In a time of constantly changing markets, grasping economic indicators can give marketers a significant advantage. These indicators are statistical/data measures that provide a look into the economy’s present and future conditions, serving as potent instruments for devising marketing strategies in tune with consumer behavior, purchasing power, and the general state of the market.
For years now, I’ve written and given presentations on how economic conditions in the housing industry and the economy in general, directly impact CCRC/Life Plan sales. I’ve also written on how organizations need to be aware of their pricing and their value proposition for current and future residents.
- https://rhislop3.com/wp-content/uploads/2023/03/value-propositions-and-markteting-4-14.ppt
- https://rhislop3.com/2012/04/19/ccrc-marketing-reality-check-up/
Strong demand along with limited supply (not many new units coming to market) has given communities a “sales” boost as of late. Yet, this boost seems to have plateaued at just about pre-pandemic levels. Frankly, I still see too many communities using financial incentives to convert prospects to buyers. Over time, these incentives get “baked-in” to the pricing, similar to what has occurred with the automotive sales market. Who buys a car anymore without waiting for the big incentives (rebates, special financing, guaranteed trade-in values, etc.)?
If recent election results are any indication, Main Street (where customers live) has serious concerns about the economy. How do I know? Well, there is a great economic data point called Consumer Confidence that says consumers aren’t so confident and their outlook on the economy, isn’t that great. October did bounce a bit higher, but the overall outlook remains significantly below pre-pandemic levels (a comparison Donald Trump repeatedly made during his campaign). US Consumer Confidence
By leveraging indicators like consumer confidence, inflation (CPI), GDP growth, unemployment rates, and interest rates, providers/organizations can make informed, data enabled decisions that optimize their marketing efforts consistent with the current economic environment and consistent with their residents’ (current and future) sentiment.
I know directly from decades in the industry plus many, many current conversations, prospective residents are concerned about their ability to sell their home for entry-fee proceeds, labor conditions at the community they are looking at, inflation and the prices they may pay, and low interest yields on their savings plus, low cost of living increases in their Social Security. Not surprisingly, current residents have the same concerns, save maybe for home sale prospects. As an organization markets to prospective residents, it provides messages internally. Congruency is key.
Integrating economic data into marketing tactics and strategies first requires a quick understanding of the indicators and what they do/data they provide. There are three types of indicators.
- Leading indicators predict future economic activity, helping organizations decipher possible shifts in the market. Examples include stock market returns, consumer confidence indexes, and new orders for capital goods.
- Lagging indicators provide insights into past economic performance. These indicators include unemployment rates and inflation rates. They offer a historic look at economic conditions.
- Coincident indicators reflect the current state of the economy. Data like GDP growth, housing sales, and industrial production fall into this category, providing some perspective on current conditions.
For a Life Plan/CCRC organization, I’d suggest using and monitoring market returns, GDP, consumer confidence, unemployment and inflation rates and housing sales. A big note of caution in using the aforementioned data: perspective and translation are required. Nationalized data may or may not be all that relevant for a Life Plan’s prospective residents.
Current local conditions for real estate data (housing sales, prices, etc.) matter far more than nationalized data. Real estate and employment data are far more localized in importance than national trends. For example, I’ve worked in market areas where unemployment levels were half the national average meaning, the local market was far tighter for staff than the national trend. Likewise, unemployment data for nurses is far different than the global numbers reported by the Bureau of Labor Statistics.
Below are a few of my favorite marketing insights that involve economic data and the reasoning behind their use.
- Market Returns: Estate values are key to most seniors in terms of having the resources to afford a major purchase like a move to a Life Plan community plus, having resources to pay for their continued care. I’ve done many workshops using outside resources to educate prospects on key estate management principles and investment principles. Easing trepidations around the investment markets, folks with strategies to mitigate volatility, etc., all create trust for the prospective and current residents.
- Unemployment Data: One of the most impressive measures of economic conditions an organization can provide to future customers and current customers, is comparative data on employment. If unemployment is rising, communities can market their employment stability, easing resident fears about job losses among their favorite employees. If unemployment is low, communities that have stellar retention data can leverage the numbers to provide a sense of security and managerial competence.
- Interest Rates and Housing Data: Moderating interest rates, particularly as the same translate ultimately to lower mortgage rates, give future residents an outlook of a strengthening resale market. Data which conveys price stability, especially at higher resale values, can create the confidence prospective residents need to list their current home and realize the proceeds necessary for an entry fee.
- Consumer Confidence: This is an indicator that I call “fair weather”. When consumer confidence is strong, people are much more likely to make large consumption decisions. The analogy is similar to planning an outdoor event when the weather forecast is sunny for the foreseeable future. Marketing during strong cycles of consumer confidence is all about tapping into customer feelings that now, is a good time to move forward with purchase decisions. This data point is all about creating a purchasing path with the reinforcement that times are good and the decision, will have positive payback.