The Pink Economy

Boston Business Forward
By Amy Traverso

December 13, 2001

The gay and lesbian market is estimated at about $250 billion a year. Small wonder so many Boston companies are displaying some newfound gay pride.

There are rainbow flag decals decorating the front door of Planet Subaru in Norwell. This is not the oversight of some well-intentioned motor-heads who thought they'd make the place look more cheerful. They're Rainbow Pride flags, and they were stuck there to welcome gay and lesbian car hunters to the showroom.

Last spring, a few weeks before Easter, an older woman came in the dealership with her son. "She hadn't bought a car," says John Morril, who took over the dealership with his brother Jeff three years ago. "She just came in and asked, 'What would you do if someone told you they didn't like the fact that you have those stickers there?' And I told her 'Then we don't need to sell them a car.'"

It's not merely the Morril brothers' lefty social consciences at work here. Subaru's market research indicates lesbians are four times more likely to purchase a Subaru than the general population - hence this year's Subaru TV spots featuring Martina Navratilova and the 1999 "It's Not A Choice. It's the Way We're Built" campaign. Planet Subaru has runs its own ads in the weekly gay newspaper Bay Windows ("We like Martina. We love Martinis."). To Morril, those ads and decals are about good ethics, yes. But they're also about good business.

If it's at all surprising that a car company would court a lesbian clientele, here are some facts to consider: The national gay and lesbian market is estimated at about $250 billion a year. Market research shows that gay men - and to a lesser extent, lesbians - make more money than the population at large, are better educated, and travel more. They are two times more likely to own a vacation home than their straight counterparts. They are also early adapters of new technology. While some debate the accuracy of these findings, citing sampling problems, a few facts are not in doubt: Gays and lesbians are less likely to have children, and thus have more disposable income. And when they get behind a brand, they tend to be some of the most loyal consumers around. According one recent study by Greenfield Research, 94 percent of gays and lesbians surveyed said they would go out of their way to purchase products and services marketed directly to them.

Marketers, branding experts, and salespeople all dream of landing customers who go out of their way to choose your product over cheaper, more convenient, even better products. The entire emotion marketing/customer relationship management industry is built on it. As a result, since the early 90s a flood of new companies have launched marketing campaigns to specifically target a gay audience. Others, like local companies John Hancock and Boston Interiors, have produced stealthily ambiguous "Are they, or aren't they?" spots in which two women appear to be bringing an adopted baby home, or buying furniture. None of this has been lost on Boston's gay community. Now, with the Greater Boston Business Council, Boston's official gay chamber of commerce, celebrating its tenth anniversary, everyone, from advertisers like Fleet to lesbian car shoppers, has awakened to the power of the pink economy.

The Greater Boston Business Council's modest office is a garden level space in the heart of the South End, decorated with an iMac and a Mark Rothkoesque study in black and blue. It's a rainy day, and managing director James Jones and Sylvia Glick, a Cambridge attorney who serves on the board, sit down to discuss the group's mission with the deliberate caution of spokespeople asked to represent a terminally media-wary lot.

Jones and Glick aren't comfortable talking about gay affluence these days. First, there's the controversy about how wealthy the community really is. Researchers rely on lists of out-and-proud gays and lesbians for their surveys, which may skew toward wealthier individuals. Second, it paints a picture of mostly gay men dividing their time between a South End townhouse and a Provincetown bungalow. There are, of course, gays and lesbians living on the economic margins, and workplace discrimination is still one of the group's major agendas. And third, though community leaders prefer the term GLBT (gay, lesbian, bisexual, and transgendered) to refer to their ranks, advertisers aren't interested in the full rainbow spectrum of the community.

But Glick and Jones also know that advertisers and marketers see them in the aggregate. And overall, they make a great aggregate. A random sample of the GBBC's membership in May 2000 found that 70 percent of those surveyed - 74 percent of them men -- earned more than $50,000 per year, with 26 percent earning more than $100,000 per year. Only 18 percent had earned less than a bachelors degree, and 11 percent had either Ph.Ds, MDs, or JDs. "We are a large and active community," says Jones. "We're well-educated, we're sophisticated, and our incomes tend to be higher." He stops, then laughs. "But then, they'd have to be to live here."

