Who’s always right? The customer’s always right! Who’s the boss? The customer’s the boss! Except when he or she isn’t…
After 30 years, our industry remains less than 3 percent market penetrated, and the market is growing faster than the industry! With too few products too narrowly defined, we have tried to spin differently in order to sell to all potential borrowers. That seldom works, and it’s not working now. We have survived a mostly government-sponsored business while that sponsor has systematically reduced its targeted customer niche. Our smattering of proprietary products disappeared with the Great Recession. We cannot sell only what we have today if we ever intend to reach the mass market. We must listen carefully to all customers in order to design and offer the products that they actually need and want (and will buy).
The idea is to study customer profiles and circumstances to identify homogenous categories with finite and similar requirements, document the generic wants and needs of each segment, then identify (or build) solutions custom-designed for each. That effort can range from simple to extremely complex.
At the most fundamental level, customers either need or want a reverse mortgage, and that distinction is essential to the approach we take with them. And we already recognize the huge opportunity around the use of reverse mortgages as a financial planning tool.
FHA understandably prefers “income-driven” customers, but that doesn’t help the much larger group of “debt-driven” customers who are now even more underserved.
We hear daily of the importance of being able to age in place, but what about those customers who would prefer to age somewhere else? We don’t get to decide; they do!
Thought leadership is available, free on the Internet or for the price of a book. As company leaders, we are duty-bound to obtain the knowledge and apply it to our businesses.
George Moschis offers a gerontographic model based upon the theory of aging, and he identifies basic segments that represent four possible combinations of physical/biological and social/psychological changes that naturally flow from the aging process. A Healthy Indulger devolves either into a Healthy Recluse or an Ailing Outgoer, which can then become a Frail Recluse. Placing customers into these segments predicts behaviors (and thus buying patterns). Segmentation identifies watering holes and dictates what we sell and how we sell it.
Meanwhile, Shalom Schwartz and Wolfgang Bilsky identify eight distinct groups of seniors: Hearth and Homemakers, Fiscal Conservatives, Woeful Worriers, Intense Individualists, Liberal Loners, In-Charge Intellectuals, Active Achievers and True Blue Believers. Each of these groups has remarkably different beliefs, attitudes and behaviors, and can only be successfully engaged via targeted messaging.
So pick your favorites, but don’t ignore the others. And don’t forget that these are “photos” when we should be thinking “videos.” Change is constant, and even if you properly identify a customer with the right segment, that segment can (and likely will) change. Life events occur that thrust people into different life stages, which require different answers (and products). Remember, it’s not about the ages; it’s about the stages!
With thanks to Monte Rose and Marlon Fuentes, who have inspired me to embrace segmentation!
