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A Place for Mom CEO: We Are Halfway Through Our Reinvention, $175M Raise Will Fuel the Effort

After taking the reins in 2019, A Place for Mom CEO Larry Kutscher laid out a plan to completely reinvent the company — and its relationship with senior living providers.

Of course, Kutscher couldn’t predict that a global pandemic was about to hit and disrupt just about every facet of the senior living industry. And fast-forward to 2022, he told Senior Housing News that although the New York City-based company feels “completely different” now, there is still work left to be done with regard to those efforts.

“I think we’ve made progress for them to understand who we are, what we’re about, and that we’re on the side of being their true partner to make revenue together and satisfy families together,” Kutscher said during a recent appearance on the Senior Housing News podcast Transform. “Three years in, I think we’ve made progress, but we’re nowhere near the finish line.”

A recent infusion of $175 million in growth equity is helping APFM leadership propel those efforts this year and beyond. Through its new funding, the company is expanding its brand by building on its marketing strategy, bulking up its workforce of advisors and continuing to revamp its technology.

“We’re at a really good inflection point where all the things we’ve done are paying off,” Kutscher said. “Now we have the foundation, we’re going to really innovate and do things in ways that are unique and different.”

Highlights of Kutscher’s podcast interview are below, edited for length and clarity. Subscribe to Transform via Apple Podcasts and SoundCloud.

On what the company will do with its recent $175M fundraise:

We have big goals, and I really look at it as going after a couple areas.

First is our brand. It is the leading brand in the industry and in the consumer world, but we really just started. When people are making a decision about senior housing, they’re not really aware of things. So, building a brand really matters and we’re spending a lot on marketing and branding.

Second, we’ve significantly increased our sales force, both advisors talking to our families — giving them advice, and ultimately helping them move into a community — as well as a team of what we call “customer success managers,” who work with communities to help them move in families and make the process seamless and better. We’ll build those teams and continue to add salespeople and add capabilities around those salespeople.

And then last is technology. We’ve spent tens of millions of dollars in technology over the last couple of years, and are continuing to do that. And it’s doing what I just said: building that brand, and then really enabling our sales force to work well with our families, be efficient, be customized and use information throughout the process.

We really give a great service and a great outcome for the families and the community, and it requires great technology. We’ve been rebuilding our technology platform pretty much from scratch. And we’ve now really gotten to a point where we have that foundation, but we’re continuing to invest in it because we see so many ways to innovate and to do a better job.

The company feels completely different to me than it did in 2019.

We were in the early days, and we had ambitious goals around technology, around the team and around our relationships in the industry and our marketing. We’ve changed a lot of those things for the better. We’ve changed the way our company operates, and the way we provide our services. And it’s really making a difference in leading us to be successful. But I would also say that we’re really only about halfway through where I think we can and should go.

We’re at a really good inflection point where all the things we’ve done are paying off and driving significant value both for our families and our community customers, and for the business. It’s exactly what I thought would happen: the learning we’re getting from that is showing us where to go next, and all the ways we can keep innovating and keep building and keep going. The change coming will be even bigger than the change we had, in a noticeable way. Because so much of what we did was foundational, now we have the foundation, we’re going to really innovate and do things in ways that are unique and different.

On creating a more positive relationship with the senior living industry:

When I talk to folks who are senior living operators, I think the tone, and the content and the substance of those conversations are very, very different.

During the depths of Covid, we were able to bring people information and ideas, because we knew a lot and we could see what was going on. And we were really on the same side of the table, helping senior community operators have more move-ins and drive more revenue, and people need help doing that. We were really able to step up, because we kept investing during that period and kept doing marketing. We were able to step up and show people how they could get what they didn’t actually think they could get, and how we can contribute to that. I think that’s really resonated.