That gives the group the wherewithal to step up their ambitions. "We made great strides in the 90s," says Jones. "But now we're less pie-in-the-sky and more strategic. We are thinking more critically." For one thing, the gay business community sees that leveraging its economic power can do more to change corporate America than holding rallies. "You have to work at changing the power structure," Glick says. "And money is power. We've evolved from simply viewing big business as the enemy to thinking that we need to work with big business. And change will happen."

Things were quite different back in 1990, when a group of Boston gay and lesbian professionals met to network and talk about being gay in the workplace. "It began as more of a support group," says Glick. "Around 1991, we began to realize, 'Wait. We can address some of these issues we've been discussing here.'"

After 10 years of networking, the group has about 700 individual members and some 100 corporate members, from Prudential Securities to Beth Israel. Companies like Wainwright Bank, Fleet, Verizon, Sun Microsystems, Harvard Pilgrim, and Polaroid have sponsored events, like Boston's Gay Pride weekend and annual awards ceremonies. Mayor Thomas Menino has spoken at meetings and issued proclamations honoring the contributions of the GLBT community.

"We're being seen as important constituents," says Jones. "In the last gubernatorial election, Scott Harshbarger came to speak at one of our meetings. For a serious gubernatorial candidate to spend the evening with us says a lot, I think."

Just around the corner from the GBBC's office on Clarendon Street are the dozens of gay-owned restaurants, galleries, boutiques, and salons that mark the South End as the neighborhood for the gay elite, the rent-indebted party boys, the design-divas, and the wanna-be Yuppie hipsters who followed in their wake. Jamaica Plain, Dorchester, and Roslindale may be home to greater part of Boston's lesbian community, but for sheer commercial visibility, Tremont Street is Boston's Gay heartland. Within a 10-block radius, you can get your morning coffee from a gay-owned café, stop by your gay realtor's office, have an adjustment at your gay chiropractor's, kvetch to your gay therapist, buy gay-friendly life insurance, meet a date at a gay bar, and, if the date disappoints, settle in for the night with a book from the local gay bookstore.

These microeconomies began out of necessity over the last century, back when the only way to find other gay people was in underground and, later, legal gay bars. Boston's own oldest gay bars, Playland and Napoleon's, closed in 1998, after 60 years of operation. Now, these economies are sustained by people who know the value of being able to apply for the mortgage without having to explain that their "friend" isn't going to default once she meets a nice young man to marry.

To keep the wheels turning, the GBBC offers networking events, with speakers like Barney Frank, Quentin Crisp, former Boston Globe editor Matt Storin, Edward Albee, and former governor William Weld, who earned the nickname "Pink Floyd" for aggressively appointing gays to his administration. There are lunch groups in Cambridge, Brookline, and Waltham, group health insurance benefits, an annual business expo, and the GBBC directory of members and member businesses. Jones says the directory is often the first place members will go when they're in the market for goods or services.

"For me, it's intuitive," he says. "I'll go to my directory and go to those businesses. My chiropractor is a member. My drycleaner. People tell me that they use it with the idea that we should stay within the community as much as possible."

Glick agrees. "People in their thirties and forties remember how it was before," she says. "Like any human being, I slip up sometimes, but I'm aware of it. Particularly as the economy slips, I'm aware that if I want the GLBT bookstore to be there, I have to be willing to pay that extra two dollars over Amazon."

For many, who feel relatively comfortable in a gay-friendlier world, the imperative to keep the money in the community is a burden. "I don't personally seek out gay businesses," says one South End designer. "If I'm looking for doctors, I just want to go to the best ones. It's nice to give back to a community that supports you -- every minority group does this. But I think it's ludicrous to organize your entire life around only supporting gay businesses." Stockdale says this isn't about self-hatred or assimilation, just practicality. "I know I'm acting like a total Banana Republican," he says. "And I do keep this log of places that area gay-friendly and gay owned, because you feel comfortable there. You almost can't help it."

