It is probably a crazy idea, but I keep wondering if doing some form of pay what its worth would work in senior living.
There have been a number of stories about companies that offer “pay what you can” or “pay what you think it’s worth” plans for their products and services including this recent one at Fast Company. It may seem far fetched, but every time I see one of these stories I find myself wondering two things:
- Are there marketing lessons we can learn from this?
- Could something like this work in senior living?
Senior Living – Probably Not, but Maybe
Most of these “pay what it’s worth” programs are selling products or services that have significant soft costs, so that if one person or a few people choose to not pay it would not put the enterprise in jeopardy. This is not true with senior living. We have hard per-resident costs every day. The other differentiator is that, in restaurants, people have some idea as to what would be fair or reasonable for a meal because people eat out a lot. Senior housing consumers don’t have that kind of widely known basis for comparison
Why It Deserves Some Consideration
In every business, including senior living, the process of interacting with customers involves setting certain expectations of what we can deliver, and what we cannot.
Once they become customers/residents, each and every moment they make judgments about how well you are doing compared to their interpretation of the expectations you have set. If you don’t meet their perceived expectations they are unhappy with you and hopefully will let you know, but even if they are not letting you know they will tell others. If you are meeting expectations they won’t be particularly unhappy, but neither will they be particularly praising you or selling you to others.
If you are exceeding expectations they will be delighted and, even more importantly, they will be telling other people about how great you are. Pay what it’s worth is a great way to keep the concept of exceeding expectations in the forefront for the company, for your team members and for your residents and prospects.
How It Might Work for Senior Housing
I see a few ways that it might be used to boost occupancy and keep everyone focused on exceeding expectations:
- Services Only – Most senior communities in one fashion or another have levels of care and charge based on those levels of care. I could see a senior community sending out a bill each month that includes the service component, a suggested price and an offer to pay that amount, if your facility did not meet expectations, pay less. If service was exceptional, pay more. If the service met basic expectations, pay the listed amount. Either way, let us know how we did or did not meet expectations and how we could raise our valuation. It should be clear that for exceptional service some or all of that money would go to the line staff who provided those services.
- Promotional Incentive – Here is what it might look like: You offer a prospect the ability to move in for 30, 45 or 60 days and for whatever the promotional period you send them your standard bill but tell them they can pay what they think it is worth. At the end of the period, people would move out or pay the standard charge. It would be a powerful way to tell prospects we put our money where our mouth is.
- Food Only – More and more senior living communities are opening their dining services to the public. This is a brilliant idea because it gets the senior community more deeply embedded into the community and provides additional cash flow. I can see how a senior community could offer food to the public on a pay what it’s worth basis that would generate a lot of buzz and traffic for very little risk.
Your turn. Do you see any lessons in the phenomena? Do you have any ideas about how “pay what it’s worth” might work in senior living? Or is this just a dumb idea?
Steve Moran
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I am a CCRC resident. I’m going to ask a fundamental question that probably was answered here long before I learned of this blog. What is meant by “Senior Living” here? All permutations? — CCRCs, “active senior communities”? Assisted Living? Nursing homes? Independent with AL only? Nursing homes only? Subsidized housing for the elderly?
If the answer is “all of the above,” then I think the “pay what you think it’s worth” concept would vary greatly. CCRC residents would LOVE to reward individual staff members (to pay them based on worth), but tipping is prohibited. The annual Employee Appreciation fund drives don’t permit individual allocations, even though the directed allocations would be anonymous (to prevent staff from figuring out who has the deep pockets leading to favored treatment).
A comment about “bad service” in nursing homes. My mother had problems with some staff treatment of my father but she hesitated to complain because she feared it would make things worse —-unseen retribution at my father’s expense…. she had observed that happening with others. (She would see another patient complain and would then observe the patient having to wait longer for help with cutting meat, wait longer to be taken back to his/her room, wait longer in the hall for a bath.) So I would say the complaints actually registered are the tip of an iceberg. Would word get out that someone is paying less (concept of “pay the worth”), resulting in a subversive, clandestine uptick in poor treatment?
I wonder what would happen if open tipping were permitted to award good staff in any kind of senior living. It would be done a bill-paying time and funneled through the provider’s payroll. That way the employer could see who is being rewarded to make sure the deep pocket isn’t getting all the attention. They can still be on the lookout for the manipulators in AL or the SNF who worm their way into the hearts and pocketbooks of the patients without family to monitor what is happening. My father walked in to visit a friend in a nursing home at a late hour and saw some “special treatment” being administered to his male friend. That friend’s attorney was soon asked to change the will, recognizing this special health aide by name with a nice lump sum amount. Let’s just say it was the world’s oldest profession with a SNF twist. Anyway, I’m sure providers have to watch for things like this, and that will never change.
But why don’t we address open “tipping” at the same time we’re talking here about “pay what you think it’s worth”?
Hi Jennifer:
You make some great points.
In answer to your first question Senior Living is all of the above.
My gut reaction is that tipping is a bad idea, but on reflection it also seems that residents ought to have some way of rewarding, saying thanks to staff who do an exceptional job. I think it might be a worthwhile article.
Steve