GlynnDevins Leadership Perspectives on the Impact of the Middle Market
There’s probably no more important – or hotter – topic in senior living right now than how to serve the middle market. And rightfully so. According to Pew Research, this segment of the market has been growing steadily since 1971 and now represents over 47% of seniors. And while there are subsidized housing options – although not enough of them – for low-income seniors, and there are numerous options for high-income seniors, there are few choices for the 47% of people in the middle-income segment.
In our latest leadership perspective, Senior Vice President Rob Adams and President East Coast Office Sharon Brooks share insight into this group and discuss their impact on the senior living industry.
Over the last 100 years, the senior living industry has served U.S. upper- and lower-income markets quite well. But there’s a large, predominant segment that hasn’t been served – the middle market.
By definition, this is a very large, diverse group that wants to approach their retirement years much differently than past generations. The middle market is made up of several income brackets – low, mid, high – a mid-middle market exists! They’re very tech-savvy and experience-oriented, and expect the level of consumer-oriented service they’re currently used to – the Apple store, Starbucks, and even Margaritaville. They crave familiarity, but not the same-old, same-old – they want the experience, but they want it to fit their wallet – not the wallet of the ultra-wealthy.
When designing for the middle market, one size doesn’t fit all. I’ve always been a firm believer in thinking globally and acting locally. Why would you try to fit a Life Plan Community, one considered middle market in New York City, into the Nashville market? Or a Denver rental community into the
New Orleans market? Do your homework, then build systems and tools to make the community attractive and affordable for the middle market segment. Quantitative and qualitative research is invaluable to developing new thinking and partnerships for wellness, hospitality and technology.
In your community design, think about market disruption. One example of this concept is providing an “Uber-like” service – have your own hourly-based car service versus parking. Every area of your community must be examined to save on building costs (non-revenue-producing space), and partnerships for amenity spaces – like the YMCA or other local wellness connections. Each service area and program should maximize affordability for your consumers and allow for à la carte additions.
To maximize your marketing efforts, think about the right person, right time, right message and RIGHT CHANNEL. This is even more important to reach and nurture this audience. Think about early cadence so you have a never-ending pipeline. Reexamine your networks and understand that tools like lead scoring, marketing automation, and intelligent use of data and technology will be integral to driving a better ROI for marketing and sales.
The integration of sales teams with this thinking and new technology will be even more critical to hone in on the sweet spot for your customer. If all these areas and more are used, they’ll come! And your organization will grow and become even more diverse.
Current middle market projects have been largely the province of the for-profit sector. Rapid development of rental models with scaled-back amenities, unbundled services and limited health options – often through an outside home health partner – have met with success in many markets. While this option is still a reach for some in the middle market, with a little support from adult children, it becomes more affordable for families with no large upfront entrance fee.
Traditional not-for-profits seem to struggle with whether this type of model – where there is no guarantee of care – is mission-consistent, but there seems to be a tide of change building. Statistics show that simply living in community is key to wellness and longevity. It also reduces health care costs for 911 calls, results in less chronic depression and lowers hospitalizations. In the long run, I expect to see HMOs and insurers who are operating under a population management model encourage and potentially partner with well-run communities.
There are numerous initiatives underway – involving studies, think tanks, task forces and prototype projects – to figure out the middle market conundrum. One that’s especially noteworthy is the NIC Middle Market study, part of a $300,000 commitment on the part of the National Investment Council; it will be presented at the Leadership Policy Summit this April, as well as at an Investor Conference in New York City after that.
Data on demographics, cognitive impairment, mobility issues and chronic conditions currently and through 2029 will be presented, according to NIC founder and strategic adviser Bob Kramer.
“This isn’t a solutions study,” he was quoted as saying in a recent McKnight’s Senior Living article. “This is really documenting the size of the opportunity, from a provider point of view, but also the size of the challenge.” It will be up to others to decide whether and how to act on the information, Kramer said.
There is little doubt in my mind that the information will be both welcomed and acted on by both for- profit and not-for-profit providers. Creativity will be a key driver.
One of the most innovative projects I’ve seen is coming out of the affordable housing sector. 2Life communities, a national leader in affordable housing, is in the process of finalizing a model unlike any existing senior living option. It combines apartments for life; home health care through a partnership; innovative partnerships with retail, restaurants, fitness providers and lifelong learning groups; and a volunteer commitment on the part of residents.
Disruptors, technology-based solutions and a redefinition of community partnerships are all on the horizon, as is the availability of an aging workforce that could actually include deploying residents to help operate their community. On the marketing front, we have some unifying principles for you. Look for convergence of all this thinking into some exceptional and creative models.
Don’t expect middle market consumers to jump at the opportunity to move – marketing and education may be even more challenging than with upscale consumers, because the percentage of their net worth they’ll be investing is higher. And finally, remember that these middle market consumers differ by age, by market, and by where they fall within the very large middle market income span. Reaching them will rely on good research and smart, cost-effective marketing. The integration of sales teams with this thinking and new technology will be even more critical to hone in on the sweet spot for your customer.
It’s going to be an exciting ride!
Meet Rob, Sharon and the rest of our leadership team here.