"Lesbians are a little more adamant about this stuff than gay men are, I think," says Chris Haynes, whose firm, CBH Communications, handles PR for area restaurants like Aquitaine and No. 9 Park. "I think it's changing because it's so much more socially acceptable to be gay than it was." But Haynes also says there's more cynicism about also-ran companies that want the gay demographic without any real commitment. "I'm not speaking for anyone else, but I know in the late eighties or early nineties, I would make a little more of an effort to support a gay-targeted business. Now I just see companies doing it for marketing reasons, and it's hard to tell who to support."

Jones and Glick have heard this refrain before - as gay people get more comfortable living in society at large, there's less urgency about giving back. It's hard to tell whom to support. "There are going to be GLBT people, particularly in the South End or Jamaica Plain, who are so comfortable," she says. "And they forget how far we've come. They sometimes take it for granted, and we can't take these places for granted."

Gay business owners, of course, are depending on the community not to take them for granted. Some, like gay realtors, law firms, therapists, and financial planners, know they have a corner on the market. At 5-Star Travel on Newbury Street, gay travel agents have been helping gay clients plan vacations to gay-friendly destinations for 15 years. Most of the GLBT community - as many as 85 percent, according to one study -- still relies on good travel agents to help them figure out where those friendly spots are.

The travel industry has long known the value of the gay market. According to a 2000 study by the San Francisco-based gay market research group Community Marketing, 91 percent of gay men and lesbians traveled somewhere for vacation in 1999, compared with a 64 percent national average, and 54 percent took an international vacation, compared with a 9 percent average.

Jack Campbell is an independent travel agent who has been working out of the 5-Star offices for 9 years. His office is littered with Key West brochures, Palm Springs travel guides, and promotional pieces from Stockholm ("A gay place to be in") and National Car Rental ("National's Authorized Driver Policy Recognizes Same-Gender Relationships. Most of the major airlines market to the GLBT community, and some have special community representatives.

But traditional travel agents have been slow to market to the community. Leisure Travel News, an industry publication, found in its own 2000 study of travel agents that 39 percent of them planned to market less to the gay community than they did two years before. In this case, gays and lesbians have fewer choices outside the pink economy. But Campbell says the Internet has cut into business some. "Online businesses have definitely had an impact," he says. "We sometime want to remind people, 'What has Priceline done for you lately?'"

Anne Marie Corraro doesn't worry about the Internet edging in on her business. An attorney with offices in West Roxbury and Cambridge, she estimates that about 20 percent of her clients are gay or lesbian. She isn't a member of the GBBC ("I probably should be."), but for now, it's enough to advertise in Bay Windows and rely on word-of-mouth. As a solo practitioner, Corraro isn't sure whether there would be enough business for her to deal exclusively with gay clients, but she does see why they seek her out. "People really need to know that a lawyer has some understanding of the special issues that gays and lesbians face," she says. "When a relationship breaks up, wouldn't you want a lawyer that understands what it's like in the legal sense, knowing you don't have the same rights as a married couple?"

Even businesses that are not gay-owned and -operated are finding they can build tremendous loyalty by publicly supporting the community. Wainwright Bank took an early lead in reaching out to Boston's gay community, as part of what executive vice president Steve Young calls, "a noble social experiment to contemplate a second bottom line."

Wainwright became a retail bank in 1992, and founders Robert Glassman and John Plukas decided that they would incorporate their notion of social responsibility into the mission statement. Today, 40 percent of the bank's commercial loan portfolio is devoted to community development projects. The bank became a member of the GBBC in 1993, and allocates nearly half of its charitable budget to GLBT and AIDS service organizations. "Wainwright was one of the first," Chris Haynes says. "They were doing it before it was acceptable, or people were being directly targeted."

Adds Young: "When they interviewed me back in 1992, they specifically asked me how I would feel about doing outreach to gay and lesbian consumers as a straight man. I said, 'I think it's a great idea." His team met with community leaders to find out how their financial needs were different from those of the general population. "Over and over again, we heard stories of lesbian couples who had great jobs, had been together 25 years, were very stable, and were rejected on technicalities," he says.

