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:

  1. Are there marketing lessons we can learn from this?
  2. 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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