Marketing the Active Adult Lifestyle Community: A Look into the Future

In the early 1990s, several forward-thinking builders took a good look at what they were selling and marketing to early seniors or G.I Generation homebuyers. They came to three shocking conclusions:

• they were no longer just selling housing;
• the word retirement was taboo for people who didn’t want to live out their mature years with what they were doing now; and
• their communities offered very little recreation, other than a swimming pool, a small clubhouse with passive activities, and shuffleboard.

Market research told them (and the rest of the industry) that their “new” prospects:

• want a lifestyle change so they can meet new people, make new friends and neighbors, and partake in new activities;
• have the ability to live actively for another 10-20 years and that their lifestyle might change again; and
• do not consider themselves old at 55-65.

These findings led the industry to create a new vocabulary that included the words lifestyle environment, active adult resort community, 55+ living, on-site recreational amenities, and maintenance-free living. These words appealed to the way over-55 prospects wanted to live and helped to drive them to a new type of residential community. This new approach created a market segment that has matured to where one out of every four building permits issued today is for an active adult lifestyle community. It’s a far cry from 10 years ago when the market share was only 15 percent to 20 percent. By 2015, when the aging baby boomers begin to turn 65, this market segment could comprise 30 percent of all residential building activity.

As Americans continue to work after age 65 (currently some 30 percent to 50 percent of all senior buyers conduct some business either from their home or workplace), marketing strategies used to sell today’s active adult communities will not be as effective in 2006 and beyond. Builders and developers who continue to market active adult communities to households that want to leave crowded urban centers for the outer suburbs and warm-weather destinations will have to change their marketing strategy. Homes in these communities will be sold for leisure/vacation enjoyment, and active adult lifestyle communities will be competing with the second home and time share marketplace, as well as the hotel industry. Plus, you will see a migration to the urban core.

From my experience with helping builder/developers with their market forecasting and planning strategies, it is clear that the active adult market is quickly evolving into a volume market segment and progressive companies will have to be able to recognize cutting-edge trends and run with them in order to stay ahead of their competition.


Internet Technology and Multimedia Use

The widespread use of technology has sharpened builders’ marketing savvy with access to ongoing data about customer attitudes and preferences, the ability to track sales performance, and instant communication with prospects, buyers, residents, and suppliers. However, this trend is still in its infancy. By using technology to track today’s new home buyers and their preferences, we have only scratched the surface of technology’s marketing power. We should take this high-tech know-how to the next level by collecting information about prospects who are likely to enter the active market in the future.

Web sites. Web sites are not being used to their full potential. Market-wise builders will find many ways to use their web sites as data collection tools that profile current buyers so they can target similar households and increase their prospect lists in different areas or regions.

In the not-to-distant-future, builders might even allow prospective buyers to place a one- or two-day hold on a home site, model, and specific neighborhood through a web site before they physically visit the community.

E-mail. It is important to target smaller groups of prospects that can identify with our communities by providing information that gives them a reason to revisit. Sales personnel should to be taught how to correspond with prospects not the next day or by the end of the week, but within a few hours. If sales is unable to respond, then someone else should contact the prospect. E-mail is no longer an unfamiliar technology to our active adult customers, and most people who use this form of communication expect a response within 24 hours. Seventy-six percent of households use the internet to obtain information, do their research, and comparison shop before they make a visit. If we don’t have all the information for them right away, conversion ratios will go down and sales could be few and far between. In the future, builders will use e-mail for a wide range of communication with their customers on a regular basis.

Electronic and special interest media. Traditional mass media is on its way out and the mix of newspaper ads, direct mail, radio, and TV that works for us now will give way to non-traditional media and sources. Today, we are seeing the rise of specialty or niche magazines such as Where to Retire, 55+ Lifestyles, and Mature Living Choices that are capable of delivering qualified prospects who are ready, willing, and prepared to buy after two or three visits—not the five or six visits we have come to expect from active adult prospects in the past. Builders will lessen their dependence on newspapers with shrinking circulations and growing ad rates, and rely more on special supplements and sections that cater to active adult living.

Builders are beginning to change their media mix to consist of continuous publicity and public relations events, electronic newsletters, targeted direct mail, on-site events that create urgency, and testimonials or third party endorsements that give credibility to their community. In addition, compact discs, DVDs, and virtual reality videos are beginning to replace lavish, expensive brochures, except for the material necessary for pricing, neighborhood location, and other details that require constant changes.