To make inroads with the community, Wainwright created the "Community Card" MasterCard in 1994. One percent of purchases goes to 13 local gay or AIDS-related organizations. "We put our name prominently on the card," Young says. "There had been other gay and lesbian affinity cards, but there was no name on it, just a line on the back that read, 'For inquires, write to this P.O. Box.'" This point wasn't missed by the GLBT community, and the response was, as Young puts it, "phenomenal." "Now you see Fleet, Sovereign, and Citizens advertising frequently in Bay windows and other publications," Young says. "But back then you never saw that."

The bank also made a point of being a gay-friendly place to work. "We told our employees, 'You're free to be who you are,'" Young says. "We now have senior VPs who are gay, junior officers. We lobbied for domestic partner health benefits with the Massachusetts Bankers Group. Two years later, in 1995, they sent us a letter saying they'd offer it because of our efforts."

Young won't give specific numbers about how all this good work translates into dollars, saying simply, "the second bottom line actually does help the first bottom line."

To younger members of the GLBT community, used to seeing gay-themed ads from companies like Xerox and Reebok, it's easy to forget how recently companies wouldn't get near them for fear of alienating their conservative customers. As recently as 1991, Jack Sansolo, then the openly gay vice chairman of Hill Holliday Connors Cosmopulos, spoke to the GBBC about the "invisible, but affluent" gay market.

On a call from his office in Los Angeles., Joe Landry, the publisher of the national magazines The Advocate, and its sister publications Out and HIV+, is remembering those days. "When I came on, the ad base consisted mostly of gay-owned businesses. Absolut vodka had been with the magazine for 18 years, along with some other liquor companies. And Viatical settlement companies - that's where you sell your life insurance policy to get the cash up-front - were big. That was the base."

Today, Landry says no industries are off-limits to the gay media, despite the shrunken advertising economy. "We meet with top level people all the time," he says. "When I first started calling on people, they wouldn't see me. It was like, 'Don't waste your time, don't waste my time.' Now we can see everyone we want to."

It wasn't easy. Some industries, like the American auto industry, came on slowly. But now he can pitch each magazine based on more targeted industries. "For Out it's an obvious fit for luxury goods advertisers and grooming products, with the stereotypes of gay men spending a lot of time grooming themselves," he says. He pauses for a moment to ask his assistant for a coffee and a muffin - "whatever's low-fat" - then sighs, "the stereotypes start somewhere."

Landry doesn't see the GLBT community getting any less loyal to the businesses that support them, despite their increasing comfort. "I look specifically for them," he says. "My mortgage, my doctor, my lawyer, my therapist, my dentist… the list goes on. When I moved to LA, I had to buy a Saab because Saab was the only auto company that was advertising in the Advocate. And when my lease ran out, I went back and bought another one."

Back at Planet Subaru, the Morril brothers' marketing strategy seems to be working. John Morril estimates that his gay and lesbian clients make up about 12 percent of his business, which amounts to roughly $4 to $5 million in sales per year. "When you market to gays and lesbians, it's more about the quality of the experience, the quality of the relationship," Morril says. "They're easier to sell to and easier to deal with after the fact. And they're very loyal."

Planet Subaru earned that loyalty, not just with the ads and the stickers, but by placing want ads in gay publications. Morrill estimates that about 12 percent of his employees are gay or lesbian. "We wanted people who were open-minded and wouldn't have an issue with people who are gay and lesbian," he says. "I've had so many customers say, "A lot of people advertise to gay people because they want our money, but I figured if you wanted to hire gay and lesbian people, I wanted to buy my car here."

And that's a lesson for businesses that want to access the pink economy. It's not enough to simply put an ad in a magazine and run for cover. If you really want the loyalty, be a gay-friendly corporation. "Look at your policies," Glick says, "Look at how you run your organization. Make sure you treat your GLBT employees equally, and make sure messages of openness and respect are coming from the top."

Steve Young and Wainwright know the upside of doing it right. "What we get from this is enormous customer loyalty," he says. "The number one reason people pick a bank is convenience, yet we have people going way out of their way to be with us. And people don't leave."

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