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What Does LGBT Certification Actually Mean?

by David Ricciardi
Friday Jan 27, 2012

I would venture a guess that few people reading this are aware of a national program to certify LGBT businesses. Before we explore what this means for a business, it would be better to explain what it is.
Simply put, it means that a business so certified is at least 51 percent owned and operated by lesbian, gay, bisexual and/or transgendered individuals. Behind this certification must be an organization with a process that is accepted as valid by those seeking to be certified or to utilize certified businesses as suppliers.

Certifications go beyond LGBT status and are not uncommon in corporate America. The concept is rooted in supplier diversity. Hundreds of corporations have such a business process in place and many consider it a strategic one. Each company will have its own reasons for having implemented it, but often it is because the company seeks to purchase goods and services from a diverse base of suppliers, just as they seek to sell their goods and services to a diverse base of customers. Supplier diversity programs often began with the inclusion of minority-owned businesses and were later expanded to include women-owned businesses. Today, there are also programs for veteran-owned, disabled-owned, and small businesses.

The National Gay and Lesbian Chamber of Commerce was founded in 2002 and one of its core services is the certification of LGBT business enterprises (LGBTBEs). NGLCC has nearly 100 corporate partners that recognize its LGBT certification process and that seek to plug LGBTBEs into their supply chains. The companies who participate vary in terms of industry, but they include some of the largest and most well-known companies in America, such as IBM, Wells Fargo, Aetna, Accenture, and NBCUniversal.

The process of getting certified is not onerous, but does require an application process and a site visit to ensure the that the business is minimally 51 percent owned and operated by LGBT. This is critical to the integrity of the certification process. A corporation who is seeking to add LGBT businesses to its supply chain needs to be sure that those businesses are indeed what they claim to be.

So let's say you are a business that could become certified. How can you use this certification to your practical advantage? There may be dozens of companies that want to meet LGBT certified businesses, but what does that mean? For any business owner, those are valid questions. It is important to note that your LGBT certification doesn't guarantee you anything-no contracts, no RFPs, no meetings. You need to do what you always do to run a business-sell. You need to have the right sales pitch and the right value proposition.

You need to find the right buyer and be able to deliver your product or service. But your certification can gain you access. Companies that recognize LGBT certifications often have dedicated people in their supplier diversity and procurement departments who actively seek to build their LGBT supplier portfolio. If you make the connection with them, they can seek to connect you to the right buyers within the organization. Consider your certification a door which previously wasn't there for you; it is a door, but you've got to walk through it (and walk the walk when you're through).

The opportunities that stem from certification are numerous. One is an expansion in a company's market as well as an increase in consumer loyalty. Lesbian, gay, bisexual and transgendered individuals represent less than 4 percent of the U.S. population, yet their total buying power is expected to exceed $835 billion by 2011-a statistic that marketers overlook at their peril. Certification is a step in the right direction for marketing a company's philanthropic personality, and showcases the companies support for the LGBT community.

Even though the percentage of consumers is small; it should be noted that LGBT consumers are an attractive market as they travel more, own more homes and cars, spend more on electronics and have the largest amount of disposable income of any niche market. With the rise of the gay rights movement, "pink" money has gone from a fringe demographic to a marketer's dream. LGBT's potential buying power is not their sole appeal.

The community's brand loyalty is second to none and consumers are very conscious of which companies treat their LGBT employees fairly and which ones make sincere efforts to meet the needs of their LGBT customers. LGBT certification gets consumers interested in learning more about the company and by getting the certification LGBT business owners are making themselves preferable to consumers and business who use their products or services or their competitors for the LGBT consumers.

LGBT consumers are 75 percent more likely to consider brands that support causes that are important to them politically, an increase from Jan. 2007 when 62 percent reported the same in a survey by market research firm Harris Interactive. Moreover, an LGBT consumer will investigate whether companies support gay marriage or provide domestic partner benefits when making a significant purchase. A marketing communications program directed at the gay and lesbian audience can be a significant opportunity for brands to build business.

LGBT certification can be a valuable tool for you to grow your business. As the voice of the LGBT community continues to grow in America, the opportunity for us and our estimated 800,000 LGBT-owned businesses to be recognized as valuable contributors to the US economy will also grow. Through our employment of workers, our providing of goods and services, and our consumption, we can work hand-in-hand with corporate America, and other types of diverse suppliers, to expand businesses for the betterment of all.

David Ricciardi is chair of supplier diversity for the National Gay and Lesbian Chamber of Commerce NY (NGLCCNY) and is president of Proximo Consulting Services, Inc., an LGBT-certified business that helps companies in many different verticals to turn their data into information, through gathering, accessing, augmenting, integrating, analyzing, and reporting.


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