As per the expression ‘once bitten, twice shy’, Latin American consumers have had their faith betrayed by too many businesses, too many times, to not treat new market entrants with suspicion.
Face-to-face communication – an integral element in building trust – is an essential ingredient of business success in Latin America and is something that foreign businesses should take note of.
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In fact, such is the Latin American love of proven track record that new companies often find that consumer brand loyalty is one of the hardest things to compete against when breaking into Latin American markets.
New businesses may want to follow the example set by Bancolombia CEO Carlos Raúl Yepes, who personally toured parts of Bogotá to offer middle-class family businesses a range of financial products. To win over distrustful citizens, new organizations must be prepared to focus on establishing their integrity above all else.
Lessons from the past
Scams litter Latin American business history.In Chile an alleged pyramid scheme that promised annual returns of 80 percent on investments suddenly shut up shop. The company’s founder and CEO, Patricio Santos Hernandez, notified customers that the company would no longer operate, and then disappeared into thin air, leaving customers without their money.
In the Colombian city of Cartagena a phony taxi company pretended to broker taxis and put them to work on behalf of would-be buyers. The “company” even provided fake ownership papers for the cars that in many cases did not exist or had been sold to more than one owner.
Nationwide in Colombia, newspaper El Tiempo reported of con men posing as employers and demanding money from job applicants for medical tests then disappearing with the cash. With legacies like this, it is no surprise that trust is a limited resource among consumers and employees in Latin America.
New ways of thinking
Despite the dodgy dealings, some new businesses are making strides in winning Latin American citizens over the honest way.
Campo Alto is a vocational training institution in Bogotá, Colombia that offers peace of mind to its students by locating within communities, adapting course and payment schedules that fit people’s lives, and guaranteeing employment post graduation.
Debt collection agency Refinancia has built a reputation by working with people who find themselves under water financially by treating them with dignity and helping them to restore their finances. CEO Kenneth Mendiwelson explains:
We provide a dignified product to someone who has been mistreated by the financial sector; […] someone who falls into default is not a bad person.
It’s critical for new market entrants to follow these examples when launching in LatAm. In a culture informed by word of mouth and strong family tradition, finding early adopters to your team’s latest innovation can be difficult; startups must overcome barriers to trust by building brands with integrity.
Build your brand strong
As Refinancia works to bring people back to the financial sector with personalized service, other businesses too must build reputations of trust in their own industries, and that means not just online and social media.
Companies should have explicit strategies to turbocharge word-of-mouth channels, leveraging close familial and social ties. One business excelling at this is financial services startup Aflore, which uses a network of community advisors to recommend friends and neighbors for loans and micro-insurances.
To overcome historic distrust, new players must focus on proving themselves as honest and caring towards their customers. Reputation – achieved through consistent and excellent service – can build a strong foundation to win over a Latin American audience.