Are Financial Service Brands Missing the Mark in Marketing to Black Consumers?
Updated: Feb 27, 2019
Marketing financial services to Black consumers is a challenging proposition for many financial service firms. Gaining the trust of these consumers has not been easy given the historical barriers associated with systemic racism, dating back to the collapse of Freedman’s bank, the race riots of Tulsa Oklahoma’s ‘Black Wall Street’, the practice of redlining and more recent instances of predatory lending practices that resulted in the 2008 recession, etc.
According to a recent report from The Center of American progress, African Americans have about a tenth of the wealth of white Americans. In 2016, the median wealth for nonretired black households 25 years old and older was less than one-tenth that of similarly situated white households—or $13,460 compared with $142,180. In addition, college-educated African Americans have less wealth than non-college educated white Americans. According to the report, the median wealth for African American households with a college degree equaled about 70 percent of the median wealth of white households without a college degree.
Yet, a report from Packaged Facts African-Americans: Demographic and Consumer Spending Trends, 10th Edition. Black consumers accounted for 76% of the growth in the number of consumers with checking accounts and 25% of the growth in the number of those with credit cards and in the number of households with automotive insurance between 2005 and 2016.
In addition, the report highlights that marketers of financial services can expect a positive response to their messages from higher-income African-American consumers. Households with income of $75,000 or more are far more likely than their counterparts in other consumer segments to find advertising for financial services to be interesting (38% vs. 8%). They also are far more likely to read the financial pages of their newspaper (34% vs. 19%).
These outcomes are positive proof that African Americans are a key growth market for the financial services industry. But simply marketing products and services is not enough to win brand loyalty or favorability with this consumer segment. The industry must acknowledge their understanding and in some instances contribution to some of the key issues that have contributed to the systemic racism that has created the large wealth disparity among blacks and whites in the United States. To learn more about some of the issues that attribute to the wealth gap watch this six-minute educational video.
Acknowledgement is an important first step, but it is not enough. Demonstrating your company’s commitment to supporting initiatives and programs that are working to drive economic equality for African Americans is key to gaining trust with this consumer segment. According to Kantar’s Microculturalism research, 76% of African Americans are frustrated by brands that just don’t get them. Representation is also extremely important to African Americans, in the report 75% believed that “Not enough brands do a good job of representing people similar to my community or me”, and 73% believe “Very few brands and companies genuinely care about the state of African-American communities.
African American consumers want to know what your company stands for, that you support their communities and contribute to initiatives that empower them socially and economically. According to Kantar’s consulting research, 92% of this segment wants to support diverse, inclusive brands and 90% believe brands that make sincere efforts to invest in and be part of their communities deserve their loyalty.
Here are five essential tips for financial service firms seeking to engage African American Consumers.
Do not ignore the role of racism in discussing issues of wealth disparity. It’s an uncomfortable topic, but non- acknowledgement can be perceived as inauthentic and out of touch when your brand seeks to engage African Americans on the topic of financial prosperity, planning and wealth building. The topic doesn’t have to be at the forefront of the marketing and communications plan, but it should not be avoided at all costs either.
The engagement of a black marketing/advertising firm is a must. Do not attempt to market your products and services without the support of knowledgeable professionals who understand the diversity, complexity and cultural nuances of this consumer segment. Black consumers are not a monolithic group.
Make sure your house is in order. Public relation is an important component of your marketing strategy. If your spokespeople cannot articulate your legitimate commitment with solid evidence of workplace representation and community support; and the media cannot find proof points to your authenticity and commitment, your brand is placing itself in a position for adverse reputational risk.
Community based events and clever experiential experiences are required. African American consumers are loyal to brands that support events that are important to them and their culture. Seeing that your brand is making an effort to support their community is important. However, showing up with financial advisors at a booth and handing out brochures will not deliver optimal engagement. African Americans are technologically savvy and cultural trendsetters. If your brand activation is boring, your products and services will be less likely to be considered. Providing a memorable experience at events is sure to make your brand stand out above the competition.
Innovative Thought leadership is required in your marketing strategy. Financial products and services can be complex. Creating organic and relatable content that enables consumers to associate their lifestyle, interests and goals to the topic of financial planning is essential in generating interest, leads and sales conversion.