PODCAST EP 9
What is Customer Lifetime Value & Why is Conversion Rate Important?
On Episode 9 of the Paper Planes Podcast Simon chats with Simon Bell about what Customer Lifetime Value is and why Conversion Rate is so important.Listen Now
Rest of the World helps companies make the world a little better by doing work that matters, for the communities who need it most.
You can contact Sergio Alcocer here https://www.linkedin.com/in/sergioalcocer/.
Simon Dell: Welcome to the Cemoh Marketing Podcast, Sergio Alcocer. Thank you for joining us today.
Sergio Alcocer: Thank you for having me. Pleasure.
Simon Dell: You’re in Austin, Texas, aren’t you?
Sergio Alcocer: Austin, Texas. Home of the Brave, yes. Beautiful city.
Simon Dell: Everybody talks about Austin as being the next big tech culture. It’s just that every time that you hear people talk about Austin, it sounds like a real exciting place to hang out.
Sergio Alcocer: I think it is. I think a part of that reputation comes because we host South by Southwest, which as you know, it’s a very large festival that combines film, music, and then the tech part has been very, very popular for the last 10 years. Of course, we didn’t have it this year in March, but uh, but it’s a phenomenal convention. The city paralyses for the week. A lot of important things happen here.
I believe that Twitter was launched here, and you know, a lot of things happening. It is a very vibrant city. Texas is a very interesting state because it gives a lot of tax breaks for opening new businesses, and the housing is still very affordable compared to California. So, a lot of entrepreneurs from California are moving to Texas and starting companies here, and then you also have the second largest Facebook campus here. Google has a very large company here, so it’s a very interesting city.
Simon Dell: I’ve been to Texas once. I spent a week in Houston, when my brother used to live there. And for people who live in Queensland, Australia, we know how hot it can get here. I think Houston was probably the only place I’ve been to when I went. It genuinely was hotter than being in Queensland.
Sergio Alcocer: Hotter and humid.
Simon Dell: Yeah.
Sergio Alcocer: Yeah. Houston is basically in a swamp. It gets really hot. I’ve been in Texas for 20 years, in Austin. I’m from Mexico, and I lived many years in New York before. Texas is growing on me. When I was living in New York, my idea of Texas was a little conservative and cowboy kind of culture. But Austin is an oasis in the centre of the state. I’ve been very, very surprised and I call it home now.
Simon Dell: Your background is multicultural marketing, which we will talk about in more detail in a minute. Just give us an overview about what your role is and a little bit about the Rest of the World company that you run at the moment.
Sergio Alcocer: Let me first tell you a little bit about the background. I arrived to multicultural marketing after many years just being a nav guy. I’m a copywriter creative for my entire career. As I mentioned, I’m originally from Mexico. When I was in Mexico, I started working at Leo Burnett, the network. And at Leo Burnett, I moved as a creative director for the office of Leo Burnett in the Dominican Republic, which is a very interesting place. And then I spent some time in Venezuela when Venezuela was still a very large and strong advertising market. And then I went to New York and I came to start working in Austin.
Multicultural was something that I didn’t understood in all the years that I work in Latin America, because Latin America was basically, you’re working for the local clients and markets, Mexico, Dominican Republic, etc. When I came to New York, I discovered this whole idea of multicultural marketing and discovered this idea of a country within a country. And particularly at that moment, my main focus was on the Hispanic market.
I don’t know if you have an idea of the size of the Hispanic market in the United States, but there are 58 million Hispanics living in the United States today. And those are the legal ones. The ones that you can count, right? We estimate that there’s maybe 8 or 9 million more, so that puts you at around, conservatively, 65 million Hispanics in the United States.
Simon Dell: That’s a lot.
Sergio Alcocer: There is more Hispanics in the United States than in any other Spanish speaking country with the exception of Mexico. There is more Hispanics in the US than the Spaniards in Spain, right? So, it’s a gigantic, gigantic market. When you have also the population of the African-American and the Asian-American population… Today, in the United States, 38% of the entire population come from diverse multicultural backgrounds.
