Market Dynamics of Senior-Focused Communities

One Size Doesn’t Fit All: Understanding Your Senior Customer Base

By Tim White, Senior Vice President, Buxton

Few would argue that seniors housing is not a growth industry. Whether your organization is planning a senior-living community, skilled nursing facility, rehabilitation center or hospice facility, the need for eldercare is growing. From one end of the care spectrum to the other, this market is expanding as America’s Baby Boomers continue to age.

Traditionally, organizations rely on demographic information when planning seniors housing facilities and services. However, a host of new market forces makes today’s planning strategies increasingly complex.

Sweeping shifts in economics, lifestyle choices and family relationships — never mind the simple demographics alone — complicate the picture. Further obscuring the market is a diverse and growing field of service providers.

Given these developments, to rely solely on demographics when planning senior-focused services or evaluating sites isn’t just unwise, it’s almost obsolete.

Rapid Growth of Senior Population

Consider these truths that affect the how, when, and where of delivering care and housing to seniors:

According to the U.S. Census Bureau, the nation’s 65-and-older population is projected to reach 98 million in the year 2060, more than doubling in size from the 2014 level of 46.2 million. While Millennials have passed the Baby Boom generation as the largest living cohort, Baby Boomers will continually add to the ranks of the 65-and-older segment through 2029. The 65-and-older population will represent more than 20 percent of Americans by 2030.

The current life expectancy of a 65-year-old man is 84.3 years, and the life expectancy of a 65-year-old woman is 86.6 years, according to data compiled by the Social Security Administration. While overall American life expectancy has slightly declined in recent years, these numbers have remained the same for those 65-and-older.

When you consider that we have another four decades of advances in medicine before the projected swell of the senior population in 2060, there is great potential for further improving health and an uptick in life expectancy.

Among other developments, such projections are supported by:

  • Health education and wellness programs that are helping extend life expectancy through prevention
  • Advances in medicine and medical technology that are helping extend life expectancy through available treatments and new cures

While the growth in the U.S. senior population presents opportunities, it can be difficult to determine which specific senior-focused services are best to offer at a site. One way to address this question is through segmentation analysis, also referred to as consumer analytics.  

Not all Seniors Are Created Equal

Today’s seniors are experiencing a unique combination of life events making it especially difficult to segment this group. However, it would be a fatal mistake to view this overall consumer base as a single, monolithic entity with lockstep needs and purchasing patterns.

Seniors aren’t interchangeable consumers, and age is an overly simplistic way to view this consumer group. Seniors’ healthcare and housing consumption behavior varies greatly by health, lifestyle and income. Some seniors may enter the spectrum of care only at the end of life, others early on.

The seniors housing organizations that want to grow in this new era must gain a much better understanding of the subtle nuances that define each segment in order to sell to them more effectively. No matter their age or position on the continuum of care, seniors have more choices today about where and how to live, as well as which healthcare services to receive from a myriad of providers. 

Recent changes in the labor and lifestyle patterns of seniors, many of whom feel challenged by rising healthcare costs, reveal more about their differences:

  • Many seniors are working longer and retiring later. Nearly 9 million seniors aged 65 years or older are working, with almost 60 percent of those seniors holding full-time jobs. The Bureau of Labor Statistics projects that the workforce participation rate of those 65 and older will rise to more than 21 percent in 2024, from the current rate of 18.6 percent.
  • Many seniors now live closer to their adult children or, in many cases, with them according to Pew Research Center. Of those 65 and older, 21 percent live in a multigenerational home with at least two adult generations, while 23 percent of those aged 55 to 64 live in a multigenerational home.
  • To accommodate growing demand for multigenerational housing, more homes are being built with a second master bedroom and even with separate entrances. As younger generations, like Millennials, remain at home in the post-recession economy and the Baby Boomers age this trend will only continue.

Seniors make up a diverse group that encompasses many segments that have different needs, mindsets and preferences. Taking a one-size-fits-all approach to marketing and other business decisions wastes time and resources.

When planning business strategies, it’s necessary for seniors housing organizations and developers to ask questions such as, “What is the lifestyle of seniors in a particular market or segment?” and “Is the senior living alone or with family?”

It’s smart to tap into household-level lifestyle data, which can help you determine not just simple characteristics like demographics (age and income), but also localized consumer behavior.

The Role of the “Initiator”

Family decision makers — usually the children or relatives of the senior — play an influential role in the healthcare and living choices of a senior. These “initiators,” many of whom live within close distance to the care recipient, are also taking time off work to care for aging parents.

Not only do these initiators help with care and make care and housing-related decisions, but many also contribute financially to the senior’s living expenses.

In addition to affordability, convenience is important to initiators for eldercare-related facilities. Those organizations that deliver a high level of convenience to initiators, as well as the patient, will likely emerge as the organizations that thrive in coming years.

Given this, it’s wise to expand the scope of a market analysis to also include likely initiators. By using consumer analytics to identify the characteristics of your residents’ key decision makers, you can identify concentrations of other households that fit the same profile. This provides an added dimension to consider when evaluating current and potential markets.

Smarter Decision Making

Without doubt, the seniors housing market is growing and changing rapidly. Because not all seniors are created equal, the stakes are too high for organizations to simply purchase less expensive real estate in untested locations and then rely on demographics to paint the market picture.

Far too often, seniors are labeled as one big block, but it’s vital to remember that this cohort is comprised of people in many different life stages. This affects what they want, where they want it and what marketing messages resonate with them.

By using consumer analytics to segment your seniors housing customer base, you can make more informed market planning decisions and position your organization for success for many years to come.

 

Tim White is senior vice president at Buxton, a customer analytics firm that helps organizations make market planning and marketing decisions.

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