Your assisted living occupancy right now is a direct result of the investment you are making in the hiring, compensation, and training of your sales and marketing directors. Industry-wide, just 9% of people who inquire into an assisted living community will move in. I’ll just let that sink in for a moment.
Like it or not, selling is the only way to increase profitability in your assisted living communities; operators have cut everything there is to cut. From here on, it’s all about growing top line revenue. The only way to do that is to net up and grow occupancy, meaning increasing sales portfolio wide.
Breaking it down even further, we must look at the very people responsible for generating new residents- sales and marketing directors. They alone can make or break your assisted living budget. That’s a lot of power (and pressure) considering what’s at stake.
When I was a kid and lived in Ohio, my mom worked for an architect who would send her to Kentucky Downs to bet on horse races for him. He would literally hand her a wad of cash and send her off for the day. Ed taught my mom everything he knew from selecting a horse based on form, weight, class, course and distance, and jockey selection. Sometimes she just trusted her instinct! Over time she grew good at picking winners. Looking back, I’m sure this is one of the coolest jobs my mom ever had.
Horse racing is a risky business and when betting on a horse it’s vital to do your research to increase the odds of a win. The same holds true when hiring an assisted living sales and marketing director! This individual is one of the most valuable hires you will make when developing or operating a senior living community and not unlike gambling at the track, can determine the fate of your financial performance. Hit budget and you pay the bills; sell every available apartment and you create incredible returns and community valuation.
Just as my mom was taught a system to bet on horses, which put the odds of success in her favor, it’s time assisted living owners and operators put a system in place that positions them to succeed when hiring sales and marketing directors. The days of stealing the competition, who you believe to be trained to sell, are over.
Here are just a few traits to look for in a winning sales and marketing director who will meet and exceed sales performance expectations. He or she must be:
If a prospective hire checks all three boxes and you put them in the right environment, meaning culture; the odds of hiring a winner are in your favor.
Imagine what would happen if a trainer just picked a horse at random because their current horse had an injury and could no longer train or race? Then the horse is brought to the farm left it to its own devices, and everyone hopes it would know what to do because the person you bought it from said it had incredible potential and had shown possibility in prior races. It’s fair to say that for this horse to be successful, you would need a whole lot of luck!
Wow sounds like the hiring process in assisted living for sales and marketing directors!
The same holds true for that very important individual you hire to put in the sales seat at your assisted living community. While it is costly to invest in salespeople; meaning to compensate and incentivize properly, onboard and train them to sell effectively; it costs more to leave them to their own devices. It’s not up to them to plug and play once hired; it’s up to you to properly train, reinforce, inspect, coach, and reward everyone based on sales performance.
No assisted living community is ever going to sell itself. It doesn’t matter how innovative, well-designed, or beautiful; if there isn’t a strong salesperson to sell the community, it will flounder. With new development costs at all-time highs, I find it incomprehensible that an investor would allow an operator to put a sales and marketing director in the sales seat who has not been properly vetted, trained, and held accountable to specific outcomes that will ensure the community’s lease up success.
There is such a disconnect on the value of individual seniors housing sales and marketing people that it doesn’t even come into play when strategizing how to turn an underperforming asset around. What first comes to mind is to drive more leads followed by running more promotions. Yet this is not what gets people to buy.
What does get people to buy assisted living is a strong sales and marketing director who understands that selling is simply helping people get what they want. To learn what people want, you must ask, and that my friend takes skill. In fact, for top performers, selling assisted living is easy. Each day communities have leads inquiring to learn about their communities. Those people who are trained to find needs, build value, and schedule the next step; meaning an on-site tour within 48 hours, will do so, ultimately moving 50% of those individuals in.
Those sales and marketing directors who are put in the sales seat without proper vetting, compensation, and training will do nothing more than take orders. They will ask one question, “what made you call?” and upon hearing what they say via their own interpretation and opinion, verbally dump everything they can think of to include pricing, discounts, room sizes, operator details and more; looking for that quick-easy sale that simply does not exist. If it did, trust me our occupancy numbers as an industry would look a lot better than they do.
There are no quick easy sales. Just as there are no natural born salespeople. Sales, just like salespeople, must be created and this is the big AH HA that operators are missing and why sales, occupancy, and revenue will continue to move forward incrementally versus quickly. We are getting those people who have no choice but to move in, but we are failing to build value and convert those who may be interested in but not necessarily in a position to have to move. Sadly, those individuals are going to wait until they too must move because we are not teaching our sales and marketing directors industry-wide to emotionally connect and build value regarding seniors housing and care.