We are very much focused on not quantity, but quality. When I first came here, people would be screaming, ‘You’re not giving me enough leads,’ And I said, ‘Well, that’s not what we should be asking me for. You should ask me for move-ins. Don’t ask me for more leads, ask me for more move-ins.’ And that’s what our goal is. Our goal is to give you more move-ins, and I think we’ve really successfully demonstrated that we’re not focused on just growing leads.

What we’re focused on is me giving you high-quality opportunities, and then working with you, which is really what’s different — working with you to close those leads to generate move-ins and revenue for both of us. And that’s, by the way, a much better outcome for the families because the family is getting something that they’re happy about. All those constituents — the family, the community, and A Place For Mom — are in a much better place, and we act that way. So, I feel the conversations are different now.

What I have found in the industry is that our biggest customers are our best advocates. And so I have to educate and I need to continue to educate and build awareness of what we do, what we can do and why it makes so much sense.

On the specific complaint that APFM owns a lead for two years, and that operators feel pressured to accept contract provisions:

One of our fastest-growing conversion opportunities are families who’ve been with us more than two years. A lot of times, those leads were just dropped because we had that clause. Families go through a process of deciding, and what we don’t want to do is pressure them to make a decision in two weeks or three days or six months. We want to work on their timeline.

I think the communities realize — I hope they do — that they’re working with the family on their timeline. And by being able to have that time, it gives us the ability to be their advocate and help them and continue to spend money against them. We’ll do phone calls, email campaigns, text campaigns, run promotions to them. And by having that, we are able to do that and do that for the community.

So, I actually think it’s one of the bedrocks of what we do. And again, it’s part of the education we have to do. Almost three years in, and I have not really heard that complaint from communities. I’ve heard that complaint from other places, but never from a community.

On the work left to do partnering with senior living operators:

I think we’ve made progress for them to understand who we are, what we’re about, and that we’re on the side of being their true partner to make revenue together and satisfy families together. But I still think we have a ways to go.

I’m not naive, there are a bunch of folks out there who probably don’t all agree with that. But a great organization is one that says, ‘Hey, here’s my aspiration, here are my goals. We want to be true business partners with all those communities.’ But how do we get there? And I think it’s a journey. Three years in, I think we’ve made progress, but we’re nowhere near the finish line.

Referral companies are not the same. We operate very differently — especially now — versus those out there who also try to do what we do. We’ll spend about $100 million in marketing this year. And when you spend that kind of money, every lead we generate … we get to a point where we have what we think is pretty good. We only send it to the community when we think the customer really wants it and the family really wants it, and it’s good for them. The message I will try to give out to the communities is that we really need their partnership to then effectively work those leads.

And there’s a great inconsistency in the industry, some folks work well and incredibly hard; some work hard, but not as well; and others don’t really work at all. We are very focused on supporting communities, giving them the information so they can know what’s going on. Because sometimes it’s not purposeful, it’s just the lack of information, and not coordinating and all that kind of stuff. Helping really to train the local folks in the communities about the opportunity they have and what’s out there and really communicating the opportunity to drive move-ins that they have and help families — that’s a big thing that I would really emphasize.

One thing I try to educate communities on is the economics of the way this all works. And what I mean by that is, I just talked about that $100 million we spent, we are super efficient at this point. I mean, we are spending money to generate leads in local communities. We measure everything, I have an amazing team that really is world class and what they do. I know we’re driving really efficient cost leads, but many times operators don’t really think about their marginal economics, meaning what’s the cost of getting the next move? If they’re at 80% occupancy, what’s the cost of that next 10%? I am highly confident that we are the most cost-effective way to get that next 5% or 10%. But you can’t compare that to the first 5%. And so really breaking that apart and educating folks about how we spent a lot of money.

A community pays something like 3% of the value they generate from moving to us. It’s something pretty small. Relative to the cost of not having that room filled at all, I think we’re a really good value. And that’s one of the biggest things we work with to get communities to understand and see.

