“Running a business, especially a senior living community, definitely isn’t an easy job, and everything we do must be looked through the lens ofhow it will affect your team and your residents financially,” says Malissa Illiano, Senior Consultant & Director of Market Research at SageAge Strategies. “Luckily, we have strategies and tactics for determining the financial risk of a new product or service, and those strategies and tactics – you guessed it – involve market research.”
Today, we’re continuing our market research series with a closer look at how market research in its various forms, big and small, can help you and your team reduce your financial risk when undertaking a new venture. Setting yourself up for success is important, and by conducting market research in an informed way, you can mitigate risk and do your best to ensure a stable future for your community.
First, let’s review some of the things market research can teach us:
- The demand, or lack thereof, for your product or service.
- Whether your new product or service has staying power or is just a phase.
- How to make your proposed product or service better and more applicable to the community you want to serve.
- And lastly, ideas or opportunities you may never have even considered.
These benefits might give you an idea of how market research can be used to reduced financial risk, but to get more in depth, let’s look at various financial risks you might face at your community and how market research and the analysis of relevant data can help you mitigate those risks.
The risk: Wasting time (and therefore money) on leads who may or may not be likely to convert to paying customers.
What market research can do: Market research can help you do what’s known as predictive scoring. This strategy gives you a clear way to identify who your target market is, what state they must be in to potentially convert and how to identify those who fit that description. By prioritizing your leads according to their likelihood to convert, you focus on opportunities that are likely to lead to success, as opposed to wasting time on leads who aren’t quite ready yet. The demographic information market research provides can be a huge help here.
The risk: Approaching a qualified lead with irrelevant information and thus alienating them – and losing the sale.
What market research can do: Market research and data are excellent for creating criteria to segment your lists. Like in the above example, this data can give you clear guidelines for what makes a particular lead fit into a particular category. Then instead of doing the old “spray and pray” form of marketing, where you hit everyone with the same marketing messaging and hope something sticks, you can segment your lists according to their state in the sales funnel and approach them with relevant information that’s more likely to move them along in the process.
The risk: Losing money through inefficient processes, both through wasted time and decreased employee morale.
What market research can do: Analytics can give you insight that will help you streamline and optimize your programs. This not only reduces the cost of implementing those programs, it also improves how you serve your customers. Data doesn’t lie, and it can easily highlight bottlenecks and failures in your processes so you are able to remedy them.
The risk: Spending too much money and resources on an idea that seems at first to be a long-term success, but instead turns out to be a short-term opportunity.
What market research can do: The health of any business can be measured in part by how long it can weather a tough financial storm. All markets ebb and flow, so having a financial safety net is an important piece of a successful, long-term business. But, if you put all your eggs in one basket and that basket turns out to be a dud… well, you get the idea! Market research can help you mitigate the financial risk of a new venture by showing you whether it has staying power and a long-term future, or if you’ll quickly saturate the market and only see profits for a short time. Data can tell you if you should put all your efforts behind one big push, or if – and this is more likely – you should diversify and pursue a variety of options.
The risk: Competition that draws from your potential profits.
What market research can do: Competition is inevitable. It will always be there, so planning for it is critical. Luckily, market research can give your team deep insight into what competition you will face, as well as what the competitive market might look like in the future. It can pull on historical data to uncover trends and give insight that will let you plan for potential losses due to your competitors.
Playing a guessing game when it comes to your potential financial risk is like playing Russian roulette with your residents’ and employees’ future, as well as your own. By conducting smart market analysis and applying what you learn to your potential risk factors, you can mitigate your risk and ensure you move forward on stable ground!