A New Lens Of Thinking Could Open Up An Entire New Market Of Buyers And Revenue For Seniors Housing
Leveraging the existing platforms of independent living, assisted living and memory care, as well as CCRC and active adult communities; operators could tap into an entire new niche of non-customers
Written by Traci Bild
In its first ten years of business, Salesforce.com earned more than $1.3 billion in annual revenues. Today, the Company has over 20,000 employees and annual revenues of $8 billion. What Salesforce did so brilliantly was they applied a NEW LENS of thinking to an industry dominated by industry CRM (customer relationship management) giants Oracle, SAP and Microsoft. In turn, they opened a blue ocean of new market space and consumers.
CRM software is used to manage organizations interactions with customers and sales prospects in all areas of their business. It’s a multibillion-dollar industry and very competitive. COMPETING AGAINST the big enterprise vendors Oracle, SAP and Microsoft who had long dominated the industry, Salesforce strove to make the competition irrelevant by REMOVING ALL THE PAIN POINTS the industry had traditionally imposed on its clients and that buyer companies had come to accept as normal.
Here are just some of the CRM pain points consumers faced:
- Expensive to purchase and maintain
- Hard to install
- Difficult to use
- Software licensing requirements
- Slow implementation and launch time
- Hefty upfront customization and implementation fees
- Expensive and time-consuming
These pain points, created by the CRM industry itself, essentially LIMITED DEMAND for their own products to those corporations large enough to afford such software installation. Salesforce saw this as a barrier and decided to look at the industry differently. It tore apart each pain point felt by customers and rethought what was possible.
THE REMOVAL OF PAIN POINTS CREATES BLUE OCEAN SPACE FREE OF COMPETITION
Choosing to stay away from the red shark infested waters Oracle and Microsoft were swimming in, Salesforce responded by creating a highly reliable, easy to use CRM solution accessible over the web, which worked the moment business users signed up for it via a monthly subscription. Even better, that subscription could be cancelled at any time.
Not having to purchase a software license or expend resources on infrastructure, deployment and maintenance reduced the total cost of ownership by roughly 90%!
Launching with just one version of CRM software dramatically lowered the Salesforce per-unit development cost and allowed them to learn which features mattered most to customers based on usage rates; ultimately creating raving fans and earned the Company a coveted spot on the New York Stock Exchange (ticker symbol CRM).
RE-FRAME YOUR THINKING FROM WHAT IS TO WHAT’S POSSIBLE
RATHER THAN LOOKING AT WHAT OTHER CRM PROVIDERS WERE DOING, Salesforce reframed their thinking about CRM, how it was purchased, delivered and utilized; in turn opening new market space through differentiation and low cost. The lesson here is DO NOT TAKE EXISTING INDUSTRY CONDITIONS AS A GIVEN, look at how you can reshape conditions in your favor.
HOW DOES THIS APPLY TO SENIORS HOUSING, CAN OUR INDUSTRY BE RE-FRAMED?
Let’s start by going through the same exercise that Salesforce went through, albeit over the span of time.
SENIORS HOUSING PAIN POINTS
Just as SAP, Microsoft and Oracle dominated the CRM industry with scale and resources, Companies like Brookdale, Five Star and Capital Senior Living dominate the seniors housing space with a combined 1200 plus senior living communities between them. Yet each of these operators is faced with the same consumer pain points as the small operator who shares the same market service area and who is fighting for the same exact consumer.
As an operator, investor or developer, you can continue to fight for the same small sliver of seniors who are ready to make a move today or you can think like a blue ocean strategist and seek to CREATE NEW DEMAND BY LOOKING TO NON-CUSTOMERS.
Extra demand exists, it’s just waiting to be unlocked.
Start by contemplating non-customers within your market service area. What is it that turns them off about seniors housing? What pain points are causing prospective buyers to delay making a move now?
Feel free to add to the list I’ve created below. Here is the list I came up with:
SENIORS HOUSING CONSUMER PAIN POINTS
- Expensive; average rates easily $60K+ per year
- Move is physically and mentally difficult
- Complex family dynamics
- Difficult to adjust to new surroundings
- Concern over outliving funds needed for care
- Arduous onboarding process and paperwork
- Final decision; can’t go back home
CONSIDER A NEW LENS OF THINKING ABOUT THE SENIORS HOUSING OF TOMORROW
While it seems counter-intuitive, its non-customers, not customers, who can provide the greatest insight into what you as a seniors housing operator are doing to LIMIT DEMAND and more importantly, how you can overcome it and open a wide, blue ocean.
Easier said than done and I will be the first to say that this executive study is a tough one! It would be easier to pick another book that’s a simple read with all the answers laid out for us to plug in. No such luck, so let’s dive in. Let’s start with the question of, who are our non-customers?