It is something that is very present and it’s very important. In the case of Hispanic in particular, which is still my main focus because that is where a lot of the brands are investing money for growth. Hispanics are also younger than the general market population, like the non-Hispanic Americans. They are younger and they are very concentrated in the largest states in the country.
They are concentrated in California, in Texas, in Florida, in New York, and in Illinois, and a few others. Just by virtue of having those 5 biggest states in the country, if you want to make business, if you want a brand to grow, especially one of those brands that want to get the millennial or the Gen Z, you need to understand and get Hispanics.
So, multicultural marketing, what it is, is: How do we break this notion that America is just a monolithic place with a sameness of people, and understand that there are different cultures that are consisting it that need an understanding for brands to be able to grow? So, that’s the whole idea of multicultural marketing.
And my new agency, Rest of the World, is a new agency because I had a previous large agency before that became very big. We sold it to Omnicom and I started this new one a couple of years ago. Rest of the World is the name of the agency. It’s still in the same emphasis of multicultural marketing, but not trying to be a full service agency, but working very strongly on strategy and creative production in the ample sense, you know social media, TV, etc., but with a particular emphasis on clients and brands that are also interested in having some sort of social impact inside of the United States for minority communities.
Because they’re still, even though their numbers are as large as 65 million Hispanics in the United States, there is a lot of disadvantages in terms of the financial label of this population, the locational gap between Hispanics and non-Hispanics, the health care issues that Hispanics have. As a matter of fact, the COVID-19 is particularly affecting Hispanics and African-Americans in the United States. It disproportionally affects Hispanics and African-Americans, and this has to do with a lot of things.
In April, May, at the height of the COVID epidemic in the United States, basically all communication was in English. And although the majority of Hispanics in the United States speak English and understand and consume English language media, the older generations, meaning those pioneers that came here 30, 40 years ago, most likely from low economic level and low levels of education, they are never, never really feel comfortable in English, and they were missing all of the government ads and announcements that everybody else was getting.
So, there’s a big disproportion of how the COVID has, just to put an example, is affecting minorities of colour in the United States.
Simon Dell: Do you think that is also down to the cultural differences in the way that maybe the Hispanic community and the Black, African Community treat family, in the sense, in a closeness, that they are closer to that family rather than perhaps Caucasian Americans? Do you think there’s a family aspect to the spread as well?
Sergio Alcocer: Yes, but it’s not the fact that you love your family, that’s why you were spreading the virus. It has also to do with the economic conditions. The income of Hispanics and African-Americans are considerably lower than the general population. And the neighbourhoods where we live, we tend to live in urban, in the outskirts of urban town. And in those neighbourhoods, there is very limited space.
For example, if you look at the epicentre of the COVID epidemic in New York City, the epicentre, it’s in the neighbourhood of Queens called Jackson Heights. That’s the epicentre, and that is primarily a Hispanic neighbourhood. And what you get there is, in a 30-40 meter apartment, you have 5-6 people that, on the other hand, they cannot afford to work from home, because many of these people work in services and industries that you need to be earning your money day-to-day.
Service industry, on the streets, some things of that nature. So, you cannot afford to stay home, and you live in very close quarters with the entire family. So, there is a lot of socio-economic conditions that create a perfect storm.
Simon Dell: I guess that’s the key when it comes to multicultural marketing; is to understand the differences between the cultures. And I guess that is what your business is doing. It is helping brands navigate those differences, and how they then appeal to those differences.
Sergio Alcocer: Absolutely. Yet, even though what I have been telling you about COVID, it feels a little like a downer, there is also really a lot of optimism. Because as I mentioned before, this is a community that is very young and represents, really, the youth of the nation. If you look at the growth of the United States in the last 10 years, the growth of the population in the country in the last 10 years, it comes from multicultural families.
