It's no secret that the Hispanic population boom has gotten our attention. There are 39.9 million Hispanics in the United States, and Census officials estimate that this figure will rise to 50 million by 2007.
According to the Selig Center for Economic Growth, Hispanic buying power for 2002 was roughly $580 billion, with a projected compound annual growth rate of 8.7 percent. The center's study predicts that, by the year 2007, Hispanic buying power will rise to $926.1 billion.
So why are so many tax preparers and accountants missing the boat when it comes to this market segment?
To understand the answer to that question, look to the statistics. The Kaiser Family Foundation reports that more than half of all adult Hispanics living in the United States today are immigrants, and another one-fifth are the U.S.-born children of immigrants. The number of foreign-born Hispanics in the U.S has more than tripled in the last two decades. A recent study by Strategic Research Corporation forecasts that, by 2020, one of every five U.S. residents will be of Hispanic origin.
The Hispanic population boom is a fairly recent phenomenon. Accordingly, there is a lack of both experience and information about the cultural, language and marketing issues specific to what is now the largest minority group in the U.S.
While accountants are interested in growing their respective Hispanic client bases, many lack the knowledge of how to do so effectively.
The Hispanic market is actually broken into four separate categories.
1. The new immigrant: Less than five years in the U.S. with little or no English skills.
2. The transitional immigrant: Less than 10 years in the U.S., still Spanish-dominant but more acclimated and speaks better English.
3. The acclimated Hispanic: Ten-plus years in the U.S.
4. U.S.-born Hispanic of the second or third generation.
Hispanics that fall into Categories Three and Four are usually served by the standard marketing strategies employed by most companies. Categories One and Two, however, remain incredibly underserved. The reason is that most companies who want to market to Hispanics typically have their media materials translated into Spanish. Unfortunately, this tactic will not work in reaching Hispanics in the first two categories.
The wrong message
This is due to the fact that Hispanics in Categories One and Two lack basic information about American systems that would cause them to be interested in your services. In terms of tax preparation, for example, they are often unaware that they can, and should, file taxes. Many who are here illegally do not know that they can file taxes with an individual taxpayer identification number. In fact, filing taxes is one of the only ways now to obtain ITINs for themselves and their families. They also fear that the Internal Revenue Service will contact immigration. Even those with Social Security numbers often throw away their W-2s because they don't understand the purpose of this piece of paper.
Marketing geared to the Hispanic community must focus on education. A culturally appropriate advertising strategy explains issues that would not be of an interest to the typical American.
This explains why standard advertising does not work. If you do not know that you can file taxes, why should you care if a tax office does free electronic filing? A fast refund is meaningless, even if you hear that message in Spanish. Companies only waste money by translating those traditional messages.
In North Carolina, we conducted an inexpensive educational campaign in the Hispanic community and the response was overwhelming. We served 3,000 Hispanics between two first-year tax prep offices.
In addition, the Commerce Department Census Bureau reported that there are now 1.2 million Hispanic-owned businesses in the U.S. These firms employed 1.4 million people and generated $1.86 billion in revenues. The largest number of Hispanic-owned firms (1 million) were sole proprietorships and unincorporated businesses owned by individuals.
Many Hispanics with less than 10 years in the U.S have started their own businesses in the fields of landscaping, construction and housecleaning. They are often eager for assistance with the bewildering process of paying employees, keeping books and paying taxes. Without that assistance, they manage on their own and risk legal problems with the IRS. In the North Carolina office, we set out to assist Hispanics with tax preparation and ended up with a large number of clients who needed business accounting services.
Education is obviously the first step to growing your firm's Hispanic client base. Other critical components include bilingual staffing and cultural competency.
The rewards are more than just financial. You will be providing a much-needed service for a group of minorities who are sometimes made to feel unwelcome in our country. You have the opportunity to look through the eyes of someone who did not grow up with our language, systems and cultural norms. Help them on their path of assimilation and we will all prosper.
Blaire Borthayre is a consultant, speaker and trainer in the field of Hispanic marketing. She is the author of Marketing to the Hispanic Community: A Comprehensive Guide for Tax Preparation Offices (www.trainingresourceclinic.com).
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