A system CFO was leading the search for something different, something new for several projects: filling a new community, maximizing the value of an expansion, and vetting the redevelopment plan for the oldest campus. We met over a screen to talk over those projects, and he asked, “How are you different?” … part of my response was “Marketing is math.” That comment continues to resonate with me on many levels. Creating compelling stories about the underlying customer value for communities and services is one of the best part of work in this field. Planning for a program, community, or system to operate in perpetuity is one of the challenges that makes it rewarding.
Markets Math:
Market studies show the depth and levels of opportunity in a specific geography. Often the financial criteria used to describe potential customers are too low. While many organizations wish to serve the missing middle, the price points and customer behaviors are often above the $100K per year an 85+ year old can earn and still be counted in that “middle (page 7 at link above).” How big can an expansion or a start-up be, and at what price point will it sell quickly enough to reduce risk while feeding mission and margin are great questions. The answers begin with which customer households and local competitors count, as well as the migration patterns of older adults (that have changed so rapidly in the past half decade.) There are great partners out there that can do these studies quickly and affordably… but doing the right study is the most important part. There is still some art in the pricing, presentation, and offering that is creative and fun. For that organization, the market demand was double what was planned for their remaining land. Adding density, even if it needs to be delivered in phases, is good math!
Development Math:
This field makes a difference in people’s lives, and it is complex and challenging. It is NOT easy to develop things, to operate any form of long-term care services, AND to be in the hospitality business (with the same customers every day!) Sorting through the rental, entrance fee, and ownership models as well as which care services and coverages to include is creating or rebuilding a pretty complicated system. Matching customers’ desires within the local competitors in the market to build a strong business that will last generations is so exciting. Most Life Plan Communities’ (CCRCs’) struggles comes from poor modeling. Those failures stunt trust and hurt the adoption rate for communities and services right when customers need them the most.
Bankruptcies in newer communities are increasing as are affiliations driven by financial challenges. It is worth getting second opinions to confirm development or redevelopment models are right for the long run. The big nursing homes that were the norm fifty plus years ago are organizations’ most frequent challenge today. Internal and external utilization for nursing care is dropping by roughly 5% a year despite the oldest baby boomers turning 76 this year. Construction, financing, and staffing costs are high. The right sizing path requires difficult conversations, compromises, and perhaps some fundraising. Memory support or the flexibility to swing households to that service provides flexibility and usually matches a significant market need. The math of those trend lines shows how customers are changing and how to better plan and invest.
Right sizing, changing refund options (moving away from 90% refunds!, as well as modifying agreements’ long term care coverage adds the actuarial tribe to these conversations. Translating actuarial tables into customer benefits simplifies something complex and makes it appealing. Continuing Care at Home programs highlight this part of the math. There are great successes and stories in the entrance fee and life care models, but they require customer education and initially appear expensive. Would there be more programs and services if the predominate models were more familiar?
Marketing Math:
This is the math most people think of first. Marketing spend by channel tracked into deposits, memberships, or move-ins. Amazing creative companies focus on this field and new ones are learning quickly and bringing fresh voices to these stories. Everyone gets excited when a family make a choice before it is too late…or when they find the service they desperately need. Meeting and beating financing and revenue goals are signs of offers that are so compelling that customers understand and want to invest in them. A growth key is to build fluency to explain how these offerings work and how they work for customers. That is my kind of markets, marketing, and math!
Our space is getting hot and alternatives and new offerings are multiplying. This proliferation of choice can make it harder for customers to decide so we need to present simple positive exchanges of value. Customers give us much more than just their dollars…they give a significant part of their lives. We earn their trust to know things will be taken care of, trust that they can enjoy their homes free from anxiety, and trust that they will have more time with the people they love.
Trust is hard to build when the math does not work. I am proud to be a part of making the math work for so many programs and services!
Thanks, and happy spring!