Basically, the Caucasian, White, however we want to call the general public, it’s having less kids than the multicultural groups, particularly Hispanics. So, the growth of the country… Let me give you an example. In Texas today, and this is going to blow your mind, in the state of Texas, which is the second largest state in the country, in the public school system from kindergarten to the end of high school, which in the United States is 12th grade, 74% of the students are Hispanic on Public School. 74% of the students in Texas today are Hispanics.
So, when you project that for what’s going to be the future of Texas in the next 10-15 years, that means that amount of people, 70%+ of the working force of Texas in 15 years is going to be Hispanic. That’s why it’s very important that companies start investing now in narrowing those gaps: education, financial literacy, health care, etc. Because if not, you are putting at risk the future of the state and the future of the country.
Texas is now already, what is called, a minority-majority state, meaning there’s more Hispanic than non-Hispanics in the state of Texas. Now, that doesn’t mean that they are Hispanics that came from Mexico or Latin America. They were born in the United States. As you know, Texas used to be a part of Mexico, so many, many Hispanics have been here since this was Mexico. But they still self-describe and self-identify as Hispanics in the census, and there is still a lot of catching up to do in many of those communities, especially on the border.
Simon Dell: So obviously, Australia has got a very different multicultural footprint than America has. I know you said to me earlier that you’ve been to Sydney once, and we were talking about your experience with Ayers Rock and the camels.
Sergio Alcocer: Beautiful, yes. I never imagined that it got me by surprise to get to the desert in Australia and see camels.
Simon Dell: Yeah, there is a lot of wild camels here. There’s a lot of stories and fake stories about camels in Australia, and about how many there are, and all that kind of thing. But um, one of our clients is actually a camel farm, it’s the third biggest camel farm in the world. It is actually here in Australia.
Sergio Alcocer: Amazing.
Simon Dell: You visited Ayers Rock or Uluru. When did you actually visit?
Sergio Alcocer: In 2008.
Simon Dell: Okay, yeah. Uluru is a very sacred site for the indigenous community here in Australia and only recently, I think, three, four months ago just before COVID hit, they’ve stopped people climbing up it, so you can no longer climb up it.
Sergio Alcocer: I tried to plan as much as I could.
Simon Dell: But obviously, the makeup of the Australian population is a combination of indigenous Australians. There’s a lot of Asian and Southeast Asian population here, Chinese, Indonesian, Vietnamese, lots of diversity especially in the major CBDs in the census in Sydney and Melbourne, and to a lesser degree, Brisbane.
If you’re running a small business, how do you start off by navigating the concept of being a more multicultural product or more multicultural company? What’s the first step?
Sergio Alcocer: It may sound counter-intuitive, but I think that the first thing is to look for the similarities. I’m talking from a point of view of marketing. Every person is a person first, and cultural background second, right? A teenager is a teenager first, and there’s teenager universal conditions that can give you clues on how to talk to them on the trains. And the second is that, on top of being a teenager, they have two cultures: a culture at home and a culture outside of the house.
That is one of the most interesting things to understand, especially in mature, multicultural societies like the United States. Hispanics live an American life, especially when you see the generation, the younger generation that is already born, that maybe were born in the United States but parents born in Mexico.
By the way, of those 65 million of Hispanics in the United States, almost 70% are Mexican. So, the Mexican market is gigantic. So, when you look at those young kids that are already born in the U.S. with parents born in Mexico, they speak both languages. And they can go back and forth between the Spanish and English. It’s almost like a superpower, right? Because you obviously have much more possibilities at your disposal.
But understanding that they are American and they live an American life, but there are themes of the culture at home, that are expressed at home, that are manifested by the proximity with family, as an example that you put before. So, it’s finding: What are the things, and at what moments of the day are they more American or more Hispanic? And understanding that beyond being Hispanic, they are people first.
One of the key things on a multicultural society and mature multicultural society is treat people like people first, and then use their culture to understand certain behaviour or to understand the relationship that they have with certain services or with certain brands.