There is nothing more exciting than watching a thoroughbred on the racetrack, just as there is nothing more exciting to us assisted living nerds than watching a community fill to capacity and begin to build a wait list. For assisted living operators and investors, there always seems to be that one person, that racehorse who outsells everyone else, producing month over month and consistently keeping the community full. It’s time to create an army of these individuals!
Operators are in a predicament. Much of their value has been in their ability to manage costs and produce a strong balance sheet. With nothing left to cut, the pressure is on to increase margins and the only way to do that is to grow top line revenue.
To net up and grow sales, most operators rely on driving leads while increasing discounts and incentives. Yet with a steady flow of leads coming in and only 22% being converted to on-site tours, that discount means nothing. People are not going to move in if they’ve never seen the community firsthand and this single, small detail is proving evasive to most operators. The fix is so simple that executives don’t see it and when put in front of them is like the blinds being opened in a pitch-black room. “Oh, I see; why didn’t I see that before?”
While assisted living today is the skilled nursing of yesterday, there is still not a direct admit model. Adult children and their loved ones will not move until they see the community in person. This tells me we have a long way to go in turning seniors housing occupancy around because we are doing an incredibly poor job of getting people to see the value of coming in to visit.
Prior to the pandemic, 45% of all inquiries converted into an on-site visit. Today, it’s a mere 22%. Of that 22%, 35% are making a move which is great but not enough to see the rapid growth we need for a fast financial recovery in assisted living.
Let me make it clearer because it’s so simple people are missing it, and these are incredibly smart people.
TYPICAL AL SALESPERSON MONTHLY SNAPSHOT
50 leads x 22% conversion to tour = 11 tours x 35% closed = 3.85 move ins – 4 outs = NET -0.15
-0.15 x $5,000 = $(750) x 12 months = $(9,000) in LOST REVENUE
STRONG AL SALESPERSON
50 leads x 50% conversion to tour = 25 tours x 35% closed = 8.75 move ins – 4 outs = +4.75 NET
4.75 x $5,000 = $23,750 x 12 = $285,000 in new REVENUE GENERATED
Something as simple as capturing and converting new leads into on-site tours can impact revenue by $285,000 simply because of a solid month of selling compared to a modest one. That is a good $57K in increased NOI or a valuation growth of $500,000.
Operators continue to fail to see the value of investing in and hiring people who can do the very difficult job of selling to seniors and their families. This is an incredibly complex role that involves a skill set unlike any other: The ability to:
It’s no wonder people in ops tend to shy away from sales; it’s a tough job!
Stop doing the same thing and expecting different results! If you are ready to rock-n-roll and get empty apartments filled by year’s end, here is your action plan. Remember, you must execute to see results:
1. Assess your current sales team across your entire portfolio and put growth plans in place: This means run performance and behavioral assessments to understand what their natural and adaptive sales behaviors and capabilities are and review associated metrics to see how each person stacks up to their 90-day trending performance
2. Identify trends within the sales process that are impeding your ability to move new residents in: Is it a poor inquiry to tour conversion ratio or a poor tour to move in conversion ratio? Are you getting a steady stream of new residents but losing so many out the back door due to death or higher levels of care that you can’t net up and grow? Where is the specific barrier?
3. Train your current executive directors and sales team to close those performance gaps that are limiting your ability to grow top line revenue. If you don’t change what you are doing, you will continue to get the same outcomes; it’s a fact. Wishful thinking and waiting it out are not going to solve your occupancy problems. Rolling up your sleeves and putting in the work will.
4. Inspect what you expect: The days of one and done are over. You can’t hold a seminar or have someone read a book on selling and expect them to produce results. Assisted living sales and marketing directors are people, who like you- hate change! You must train, evaluate, retrain, and reinforce, and then recognize when people step out of their comfort zone and implement those new skill sets.
5. Push velocity: To get back to pre-COVID-19 occupancy, you must increase the level of income producing activity that will result in dramatically increased move ins. Meaning that your assisted living sales and marketing directors are going to need the stamina required to push through third and fourth quarters producing consistent results month over month that far exceed what they are doing right now. There is a lot of traction to make up and the demand is there; what isn’t is the sales ability and performance needed to get buyers to move.
Your sales and marketing directors hold a lot of power, it’s time to give them the respect, compensation, and training they deserve. A community sitting at 96% occupancy, selling at market rate rent, without leveraging paid referral sources, is worth the pivot. It’s time to cultivate an entire organization of racehorses who know how to win the race month over month, year over year.