Hispanic-Americans Are Customers With High Lifetime Value
Forget everything you thought you knew about Hispanic-American consumers — because the U.S. Hispanic population is exploding, and it’s shattering old stereotypes as it grows.
The 64 million Hispanics who live in the United States today represent 19.5% of the U.S. population. And Hispanics are the second fastest-growing population segment, with 83% growth since 2000, according to TheHispanic American Market Report.
As recently as a few decades ago, Hispanic Americans were viewed primarily as migrant workers in low-level service occupations. Contrast that with today: The average U.S. Hispanic household will spend $538,636 more than the average non-Hispanic white American household over the course of their respective remaining lifetimes, according to the report.
What’s driving the higher lifetime spending? It’s partially due to the average age of Hispanic Americans, which is significantly younger than other segments of the U.S. population.
In fact, by 2024, 25.3% of U.S. millennials will be Hispanic. And that, of course, makes the potential customer lifetime value of a loyal Hispanic shopper much higher than many other consumer segments.
It should come as no surprise that savvy marketers are paying attention to this fast-growing multicultural group. Turning Hispanic consumers into loyal lifetime customers can pay off big for companies, not only through direct sales, but also through referrals, because these customers are more likely to recommend trusted brands to their friends — particularly products in the financial, food and technology industries.
Case in point: If you’re in the consumer packaged goods (CPG) industry and you’re not targeting multicultural consumers, you’re missing a huge growth opportunity because data shows that in the future, most of the spending growth in this category will come from multicultural households such as Hispanics and Asians.
Today Hispanic-American households are spending more than other U.S. households on many CPG items:
- 17% more on soaps, detergents and other laundry and cleaning products
- 5% more on apparel in general — and 28% more on clothing items like footwear and apparel for children under age two
- 15% more on meats and eggs and 9% more on fruits and vegetables
- 18% more on motor oil (but 15% less on oil change services, which likely means they’re servicing their own cars)
But how do you most effectively engage the Hispanic audience — and capture some of that market share? As marketers look for innovative ways to engage Hispanic consumers, it’s important to note that all Hispanics do not share the same ancestry. While two-thirds of Hispanic Americans are of Mexican origin, Hispanic Americans overall come from many different countries. Puerto Ricans are the second-largest ancestry group at 10%.
In fact, particularly in states with a large Hispanic population, it is not unusual to have a high number of Mexican Americans living in one area and a large number of Puerto Rican American consumers living just 20 miles away.
Insights on the different customs, beliefs and language preferences within Hispanic subcultures can help marketers customize their message. For example, Hispanics of Mexican descent celebrate different holidays than those of Puerto Rican descent, and exhibit particular purchasing behaviors related to those holidays, such as what type of food they cook to celebrate.
Knowing this, one tropical fruits and vegetables distributor worked with its retail partners to analyze the ethnic demographic breakdown of their customers and created holiday-based campaigns to market the produce based on that data. As a result, some of the retail partners increased their sales of the distributor’s product up to 30% in just six months, and the distributor’s tropical business grew over 300%.
The best way to reach Hispanic consumers
Data on multicultural consumers helps to create a message that appeals to this lucrative market group and can deliver that message most effectively. In particular, data on social media and other buying channels is critical.
In fact, the behavior of Hispanic groups in areas such as social media usage contrasts sharply with other multicultural groups. For instance, while Asian Americans are twice as likely to spend time on LinkedIn than other social media channels, LinkedIn is not a good way to reach Hispanic Americans. They spend less time on LinkedIn than any of the other top six social media sites/apps, which include Facebook, Instagram, Snapchat, Twitter, LinkedIn and YouTube.
Hispanic Americans spend the most time on Instagram and Snapchat, and prefer to access all social media sites from their smartphones versus computers or tablets. This kind of insight helps you deliver your multicultural campaign across the channels that are mostly likely to produce higher sales.
Why marketers today need a deeper understanding of consumers
In today’s fast-paced, rapidly changing media climate, consumers of all backgrounds are choosing when and where they engage with brands. It is essential for marketers to understand their audiences at a deeper level than ever before — who they are as individuals, their likes and dislikes, how they consume media, and when they’re ready to buy.
Marketers seeking to create campaigns to specifically engage multicultural U.S. population segments have many different options. They can focus specifically on acquiring new customers within a specific population segment such as Hispanics. Or they can append data onto their existing customer file to identify existing customers that they may not realize are Hispanic — to more effectively upsell them using customized messages.
One large cable service provider created a marketing campaign specifically targeting Hispanic households that was highly successful in acquiring new customers with a response rate as much as 700% higher than previous campaigns. That’s just one example of the increased ROI you can achieve when you strategically target multicultural consumers.
The bottom line is that marketers can no longer afford to leave outreach to rapidly growing groups, such as Hispanics, as an afterthought. Chances are that even if you’re a non-Hispanic brand, the Hispanic population already might make up a significant portion of your customer base. If not, it could represent a lucrative new customer group for your company to target.
Given that the Hispanic population is adding 4,209 new members EVERY DAY, the influence of this population segment will continue to grow — and fast. This means that launching a specific campaign to attract and keep Hispanic customers now will likely pay off big in the future.