There are brands that are global brands that have a lot of impact in Latin America. So when people come here, those brands are the preferred brands at the beginning, until you start discovering new brands in the United States. It’s more about finding the similarities and then using the differences to be a little more insightful and more nuanced, but not by separating the groups and talking to them as if they were in a bubble.
And that’s something that’s happened for many years in the United States. There was a Hispanic marketing industry that had separate TV channels, that only speak in Spanish. They have their own parties, their own music, it’s almost like they were running in parallel paths to the general market.
But nowadays, and technology has been a great equalizer, and as the population grow and there’s more Hispanic kids born in the US, the interesting thing is being ambicultural. You can be a part of both cultures at the same time, and it’s fascinating to see how you can switch back and forth between one or the other.
Simon Dell: I guess that has come out of the media side of things. Music and TV shows are not necessarily created for particular cultural demographics. They are popular for everybody. So, if you’re wanting to advertise through Game of Thrones, you’ve got all sorts of different people watching Game of Thrones. It’s not just White Americans are watching it. It’s Latin Americans, Black Africans, that kind of thing.
Sergio Alcocer: Absolutely. That can go either way also into the very smart marketing and the very bad marketing. There is a problem of representation of what we call people of colour, actually multicolour people. There is a problem of representation in the United States, especially media, and especially in Hollywood.
If you look at the roles of Hispanics in Hollywood traditionally, women are sexy. And if you look at any Jennifer Lopez movie, she is hot. That’s her role, and that’s why she conquers the boss of the company that’s how she advances in life. So there is an over-sexualisation of Latina women in media.
Sofia Vergara, I don’t know if you know who she is, she is voluptuous and a little dumb, but she can do anything she wants in life because she is super hot. Those kind of simplifications really hurts the representation of Latinos. If you look for example… Forget about women, if you look at the culture of narcos. Drug cartels, Pablo Escobar, El Chapo, the TV and all the messages about narcos and narcos culture is really affecting the representation.
On the other hand, you have a president now that, during his career, he called Hispanics and Mexicans criminals, drug traffickers, he wanted to build a wall, etc. We are going through a period of really bad PR, to say it in simplest terms. And then when you look at what’s happening with the African-American community, which I’m sure you’re following the news of the Black Lives Matter, and the systematic abuse that have never changed, really, there’s a big chunk of the population between Hispanic and African-American that are, at the moment, starting to demand better representation in the media and better representation, in order to be the ones write their stories, and to have people of colour in positions of decision-making in order to be able to at least have an impact on the editorial of entertainment, and movies, and news.
Music is a different thing. In the year 2019, 2020, if you look at the Billboard Top 100 of the United States, there has never been more Latin music hits. If you look at the Super Bowl, the biggest event in TV in the United States this year was Jennifer Lopez and Shakira. So, it’s okay if we dance, but in the rest of the media, we are not very well-represented yet. That is changing, and the things that are happening now with Black Lives Matter, which in reality, is also advocating for a more fair treatment of people of colour… Things are going to change, and I think it’s going to be exciting.
And I think it is important that it happens, because as I mentioned, many of the youth of the country is Hispanic and colour, and it’s important that they grow with better representation in the media.
Simon Dell: You know, I’ll be honest that the guy who does the sound engineering for this podcast is Gilberto, who’s a long-time friend of mine, is Colombian and he constantly gets various standard Colombian jokes targeted towards him. And you know, he gives it back to me as much as I would give it to him.
I guess it’s one of those things. We don’t meet, in Australia, many Colombians. You know, having a Colombian friend or a Colombian contact and working with one, that sort of becomes… I always think it depends on the intent behind the conversation. Does that make sense?
Sergio Alcocer: 100%, and not only that. I am all for good jokes and it’s very hard for me to be personally offended by being Mexican, and there is a lot of jokes about Mexico. I think that, deep down, it’s very funny. But as long as we understand that there are things in the system against us, that opportunities not equal.
An African-American for example, 21 to 22-year-olds in the United States, there is a disadvantage, and it is real, and that thing needs to stop. I think that, at this moment, if everybody is particularly serious and not joking much, it’s because the moment is very vital and very important.
