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Selling to the LGBT Community

Opportunities abound but best be cautious, new research suggests

By Kevyn Burger
Mon, 2017-03-13 11:38

Making an appeal to LGBT consumers makes good business sense, but the pitch better be sophisticated or it could backfire.

“For a lot of companies, this represents a whole new population to explore within commerce,” says Rico Mace, CEO of Orman Guidance. “We’re seeing an upsurge in marketing efforts to communicate with the LGBT community. This group has been under researched.”

The Bloomington-based marketing research firm recently completed an exhaustive study on behalf of an unnamed retail client, arriving at its conclusions via focus groups, one-on-one interviews, surveys and data analytics.

Mace notes that the US Census Bureau first included questions to allow respondents to identify their same sex households in 2000, allowing the population to be measured by a government entity for the first time.

He cites recent studies which put the number of LGBT Americans at around 4% of the population, with an accompanying trillion dollars in buying power.

“We know that traditionally, many in the LGBT community were not open about their orientation. Researchers think that as people are more comfortable and mainstream acceptance continue to grows, that number will get bigger,” Mace says.

Mace is keeping his eye on younger consumers, Millennials and the so-called Generation Z cohort, which follows them. A 2015 survey by the Public Religion Research Institute estimates that seven percent of Millennials identify as either lesbian, gay, bisexual, or transgender.

“If this population is, in fact, almost twice what has been previously estimated, then it holds almost two trillion dollars in buying power,” he says. “Businesses that disregard these numbers do so at their own peril.”

The Orman Guidance research concludes that LGBT adults are statistically less likely to have children in their households, which, as a group, means they have greater disposable income.

“Brand loyalty is huge with this population; we had more than one person comment in the one-on-one interviews that LGBT people vote with their wallets,” Mace says. “They want to associate with companies that represent a certain ethic or value and are more diligent about doing research before they spend.”

In building marketing efforts to capture LGBT customers and clients, Mace advises caution.

“Work with staff and groups that have experience with this community, don't try to traverse these waters without support.” he says. “This community is very sensitive to word choice, subtext and nuance.”

Mace notes this requires effort for companies with an international footprint who need to craft and calibrate their outreach.

“In many parts of the world, LGBT people are not even acknowledged. Global companies need to build customized strategies based on the local environment where they are doing business.”

Mace identifies two corporate personas in approaching the group: The embracers, who promote their alliances with LGBT groups and causes and state their position of wanting to change the status quo, and the avoiders, who are more cautious, sometimes because of their own views and sometimes because they are afraid of getting it wrong.

“We see other companies that float between embracing and avoiding. They are using the Internet and social media channels to selectively communicate with specific LGBT individuals with targeted messages,” he says.

This is not the first time that Orman Guidance has taken a deep dive into a demographic segment as it gained market prominence. The company did some of the early consumer research when companies stepped up their efforts to connect with African American consumers some 30 years ago.

“Then as now, we see many companies that tiptoe into these waters,” he says.