Reg's Blog

Senior and Post-Acute Healthcare News and Topics

CCRC Marketing Reality Check-Up

Periodically, the source for a post on this site is the accumulation of thematically condensed questions that I receive regularly and with frequency; what I now call the “buzz”.  While the “buzz” for me is fairly constant across the post-acute/seniors housing industry, the pitch does vary, sometimes daily but most often, weekly.  I guess it just depends on what is trending and where people’s focus lands.  If the buzz is steady enough and the sound-bites within the buzz repetitive, it spurs me to sit and write, perhaps defensively, to quiet the noise from Twitter and e-mails, and re-focus.  This post is one of those defensive or perhaps, reactive posts.

Lately (last three to four weeks), I’ve been getting a steadily increasing series of questions regarding CCRC marketing, value (economic) propositions and to a lesser extent, repositioning.  The sources of course anonymous, range from established communities to relatively new communities, seeking sales and occupancy improvements.  In some form or fashion, I’ve likely addressed most of these issues in pieces via various posts and articles spanning the last two years but alas, I have been remiss in circling back with a condensed and consolidated version.  Hopefully, this post will help.

Post recession and into a grinding period of almost unrecognizable economic improvement sprinkled with volatility, CCRCs need to come to grips with four key themes when it comes to marketing.

  1. Reality has shifted permanently for the industry.  This is not necessarily bad but it does mean that every aspect of the sales and marketing cycle once engrained, understood, and successful in terms of selling units has changed.  Consider the following;
    • Within the last four years, most seniors saw their incomes via investment returns, social security, pensions, etc., flatten and/or trend down.  Some saw immediate and permanent reductions (permanent for their remaining lifetime).
    • While investment portfolios principally consisting of equity securities have rebounded, the recoupment of loss only occurred for those that remained fundamentally steadfast and did not turn what were “unrealized” losses into realized losses via reactionary selling during the market fall-off and bottom.
    • Depending on the individual market, real estate prices fell precipitously or at least modestly and the liquidity of the real estate via a thriving residential market stagnated and declined.  Some markets have recovered elements of liquidity and re-sale value (price) but not to the levels prior to the downturn.
    • Seniors housing demand has always been elastic but as a result of the three points preceding, it is even more elastic today.  Why?  Simply, economic fortunes of the consumer shifted downward and thus their real and perceived purchasing capability moved accordingly down while the prices for seniors housing remained stable to modestly higher.  We’ve seen a similar effect in new construction vs. existing housing.  New construction per square foot costs have stayed relatively flat or slightly higher over the period while existing construction on per square foot basis fell.  When the correlation between the two is tighter or even inverted slightly, the demand shifts accordingly.  For seniors housing, this added price elasticity, created by a wider gap between the declined consumer’s economic purchasing capability (again, real or perceived) and flat to slightly higher seniors housing prices, creates a different value proposition and purchasing dynamic.  For most CCRCs and other seniors housing providers, the best strategy to combat some of this impact in the near term is to hold prices or drop prices; a scenario for many that may be difficult.
  2. The customer demography has shifted.  While this shift has been subtly occurring over the past decade, the recession period sped the movement.  Retirement is now more deferred and the economic need or desire to remain in the community for a longer period of time more developed.  The customer today is de facto older and more driven by need, predominantly health related.
  3. In light of number 2 above, even with the constant growth of age bands suitable for seniors housing and CCRCs, a percentage of the market evaporated.  This percentage is folk whose economic fortunes changed so profoundly negative or were marginally positive enough to afford a seniors housing product but now no longer so as a result of wealth loss.  This segment or percentage was at the normative market age, economically qualified at the time, but four or so years later, outside the age and health profile and/or economically incapable of affording the product.  The bad news is, the replacement numbers generated from a cohort behind them are insufficient to make-up for their loss.  The market has marginally shrunk, although unit numbers have not and in some markets, have increased during this period.
  4. Given points 1-3 above, the sales cycle is now longer requiring new approaches, more touches, and revised pricing strategies and product features that realign the value proposition.

Circling back to where this post started, the compendium of current questions I am attempting to defer and answer lie in number 4 above.  Specifically; “OK, I get 1-3 but how do I then develop the strategies, etc. dictated by this new sales cycle”.  My summarized answer is below.

  • First, redefine your customer.  I like an analytics approach.  Who are they?  What do they need? What is their economic profile?  What are they shopping for (and it’s not the real estate)?  What is their background at all (or as many) levels that you can ascertain (education, occupation, interests, locations, current living arrangements, health profile)?  The more you know, the better.
  • What is your community’s economic value proposition?  I’ve written on this before and it needs to be clear.  Price it and benchmark it across the broadest market segments possible (compared to living in their current home, rental, condo, etc.).  How does your product compare to competitors at all levels (features, services, care levels, etc.) on a price basis, quality basis, access basis, etc.?  Again, the more detailed this information is, the better.
  • Generating leads once the above is complete becomes easer.  The strategies that work the poorest on a cost per lead basis are newspaper and print media advertising, other media advertising, facility generated brochures, billboards,  and events.  Events can be helpful in getting people into the community to remove a barrier but in and of themselves, they do very little to turn attendance into prospects without other steps taking place.  Strategies and tactics that work best in terms of numbers and on a cost basis are referrals (current residents, families, community members, from other providers, etc.), e-mail contacts and direct mail, website and social media marketing, and co-branding with other organizations where your target market is plentiful and frequent.  In this latter strategy, I recommend being present and visible via human presence as well as building joint lists and joint value-added connections (education, support, referral development, resource sharing, sponsorships, etc.).  A word of caution here: Make absolutely certain that in co-branding and co-marketing strategies that the other organization is as credible and solid as your organization – the relationship must be value-added not value-dilutive.
  • Incorporate new math into your thinking.  The new math is all about how many touches and presentations are required to make a sale.  For most CCRCs and market rate or above market rate projects, 20 or so touches to qualify and close a prospect is the new norm.  In short, if you are working on a list of 100, expect five to ten sales (if the list is qualified) from that 100.
  • Marketing needs to focus on building “volume” thus, methods and analytics need to be at the forefront of strategy.  To keep costs manageable and to build fluidity, I recommend strategies that utilize in revolving fashion, the following four elements.  First, e-mail blasts and e-mail news letters that go out to target segments on specific interest levels.  Second, simple events that are educational, again focused on target market interests.  Third, internet and social media campaigns.  For internet, I like to make certain that the web pages are clean, focused and have ample opportunities for people to request more information.  Fourth, direct mail campaigns.
  • All campaigns and elements need to focus on a clear, direct distinction between your product and other options.  In other words, the goal is to find as many ways as possible to reinforce what the value proposition is and how the same is directly correlated to the interests of your target markets.  For CCRCs, the simplest concept is “continuum of care”.  The vast majority of CCRC consumers are motivated by health and supportive care access.

The “new” CCRC marketing reality is all about analytics and alignment; narrowing the gap between what your customer wants and how your community is best suited to address the key issues.  Touches have to go up to meet sales objectives and contacts need to be weeded through quickly.  Building a qualified and fluid prospect list today is all about using multiple methods with fluidity.  Finally, I can’t emphasize enough how critical and how granular the marketing analysis needs to be to push forward a successful strategy.  Without a full analysis of market targets, customers, prices, product, etc., gaps remain that allow prospects to filter through, resulting in less than effective marketing activity.

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April 19, 2012 - Posted by | Senior Housing | , , , , , , ,

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