Selling is Hard, Execution is Harder: Seniors Housing Operators Face Increased Complexities That Few Fully Understand and It’s Crippling Revenue and Cash Flow with No End in Sight
Expect to see seniors housing operators focus on the complex operational aspects of assisted and independent living communities while sales and marketing experts take on the critical task of driving occupancy, revenue, and net operating income on behalf of owners and investors.
Let’s talk about the business of seniors housing: You have a 100 unit assisted living community in an affluent market that cash flows $7,300,000 per year with a $1,440,000 net operating income and the asset and operation is valued at $23,000,000.
Your operator hires a salesperson for that asset with a compensation plan of $65,000 per year- all in, provides basic onboarding and sets them loose. When he or she fails to perform, despite having lots of assisted living sales experience and blames lackluster performance on fierce competition or COVID-19, the operator concedes and fails to push back because those are valid excuses. Everyone holds their breath and waits…and waits…and waits for things to turnaround.
Tensions rise as investors push back and demand action. Operators insist it will get better with more time and that competitors are experiencing the same thing so not to worry. When the conversation turns to training implementation and investing in professional development to improve skill set and performance , executives balk. Invest in salespeople? I don’t think so.
A high performing, profitable assisted living community can be a cash cow; yet a scarcity mentality for talent keeps operators, investors and many developers from maximizing revenue potential out of fear they may invest in someone only to see them leave and go to a competitor.
Can I remind you of the numbers? A business valued at $23,000,000…and if you have five of them that’s a $115,000,000 valuation, cash flowing $36,500,000 with a net operating income of $7,200,000 per year! I’m a small business owner with just 11 employees and I invest more in professional development, employee retreats, maternity leave, gifts, perks and bonuses each year than many operators do in an employee’s lifetime. I can tell you without a doubt that the investments made have paid off tenfold in employee performance, satisfaction, retention, and business outcomes.
Investing in people, particularly as it relates to your assisted living communities and your salespeople who are the engine of your business, is critical. Unless you are willing to pay to attract top talent and incentivize them well enough that they will perform on their own merits, you have no other options.
Senior living sales professionals are seriously undervalued and it’s a shame. So here’s my point: If you hire someone who is inexperienced in sales or experienced but “cheap” (great talent know their worth) and not true sales talent with a track record of results, you are going to have to invest in their sales training to create the sales talent needed to maximize the value of your seniors housing asset. These are your options my friends.
LET’S DIVE DEEPER; I WANT YOU TO UNDERSTAND THE WHY BEHIND TRUE SALES TALENT
I’m a seniors housing expert and entrepreneur who has been selling my entire life, has access to incredible customer relationship management software, a proven and effective sales system, and an entire team to help me ensure nothing falls through the cracks; ever.
Even with all that in place I struggle to keep up with the many details.
On the same note, developers are juggling many moving parts, such as-
- Three new developments with a total of 350 units opening in the span of four months
- One community is independent and assisted living
- One assisted living and memory care
- One all three levels of care.
- Each community has its own unique footprint in its market
- There are three different investor groups and two different operators
- Each deal is structured differently
- All three developments have unique challenges and complexities
- The independent and assisted living community has had two different executive directors in the span of three months (and they are still under construction)
- The assisted living and memory care community’s salesperson is on medical leave after being employed for just 12 weeks
- The independent, assisted, and memory care community has a strong salesperson and executive director so that one is in a much better position than the other two but has a strong competitor less than a mile away that is deeply discounting rates
- More concerning is that two of the three new developments in this portfolio have under ten deposits secured and worse yet, the deposits are The third community has 21 deposits; but all three are far behind proforma projections
- Tensions are high between the operator, developer, and investor groups and no one knows how to get momentum. There is a lot at stake, the operators continue to say things will turn around, that the slow starts are due to COVID-19 and to just give it time.
NOW LET’S LOOK AT YOUR ASSISTED OR INDEPENDENT LIVING SALESPEOPLE
I’ll be frank: Most seniors housing salespeople are minimally paid and clearly not in it for the money, but the difference they make in seniors’ lives. In most cases:
- There are few if any actual sales systems in place or investments made into their professional development, i.e., on how to close a six-figure sale, let alone virtually
- The CRM or customer relationship management software is most often clinically or financially designed to support ops; and the sales component is an after-thought making it slow, cumbersome, and difficult to use
- If there is a sales focused CRM in place, the sales team is either not using it strategically, or not being held accountable to the system
- Salespeople are consistently pulled into ops whether it’s manning the front desk, running activities due to a director who is off, or assisting with paperwork
The sales process is complex, no one doubts that. There can be two inquiries in a single day with the following and vastly different situations:
- A recent widow who is exhibiting signs of dementia, lives alone, has gotten lost twice in the last month and is challenging her kids on their decision to have her pack up and leave her home
- She is confusing her medications and has landed in the hospital three times over the last 45 days due to falls and the resulting injuries
- The youngest daughter is local and wants mom to live with her while the oldest daughter lives in a different state but feels she needs to be in a secure assisted living community with a memory care unit because she is in the medical field and doesn’t feel her sister can handle the responsibility
- Mom must sell her home, car and give away her belongings and is now avoiding her elder daughter because she thinks she wants to “put her away”
- There are a lot of family, moving and financial dynamics to work through, not to mention the dog- the community doesn’t allow pets and mom refuses to live anywhere without Cookie.