On new competition from other referral partners:

We have competitors out there, and there are people doing what we do. But honestly, I don’t perceive that we have more competition than we used to

We’re really very scaled at this point. If you think about what we do, we’re national, we’re in every state of the country, we’re in every part of all those states, we’re running national campaigns and marketing programs, we have 500-plus senior living advisors working with families, we have a large number of sales folks working with communities. I could go on and keep giving statistics. The point is, we’re focused on how we help the industry adapt and grow and change.

The biggest thing I want people to do is come to referral folks like us, and really to get advice, because I think they’re more likely to move in when they use an advisor. We help families overcome objections, otherwise, they just can’t — especially the kind of people who seek us out. And so, our big mission is to get more people to use us as an advisor, because we think they will convert more in the senior living and it’s good for the whole industry. When I think about the opportunity and competition, that’s the real competition: people not doing anything, people just deciding not to move in or getting stuck in the process.

On how operators can better educate senior living residents and their families:

As I said before, I think this is a big opportunity as an industry.

When I talk to senior-level folks in the industry — I say this over and over again — there is a little bit of shame on us for not helping families and consumers understand what senior living is and what it’s about. The fact that nursing homes are the number-one term people start with just tells you they’re confused by what the differences are, and what the offerings are. And again, one of the biggest roles we play — both in our advertising, also in our advisory work — is to educate them about what the different types of senior housing there are, and how it fits them.

I think every operator needs to be out there getting the message across about how senior housing is a good thing. People end up saying, ‘This is something I only do as a last resort. I don’t want to move on with that, it’s a bad decision, but I feel forced to do it,’ which is what we’ll hear sometimes. And look, I understand the emotional nature of that decision. Nobody wants Mom or Dad to feel like they are in a place where they can’t just live as they used to live before. But this is the right solution — Mom and Dad can have a healthy, happy life — and that’s a thing we should be proud of.

How do we get that message across in every interaction in educating people; in local marketing; in public relations, which we don’t do very well; in government lobbying? It’s a biggest weakness as an industry, we have others define us, as opposed to us defining ourselves.

On Kutscher’s experience in travel hospitality and how that informs senior living:

[Hospitality] and senior living are fundamentally the same, right? You have a room that somebody lives in for some period of time that an operator is renting out. And then you need to get the word out, you know that this is the right place to go and help them make a decision to go there.

Now, it’s a very different kind of customer and different segment and the experience you’re having is very different. But that basic dynamic is the same. And also, the other key part of it is that you’re talking about inventory, that every night that’s not filled, that operator is not able to return on a fixed cost investment. So the fundamentals of the business are very similar. I often would say that our industry, senior housing, is probably 30 or 40 years behind hospitality in recognizing what we do about that. Some of that is because the consumer is different, the family is different, and they’re in a different place.

On what’s next for APFM:

There are a lot of folks out there who are turning 80 or 85 every day. We as an industry have the beauty of being an industry where we have a tailwind behind us, which is that there are more and more customers coming. And I don’t mean, in a theoretical sense, I mean, in an actual sense. This is not something that people want to have, they need to have it. How do you get the word out? How do you get people to understand what the industry can do and what we can do for them?

Marketing is a key way to do that. Whether it’s branding, TV, or search marketing or a whole host of new channels that we’ve been developing out there, we have really started to figure out how to reach our target audience in ways that are cost-effective and smart; and good for the family, good for the operator, so we can open up more doors and bring more people to the party. And that’s what it’s all about. We’re obviously economically driven, but we constantly measure what we’re doing, and we’re seeing really good returns on that investment.

It all goes back to having the communities, taking those leads and actively working it. If we’re going to keep increasing our marketing budget, as long as the communities keep taking our leads and work them at higher and higher lead conversion rates, we get more families moving in, they’re happier with us and have a good experience.

The post A Place for Mom CEO: We Are Halfway Through Our Reinvention, $175M Raise Will Fuel the Effort appeared first on Senior Housing News.

Source: For the full article please visit Senior Housing News

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