But there is going to be a moment in which we want to come back and be able to laugh a little bit about it, right? There are certain things and certain moments to take things lighter, but it is a fascinating thing. And I think that at the end, it’s going to be a very welcome change for the country. But in the meantime, please say hello to Gilberto.
Simon Dell: I hope that he will be listening to this as he edits. I’ll no doubt get a message from him as he’s in the middle of this. I guess my last question for you today is that: One of the things I think a lot of small businesses, or any size business, really, is concerned about, is getting it wrong. Because it is very easy to get it wrong, in terms of how you appeal to certain demographics, and how you’d appeal to certain cultures and that goes across cultures.
You see how some companies treat women, and some people, different age demographics, and things like that. It’s very easy for a company to make a giant fuck up. And obviously, the challenge is that it doesn’t matter what size company you are. You could be a small, family-run restaurant or you could be an international skin care company, that Twitter will come after you.
The “woke left” would come after you, and name and shame you. And so, I wonder whether you find that that sort of paralyses people into not trying to appeal to a broader cultural demographic because they’re afraid of the consequences of getting it wrong?
Sergio Alcocer: Yes, and it’s a shame. I think there’s a lot of people that is abusing of this moment. I’ve lived in the United States. A lot of people that is abusing this… There is a culture of what they call the “cancel culture”, in which anything that, the minimum thing that somebody says that is wrong, that person gets basically crucified in the media.
And it is a shame because what’s happening, as you well said, is that people’s paralysing, that people that have good intentions rather don’t say anything and don’t do anything for that fear of being wrong. I think it’s one of the prices that we are paying on this moment, the abuse that many people are suffering from speaking their mind.
Politically, I mean, not even a question, it’s terrible. What I would say is, don’t make an obvious mistakes, because there’s obvious mistakes, right? Make sure that when you talk, you have your facts right, be respectful, but do not only talk. I think that’s one of the things that we are seeing now that is working best is, companies that is supporting minority communities, not just talking about, “Is it fair, it’s not fair? I think this, I think that.” But it’s companies that are supporting.
For example, one of my previous clients, Target, which is a big retail chain, I don’t know if you know it.
Simon Dell: Yeah, we have Target here but it’s a different brand, a different company, but yes.
Sergio Alcocer: Target is based in Minneapolis. As you know, Minneapolis is the city where this new chapter of Black Lives Matter started, with the murder of George Floyd. And in Minneapolis, Target is ubiquitous. Target is everywhere, right?
During the protest for the killing of George Floyd, there were a lot of Targets that were burned or looted, etc, more because they are ubiquitous. Some people argue that “they deserve it” because Target has been donating money for the police for many years, which is one of those abuses.
I mean, donating money for the police is something that good citizens used to do, in a way. But what Target is doing, and it seems before these protests, Target is a company that has invested a lot of money in improving the quality of the neighbourhoods where they do business, allocating…
Because in every local Target, the employees of that Target, many times are part of that community. So, if you go at a Target in the Hispanic neighbourhood, the majority of the employees working at that Target are Hispanic. Same with African-Americans and all that. So, Target has a great track record of investing in communities of colour.
And what happened to them a couple of months ago in Minneapolis, by no means erase that record. So, what Target is doing is continue to doing that, continue to invest in the communities, doing more than saying – they did not complain, they understood that they were part of the fabric of the society that was hurting at this time, but they’re starting doing things.
It’s like a very ample, obvious advice, but it’s rather than talk, do. That is the best way, especially in the United States now in this time, in which everybody is trying to heal: Actions speak louder than words.
Simon Dell: My last question for you today is: You’ve obviously just mentioned Target, which is great. But what are some of the other companies out there that are doing a good job with this?
Sergio Alcocer: Many. And every time, more are trying, and some are doing a bad job but trying to do something. And not a bad view, from an offensive point of view, but everybody is trying to catch up now, many of them in order to show that they are not racist, et cetera, you know, there’s confusion.
