LOS ANGELES — Participants in the “Best-in-Class Operators” panel at France Media’s InterFace Seniors Housing West conference, held Feb. 2 at the Omni Los Angeles, had one task, albeit a large one: provide the blueprint for oeprational success in a challenging market.
Though there were various strategies thrown out to combat the whack-a-mole challenges currently plaguing operators, panelists noted that the goal of seniors housing remains the same in any market: To increase occupancy and rents, which is done by providing a product people not only need, but want.
It’s the latter half of that point that Dan Hutson, head of marketing at Priya Living, believes is overlooked far too often.
“A significant number of people [we serve] felt forced into a product by either their family or a health condition,” he said. “They don’t want to be here. You have to think about how to create products and services that are people’s first choice.”
That, he noted, involves fundamentally rethinking what the seniors housing industry is really selling. Spoiler alert: it’s not a room.
“We think of our product as part of real estate when what the customer is looking for is an experience,” he continued. “It’s more than lifestyle, it’s ‘What are you doing to support me in living the life I want to live in this stage of life?’ If you’re just focused on providing a housing solution, you’re always going to struggle.”
Create a narrative
Naturally, selling an experience requires a different sales approach than selling a room. The pitch must allow the prospective residents to envision themselves not just living at the property, but happy to be living at the property. For this, one must paint a picture. Tell a story.
There’s just one problem, according to Hutson.
“As an industry, we’re lousy storytellers,” he said. “We just don’t do an effective job of explaining the beneficial impact of congregate living.”
To turn this around, Hutson believes operators needed to be better listeners. They do, after all, have entire buildings full of focus groups.
“We also do a lousy job of talking to and listening to our customers and prospective customers,” he continued. “We need to develop a deep understanding of how they actually want to live. What they want our product to actually feel like. We have to do a better job of creating products and services that align with people’s desires. You can’t do that without spending more time and resources with your prospective customer.”
For Patrick Dooley, president and chief development officer at Milestone Retirement Communities, this starts with ensuring a resident can continue the passions they enjoyed at home.
“I’d like to think when I move into one of our communities, that all of a sudden I’m not going to forget what I love doing,” he said. “We should be celebrating those things and doing them with our residents every day.”
A model train enthusiast, for example, should be able to interact with a model train unit and share that passion within their larger community.
Work with partners
Listening to current and potential residents, personalizing the product and services, and ensuring a resident’s passions continue at his or her current dwelling can certainly begin to create the blueprint for operator success. But the full title of the panel is “Best-in-Class Operators’ Blueprint for Success in a Challenging Market” — and challenging markets don’t tend to offer large budgets, staffs or patience for ideas that require either of the former two items.
“In this industry, it’s a real challenge to find capital that supports programming, experience and design,” said Hutson.
Not all of these challenges are related to current market conditions, though inflation and high interest rates aren’t helping. In a way, the seniors housing industry is experiencing its own form of “long COVID” as it recovers from the hit it took during the pandemic.
Stress levels were high in 2020 and beyond as residents faced serious pandemic-related health struggles, facilities were short staffed and the reputation of congregate living took a big hit.
Investors and operators alike are still finding their ways through these challenges. The only difference is one has a focus on the bottom line while the other works to increase customer satisfaction and, thereby, resident count.
Somewhere, somehow, the two parties need to meet in the middle.
“We haven’t really rebounded as quickly as everyone thinks we have,” said Joe Jedlowski, CEO of Distinctive Living. “We’ve had to have lots of really hard conversations with ownership groups about what is reality, because they’re getting pressure from their capital, their debt. Overnight, in some cases, debt on an asset has increased by $30,000 to $40,000.”
This led some ownership groups that were barely meeting their debt coverage to no longer meet that coverage, Jedlowski explained.
“So, what do you do? Beat the heck out of the operator,” continued Jedlowski. “‘We need more NOI, we need to cut staffing.’ We’ve had to get on the phone and say, ‘This is what the reality is for this asset. This is the reality of the results we’re going to be able to achieve in this asset and this is the reality of how long it’s going to take us to get the results you’re looking for.’”
Keen storytelling abilities are also handy with owners and investors, as many don’t have the on-the-ground perspective that operators do. Some may also overlook the generational cultural differences that will play an essential role in marketing efforts going forward.
“Boomers have very different expectations — and subsequent generations are also going to have this expectation that, ‘You’re going to give me what I want or I’m going to go somewhere else,’” Hutson said.
Then you add in the advances in smart-home technology.
“The home sector is developing a whole suite of services to make it a lot easier for people to stay in their homes,” continued Hutson. “It’s not a company doing this. It’s a whole diversified landscape of companies finally waking up to the fact that boomers are a huge demographic. They’re very affluent, so there’s been a big wealth transfer. These companies are all coming up with solutions. If you think it was tough before, it’s going to get even tougher.”
One of the things boomers and the subsequent generations appreciate is technology. As the home sector has realized, technology can help older adults stay connected, complete small tasks and alert the necessary personnel if something may be amiss.
“Residents want more technology as the younger ones move in,” said Jack Cumming, a panelist and resident at a Front Porch-operated community who also invests in the seniors housing sector. “At my community, we have a full-time help desk and that’s made a tremendous difference.”
Cumming noted about 70 percent of his fellow residents have Alexa devices. He also believed the addition of technology could help with staffing challenges. Jedlowski agreed — as long as the tech is effective.
“I always ask vendors, ‘what does it take to implement this?’” he said. “I’m interested in low-high tech. I want platforms that have high-tech sophistication behind the scenes but are low-tech enough that our staff doesn’t have to do anything with it because we can’t throw one more checklist on our team members today. They are bursting at the seams.”
Cost, naturally, is also a concern.
“If I take just five or six of the tech platforms I want, that’s an extra $300 per unit per month,” continued Jedlowski. “If you cap that, look what I’ve just done to the value of the asset.”
Kian Saneii, founder and CEO at tech firm Independa who also moderated the panel, also sees the value in technology if it can integrate into existing platforms and create a seamless experience.
The blueprint for success in a challenging market, it turns out, isn’t all that different from achieving success in any market. At the end of the day, it’s all down to providing a product and service that people want; it’s simply harder to do so in an environment with added challenges and pressures.
Still, the fact that the industry knows it has a problem is the first step to solving it. Converting a product from “need” to “want” will make all the difference as a new generation enters their golden years. The seniors housing operator’s job, according to Dooley, is to keep providing that care — whether it comes in the form of listening, more technology or a model train set.
“We can’t lose focus on the fact that we’re in the business to take care of people,” he said. “It’s not always the data, not always analytics, not always the dollar return. I know I got in this business to take care of people and it just so happened that in the last 25 years we made money doing that. But it’s been a struggle the last couple years and we just need to persevere.”
— Nellie Day
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