That was this morning. This afternoon, a prospect called in requesting information who had the following situation:
- The prospective buyer’s stepfather is depressed, not eating, and refuses to change his clothes his dehydration from not eating/drinking well landed him in the hospital where he is being discharged in three days and he can’t go back home per his doctor
- He has no will to live, says he is a burden and the family isn’t sure if it’s due to a recent change in medication or the fact that he is isolated due to his friends all dying
- There are two sons involved and while one wants him to move the other refuses to help contribute financially and insists it’s wrong to send dad to a “home”
- Dad is a veteran and it seems he will qualify for veterans’ benefits, but the severe depression and refusal to eat is a concern for the director of nursing
These are serious, life altering problems with no clear-cut solutions. When families like this call your community to get information, their first experience is typically with an individual who is untrained in sales , who talks more than listens, is distracted, trying to qualify the “lead” and fails to exhibit empathy. They tend to commoditize assisted living as if it were a product on a shelf rather than a life extending, enhancing move.
While the salesperson thinks it’s all about price, for the family, it’s about their mom or dad; it’s about finding someone who hears what they are saying, who has expertise and can advise them what to do because they simply don’t know.
Do you see how serious this is? It is so troublesome to think that we plug people into such a vital role in our senior living communities, with little to no training. From a business perspective, we charge them with the sole responsibility of generating the revenue and cash flow needed to run operations. Ten years ago, this was okay to do because there were fewer options for the consumer. Today, it’s unacceptable.
The bigger issue is that operators know their salespeople need significant training , coaching and support but they don’t have the time nor the funds to get it done. They are in a tough situation and there is no easy answer.
KNOWLEDGE IS POWER; GAIN IT AND HAVE A BREAKTHROUGH
The goal of this blog is to help you grasp how serious this situation is. I have clients in the seniors housing space with thirty years of experience, who are incredibly good at developing and operating communities; yet are concerned they may not be here in two years due to current occupancy challenges, increased expenses, development cost and pricing thresholds for the consumer.
“We can’t do better until we know better.”
ADD IN SCALE AND YOU WILL SEE THE BIGGER PROBLEM
I started this blog off with a developer with three locations coming out of the ground. Now, take this one scenario and multiply it times thirty different organizations with all different types of product, portfolio size, management experience and stages of development.
CONSIDER THE VOLUME OF LEADS AT YOUR ASSISTED OR INDEPENDENT LIVING COMMUNITY
Your salespeople are working with many prospective buyers. I shared just two scenarios- now multiply that times ten or twenty depending on the size of your community. Yet rather than sharing each lead and working through it with the leadership team at morning stand up, brainstorming solutions, introductions to key residents and staff, identifying strong next steps to convey value and demonstrate your community’s expertise; leads are left to sit with little to no thought at all. In most cases if a lead is not deemed “hot” it’s:
- Put in the database (nothing more) if your salesperson is compliant to using it; otherwise the details will be left on a sticky note or on a notepad for future reference
- Followed up with via a long email with lots of attachments to include floor plans, a pre-recorded video tour and a reminder for the prospective resident or family member to “call when ready”
- If there’s no reply from the prospective buyer, that lead that you paid $500 for on average is lost; coded in the CRM as lost or never put in the CRM in the first place
YOU MUST THINK DIFFERENTLY BECAUSE THESE ARE DIFFERENT TIMES
When you start to see each lost lead as $120,000 in lost revenue (over a two-year stay), because every lead is hot, you will see the magnitude of my frustration. Those two leads I used as an example, who called with a need and who were essentially blown off resulted in over $200,000 in lost revenue. Even more important, the senior and his or her family is left without a solution to their life-altering and very real problem.
I made this a two-part blog series because I can’t educate you without helping you understand the why behind properly training the individuals responsible for the sales and marketing of your senior living communities. Once you get it, you will never see this aspect of your business the same.
Today we looked at the complexities of the sales process within the independent and assisted living, memory care and life plan communities. In part two of this blog series, we are going to dive into the very difficult task of delivering on the promises made by your sales and marketing people as well as the site level leadership team.
Think selling is hard? Once you see what’s involved in the service aspect of seniors housing today, you will see exactly where the disconnect is and what to do about it. Ultimately that will be a win for investors, developers, and operators because alignment is vital to success.
Have questions, want to discuss a strategy to equip your salespeople and executive directors to sell in a COVID-19 world where everything is done virtually? Email firstname.lastname@example.org , text me at 813.390.3349 or schedule time to talk here .