their financial picture. When you initiate your marketing strategy, it is important to: "Make sure your ad and marketing campaign is in Spanish; "Ensure that your applications and disclosures are in Spanish; and "Make sure you have a bilingual staff member who not only speaks the language, but also understands their consumer habits. In one instance, I was selling the good old "American" way by going full speed at a client from Venezuela, only to have the client's friend tell me to "Slow down, you are selling the American way." Based on my previous experience, sub-prime products, 100 percent financing programs and FHA loans have been the most common products that fit with this group. Many of them have deficient credit, not because they choose to but because they are not used to managing credit. The credit system and the availability of credit in Latin America is extremely limited, very expensive and usually available to only certain sectors of society. Latin Americans tend to use cash to purchase most items and rarely rely on financing as a result. In America, on the other hand, credit is available to everyone and is a prime motivator of the U.S. economy. In addition, many Hispanics in this group do not have the disposable cash for large down payments so programs that are attractive to them are the ones requiring little or no money down. Also, a large percentage of this group has assets in their country of origin due to restrictive government regulations that prevent them from selling their properties or pulling their money out of the country. Stated assets and stated income programs are thus very common within this group. The foreign national group Another group that has similar consumer habits to the immigration group is the foreign national group. Today, many mortgage lenders have developed mortgage products for foreign nationals. Foreign nationals are tourists who live in their native country, but like to have a second home or an investment property in the U.S. This group also includes those working in the United States with work permits for multi-national companies, foreign agencies and government agencies. The major difference between this group and the previous is that foreign nationals tend to have the disposable income and substantial assets in U.S. bank accounts, ranging from $300,000 to $1 million on average. Moreover, foreign nationals know the financial benefits of real estate investing as a tangible asset very well. Foreign nationals usually tend to invest in real estate before they invest in the stock market. They have a long history of real estate ownership due to personal acquisitions and to family inheritances that date back on average more than 20 or 30 years in their native country. This group, however, still tends to remain very cautious in their buying habits. Their level of distrust is higher than that of the other groups, since they have witnessed firsthand the Latin American financial sector exposed to banks going bankrupt overnight, accounts being frozen by government regulations to retain money in the country, exchange rate controls, capital flight restrictions and fraudulent investment activity. So, even though they have the disposable assets and incomes, money is a very sensitive issue to them. Decisions made by these groups are much slower in nature. A higher degree of patience is needed to complete these transactions. This group likes a higher level of customer service and treatment. They enjoy dealing with conversationalists who can establish a friendship first and then transition to business dealings. In addition, they enjoy talking about business over lunch, dinner or a cup of coffee. They dislike providing confidential information by fax, telephone or e-mail. They prefer to provide personal information and documents in person. You need to become familiar with foreign national mortgage programs that usually require a higher down payment and lower loan-to-value than for U.S. residents and citizens. In addition, you will need to become familiar with certain legal and immigration documentation, and be able to differentiate different types of visas. Lastly, foreign nationals usually do not mind obtaining a variable interest rate mortgage since in Latin America, most mortgages are variable and are at very high rates. This market segment is usually highly educated and has keen knowledge of the different interest rates in the global economy. Remember, family is numero uno In conclusion, these groups have similarities. Again, family ranks number one on their priority list. Many Hispanics will include their spouses, children and extended family in the mortgage buying process. They will want a relative on the mortgage or title. They usually like joint ownership and hold joint bank accounts or similar assets. So, when performing these transactions, be careful with the asset requirements since in many cases you may have to document gift money or justify full access to assets. Many of them like to establish friendship first and then do business. It is only after they can trust you as a friend that they can trust you with everything else they have. Hispanics also like free promotions. Yes, everybody likes free stuff but Hispanics seem to respond to promotions in greater numbers than other groups. Try things like sweepstakes, raffles and samples in your marketing campaigns. Last but not least, if you can enter this emerging market, the opportunities are endless. Hispanics are a great source of referrals. If you gain their trust, they will refer you to their friends, family, acquaintances and co-workers. These clients will become a marketing machine for you. Gil Zapata is CEO/managing partner of KGFA Capital Partners LLC in Miami. He may be reached at (305) 379-4457 or e-mail [email protected].
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