WHO ARE OUR NON-CUSTOMERS IN THE WORLD OF SENIORS HOUSING?
The first group that comes to my mind are those we covet; the retired person, the empty nester, the widow or widower who is in a new phase of life and ideally; all these individuals in their mid-seventies. EVERYONE WANTS THIS CUSTOMER!
Pre-Great Recession the average resident moved in their late 70s. Post Great Recession they move in their late 80’s. While the financial crisis caused many to put off the move it resulted in a much higher acuity resident entering our communities that in truth, scares the younger, more vibrant residents you desire. This must be addressed as part of your Blue Ocean Shift study as well. Where can you find middle ground?
Interesting enough, as I was writing this blog I stumbled upon an article n Women’s Health (November 2019 issue) that fits right into this study. It went on to say that over 10 million millennials look after an older relative or loved one with a disability or a physical or mental condition according to the data from the National Alliance for Caregiving (NAC). This demographic is providing on average, about 20 hours of care a week. “That’s a second job,” says C. Grace Whiting, President and CEO of NAC. Could this be an untapped market you could serve?
Over 10 million millennials are providing, on average, 20 hours of caregiving to a relative or loved one per week. Could this be a wide blue ocean space for you to explore?
LOOKING THROUGH A NEW LENS OF THINKING
After reviewing my list, let’s start with the pain point of “It’s expensive,” because it is to the average consumer. Odds are it will continue to get pricier due to the rising cost of construction. How might we look through a different lens, to create move value, at a lower rate and open a new market of consumers who otherwise wouldn’t buy? Take a moment to jot down your own ideas.
Here are some of mine:
SHIFT FROM A CONSTRUCTION MINDSET TO A LIFESTYLE MINDSET
Simplify design with less common space that oftentimes sits empty-from family dining rooms and libraries that no one uses to those ghostly spaces on each floor meant for residents to congregate over a television show that rarely if ever do. Reduce the investment in the building, making it smaller with simple design specs; making it more affordable to move in and maintain independence and freedom while opting into ancillary services from dining and transportation to housekeeping and laundry.
The barrier to entry becomes lower, allowing it to compete with 55+ rates; while the value of having services should you need them higher. Invest saved funds into creating a resident experience platform that rivals the best multi-family apartments and cruise ships to engage residents and truly impact their quality of life in turn creating raving fans.
MOVE FROM CONGREGATE TO CONVENIENCE LIVING WITH A ROBUST SUBSCRIPTION PLAN
First we must look at what do customers REALLY want? According to a PWC research study across all age segments, customers want convenience and efficiency when it comes to overall customer experience.
What if there were an entire base of customers that lived outside the community itself? Imagine the impact of a subscription program that allowed individuals in your market service area to subscribe to the community’s services. Rather than move into the physical plant this plan would allow them to acclimate to the services offered incrementally, over time and to see the value the community is able to bring their quality of life. Truth be told, the infrastructure already exists, it’s leveraging it to open new doors and a pipeline of future residents and loyal referral sources plus a steady stream of revenue that is limitless. For fun, consider these type services:
- Blue apron style meal delivery offered to your market service area
- Housekeeping and laundry services
- Prevention focused fitness customized to the resident’s needs, facilitated at the community and outside of it by a trained geriatric health instructor
- Educational courses from creating small farm-to-table patio gardens to cooking classes on how to use these foods to fuel the body and slow the impact of aging; to the art of calligraphy and creative writing courses
What if you could capture 50% of those prospective buyers who are not yet ready to move and convert them into a subscription service that fills their immediate needs while coming to terms with the prospect of a final move down the road. Is it possible to generate $1,100-$1,500 per month per subscriber (or more) to leverage the services and staff within your community? Even better this service would create a pipeline of future buyers who will ultimately move; a nice feeder into your communities.
BREAK IT DOWN WITH A FRESH LOOK AT WHAT’S POSSIBLE VERSUS WHAT CURRENTLY IS
A great exercise for your leadership and or community teams to conduct at your next leadership meeting is to take each of the pain points and work through ways to remove, lesson or go around them. Your people are the greatest asset you have, and they bring a wealth of ideas!
This book study Blue Ocean Shift requires patience for sure. Transformation won’t come overnight but all great things first begin with a thought, so start thinking… I know it has certainly sparked my thinking of the possibilities. I know it will for you too!
Like the ideas shared but no time to work on them? Email me at email@example.com or text me at 813.390.3349 to learn about our executive retreats and consulting services that allow us to embed within your leadership team to map out, test and execute new strategies that move you from the red oceans of seniors housing into wide, blue ocean space.