Can You Put it On My Credit Card?

The travel industry fully embraced the over-55 age group by allowing them to earn frequent flyer miles, hotel points, and other rewards for purchases made with affinity credit cards and other credit card issuers. In the future, the housing industry will also embrace this group’s eagerness to buy now, pay later, and earn points. One smart builder is already allowing tenants to pay their monthly rent with a credit card. It is a safe bet that very soon we will see American Express announce a program in the for-sale housing market so buyers can use their credit cards for making reservations, down payments, and monthly HOA fees. When this happens, VISA and MasterCard will certainly be close behind. After all, the 55+ group is already credit worthy, and there’s no need for us to require them to fill out lengthy financial forms again and again.


Telephone Call Centers

The use of telephone call centers is an emerging trend and will become commonplace in the next several years. Builders will keep the sales personnel on the sales floor selling and qualifying and let a telephone call center field requests for only pennies per call. The call center will collect all the prospect information, get an idea of when the prospect plans to visit, and even send e-mails on behalf of the sales staff confirming the time and place. This will allow the sales team to get an initial profile of potential homebuyers even before they visit, and enables them to devote more time to handling onsite traffic and following through with existing prospects.


Referral Services

In the future, more builders will be generating leads not only from their own web sites, but also with online tie-ins to established new home referral services such as American Home Guides, Homebuilders.com, Homescape.com, and NewHomeServices.com. Tying in print advertising with websites established by local-area newspapers and magazines will become a standard marketing procedure.


Educate Realtors to Forward Qualified Prospects

Most realtors do not deliver qualified prospects to active adult communities because they have not been educated to understand this form of lifestyle living. For the past several years they have been happily reaping tremendous success selling primary and second home properties in an unusually strong housing market. Many realtors feel that there is not enough active adult inventory available for it to be profitable. However, as more and more active adult communities enter the market and resale inventory becomes available, it will be necessary for the industry to develop programs that will show realtors why this category can be a lucrative market with income comparable to what they make from selling resale properties.


Build a Community Brand

Many of today’s home builders feel that each new community they build must have a new name, but big builders have already proven that homes sell faster when prospects recognize that a brand meets their requirements for quality and price. Consider the successful brands like Four Seasons by Hovanian; Heritage and Greenbriar by US Home; Regency by Toll Brothers; and Trilogy by Shea Homes. If you don’t believe that this type of branding gives public and large-volume builders extra business through referrals and creates an expectation that their product will be a step above the crowd, then you are out of touch with reality. Over the next several years, more builders will develop their own brand product that will help prospects understand the level of construction, service, warranties, and delivery that they offer.


Sell Value Added, Not Price or Market Share

More and more, market-savvy builders will not be competing on price alone, but rather through constant research to find out what their active adult customers want, and are willing to pay for, in a new community. Take a look at what some of the manufacturers of luxury automobiles, appliances, and other products have done with their continuous new product showings. You will never see them selling a new product with last year’s features. In fact, they always make sure that their new product is backed by extensive consumer research and has state-of-the-art features that they know consumers want and will pay for.

In the long run, home builders who do not conduct ongoing product research with current and future prospects can expect sales to sag and market share to drop. Try a simple exercise. Assemble your architect, interior merchandiser, and sales director and have them conduct a series of design focus groups for your active adult buyers who have lived in your community for nine to 12 months. Ask them this question: “Now that you have experienced living in one of our homes and in our community, what would you like to add, change, delete, or wish we offered you the opportunity to include with your purchase?” You’ll be surprised at the results and the information you gather will help you to successfully introduce new product, amenities, and land plan designs that will keep your company competitive as the active adult segment continues to evolve.

Good luck in the next several years.


William E. Becker

With 40 years’ experience marketing active adult lifestyle communities, William E. Becker, managing director and president of The William E. Becker Organization, has taught and written extensively on this subject. He has been presented with many awards for his accomplishments and is a popular speaker and industry conferences. Mr. Becker is a charter member and past president of the Institute of Residential Marketing and has been named a Legend of the Industry by NAHB’s Sales and Marketing Council. He can be reached at (201) 833-2610.