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Private Duty Today
Welcome to Private Duty Today,
the bi-weekly electronic newsletter for Private Duty Home Care Leaders
from Leading Home Care ...a Tweed Jeffries company.
I'm Jason Tweed, Director of Business Development for
Leading Home Care, and Editor of Private
Duty Today.
Private Duty Today is published every
other Wednesday, and currently goes to over 7000 subscribers.
Private Duty Today is
a permission-based newsletter.
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Private duty home care is a highly competitive market
right now. Every week our firm gets several calls from people
learning how to start a non-medical home care agency. The largest
franchise organizations are expanding. For every franchise in a
location there are perhaps three "mom and pop" operations.
Membership networks and associations continue to add new
companies. And, frankly, our customer base grows daily.
With all this competition you might think your most dangerous
competitor is the biggest home care company in town. Or, if
you're the biggest, maybe it's the new company nipping at your heels.
In fact, your most dangerous competitor is not a company at all.
Your most dangerous competitors are individual families who hire
privately, and quality caregivers who work independently.
The competitor is "perception of value". Individual
families see what you charge, and they think they can employ privately
for less. Individual caregivers see what you charge, and compare
it to their own salaries. They see you as profiteering from their
hard work.
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The Same
Battle on Two Fronts
Many agencies make a mistake by lowering prices or raising
pay rates to combat perception of value. Agencies that use this
tactic often struggle because a dollar of gross margin multiplied by
the number of hours of service annually turns into big profit dollars
lost. Unfortunately, not fighting this battle turns into lost
customers and again lost profits.
The answer lies in the name I've given to this competitor.
"Perception" is simply a viewpoint. By altering the
point of view of your customers and caregivers you can change their
motivations. "Value" is not a measurement of money, but
a measurement of what you get for that money. So the best way to
reduce the danger of this competitor is to alter how your customers and
caregivers see the value of your profitability.
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Changing
Customer Perception of Value
First, let me be clear that when I talk about customer
perception I'm talking about existing customers as well as potential
customers. You need to demonstrate that while you are clearly
more expensive than hiring privately, your organization brings
significant value.
One strategy is scare tactic. Convince your potential customers
that hiring privately puts them at significant risk. In fact, it
does put them at risk, but I'm uneasy about this strategy for the long
term, and here's why. Your customers are getting smarter.
You used to be able to convince your customers that a criminal
background check and drug screen were unattainable privately, and
therefore valuable. But today Web savvy families and small
business owners know that these things aren't difficult.
Furthermore, by emphasizing them it reduces your credibility.
This tactic still works, I just don't know how much longer it will
work, and I wouldn't want to put my profitability at stake.
Another strategy is tax education. Every four years we have a
change in administration in Washington, DC. New Cabinet and
high-ranking appointees are selected by the President and his
staff. And every year (which still blows me away) one or two
highly qualified nominees turn down the position because they have
failed to pay "nanny taxes". Presumably these are
intelligent, well-educated, politically aware people who break the law
by not paying taxes on their domestic employees. In fact, many
individuals see caregivers, nannies, and housekeepers as "under
the table" employees. This puts families and the employees
at risk, albeit a slim one.
I like this strategy because while most families are capable of
managing payroll taxes and workers compensation insurance legally, most
of them don't want to be bothered. The inconvenience creates
perception of value for your company. Many of you even outsource
this task.
The final strategy is quality. This is one of the most powerful
strategies because it's impossible to replicate on an individual
basis. While your customers can learn how to do a background
check, drug screening, and even outsource payroll cost effectively,
they cannot effectively replace "gut instinct" when selecting
caregivers.
The difficulty with this strategy is that it has been difficult to
demonstrate because so many home care companies rely on their own gut
instinct and experience when selecting caregivers. I highly
recommend using modern science to quantify behavioral, personality, and
attitudinal traits of great caregivers, and also identify the factors
of caregivers that put your company and your customers at risk.
In my, not-so-humble, opinion our Caregiver Pre-employment
Assessment System is the best for this, and our Caregiver Quality Assurance
program is a fantastic way to demonstrate that to these customers.
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Changing Caregiver Perception
of Profits
Compared to your customers, changing the perception that
you are profiteering from your caregiver labor is easy. There are
three easy steps.
1. Be Honest.
Let your caregivers know that your company is profitable. They
see profitability as the difference between their paycheck and what you
charge. Make sure that they understand how those dollars are
used. Additionally, be honest about your profits. Profits
for companies create job security, growth, and value for their
employees as much as the owners. The nature of business is that
companies exist to make a profit off the labor of their workers.
By admitting this, and demonstrating the value to the caregiver, the
customer, and the community, caregivers are more than willing to except
that the owner takes a fair share.
2. Rewards and
Recognition. Caregivers work for you because they
receive value. They will tell you that the value is a paycheck.
Our research however contradicts this. Caregivers almost never
leave the agency because of money. They leave because of lack of
job security, lack of benefits they need, but most importantly lack of
recognition for the work they do. No one becomes a caregiver to
get rich. Let's face it, your caregivers do some pretty nasty
things for $12 an hour. They do this because they feel a
responsibility to be a giver of care. When you recognize that in
a public way, you let these caregivers know that you appreciate their
value. Furthermore, this strategy can be used to reward positive
(and profitable) behaviors. Reward people for years of
service. Reward them for dependability. Reward them for
recruiting caregivers. Reward them for referring clients.
By recognizing quality and rewarding behavior you make caregivers want
to work for you.
3. Share the
Wealth. In my opinion there are two ways to share
the wealth. Make sure your caregivers know that a portion of your
profits are going to be shared. One way to do this is through
profit sharing programs. These could be as simple as cash
payments for referring clients, or may be as complex as taking annual
profits and dividing it among your caregivers based on hours
worked. The other possibility to "share the wealth" is
to do good in your community. You already do much good for your
customers, but take that beyond your business. Become a public
supporter of your community. There are many ways to do this and
the benefits of a positive community relations program often yield
customers and caregivers. Make your caregivers proud to work for
your organization, and they will forgive profits on their work.
Not every caregiver can be convinced that corporate America is
just. There will always be caregivers who want to work
independently, and my opinion is, let them. As this industry
grows the value companies create in the minds of customers and
caregivers will grow.
Do your best work. Be good to those who write your paychecks, and
to those whose paychecks you write. If we do this collectively as
an industry we will see a time when the only competitor you will have
is each other. And then, the cream will rise to the top.
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Are You
Coming to Louisville? See You There
If you're serious about growing your business you owe it
to your sales staff to put them on an airplane to Louisville,
Kentucky. Louisville is where good sales people become great, and
great salespeople ... well, get certified.
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Private
Duty Business Builders Strategy RetreatTM in Columbia, Maryland
We hope you'll
join us in Columbia, Maryland on June 3rd as we join with
Maryland National Capital Homecare Association to present our Private
Duty Business Builders Strategy RetreatTM. This
is an opportunity for the key leaders in your private duty company
to come together to focus on strategic growth planning for your
business in the coming year. This dynamic, interactive strategy session
with America's leading expert on Private Duty Home Care, Stephen Tweed,
will help you explore the strategies and insights you need to develop
to grow your private duty home care business.
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