But traditionally, the beer companies have done a great job. [INAUDIBLE 00:34:30] has traditionally done a great job. Malls and schools as well. McDonald’s has done a wonderful job from a point of view of investing in education. People can argue, yes, but on the other hand, it’s giving us diabetes and making minorities fat, et cetera.
All of that argument is real, but they invested a lot of money in education. And Nike is an interesting case because Nike has always been first at advocating social justice particularly for the African-American community, of course. The rise of Nike in the last 30 years is very tied to the lifestyle, and urban culture, and sports, and basketball basically, of the African-American culture. Yet, they have been always being advocating for social justice.
Somebody criticized them, Cindy Gallop, which is a British marketer that started bringing more diversity to Madison Avenue. Cindy Gallop noticed the other day that even though Nike is always advocating and creating ads in support of African-American and social justice, there’s not one African American in the board of directors or high positions at Nike.
So, what she was asking Nike was, “Okay, great that you were doing all this incredible, inspiring ads to support the community. But until you empower them in the conversation, and you create the sense of progress for them inside of your organization, maybe what you’re doing is advertising.” That is an interesting point, but Nike has been good at working ads.
Many companies that, for many years… For me, it’s important companies that invested in these communities before it was fashionable to do so, and those are the ones that are doing better because they started before. But hopefully it’s going to become a normal thing, just to understand, again, that 36-38% of the population of the United States is People of Colour, and the majority are young. They are your future and you need to change.
Simon Dell: I can’t echo that enough. Certainly, Nike has been, whenever I’ve used advertising as an example of creating an emotional engagement with the end user, I’ve often used the old Nike adverts, the Colin Kaepernick ones. But also, I love what Anheuser-Busch did because one of the most recognized adverts around the world was the “What’s Up” advert, the “Budweiser What’s Up” advert which was for African-American guys.
That went around the world almost before advertising was viral. That was before we had Facebook and before we had Twitter.
Sergio Alcocer: That was in 2000, yeah.
Simon Dell: That was being shared. Everybody knew that without the need for social media to exist. So, that was the power and the impact of what was a really simple advert, and I think they actually re-released recently to target… Was it mental health?
Sergio Alcocer: Yes, it was about staying calm in the beginning of COVID.
Simon Dell: That was it. Yeah, and the mental health of just calling up your friends and making sure they’re okay and that kind of thing.
Sergio Alcocer: Yeah because you’re missing going out, and all that. It was very clever. Anheuser-Busch has been investing in multicultural communities since the ’80s, a long time.
Simon Dell: I’ll tell you what’s funny about re-watching that advert recently with the COVID idea behind it, was everybody using normal phones, using a phone that was on the wall with a cable, and I’m going, “Oh, I remember those.” You know?
Sergio Alcocer: I remember that when I was a kid in Mexico, there was a phone connected to the wall but with a very, very long cable, so you can take it to your bedroom. But it was still connected to the…
Simon Dell: Mate, I remember, you and me will probably both remember the dial phones where you had to do the… With your finger go round, and dial-up internet with your little modem as well, as your 28k modem.
Sergio Alcocer: Yeah, that was the other thing.
Simon Dell: Oh, God. The kids these days don’t know how well they have it, do they?
Sergio Alcocer: Well, yeah. I tend not to be nostalgic just because you get old really fast but that was fun. It was a fun time.
Simon Dell: Sergio, thank you very much for your time today. It’s been very enlightening and I hope people got a lot of it. Once again, if you come to Australia, I’m sure you’ll be welcomed here with open arms.
Sergio Alcocer: Thank you, Simon. My pleasure. Stay well.
Simon Dell: You too, thank you.
PODCAST EP 9
On Episode 9 of the Paper Planes Podcast Simon chats with Simon Bell about what Customer Lifetime Value is and why Conversion Rate is so important.Listen Now
PODCAST EP 12
On Episode 12 of the Paper Planes Podcast Simon chats with Simon Bell about the 7P's of Marketing and how they impact your business.Listen Now