Occupancy and Rate; When Is Seniors Housing Going to Stop Order-Taking and Get Serious About Top Line Revenue Growth?
Operators have cut everything they can from operational budgets to the point that there is very little left to cut. It’s time to move from managing a budget; to managing a business and a thriving one at that!
I have yet to figure out why seniors housing owners, operators and investors refuse to put elbow grease into the proper sales and marketing of their independent and assisted living, memory care, continuing care and active adult communities.
I know, I know you think you do; but the reality is the industry is full of order-takers. The mindset we have is a wait and see approach. If we wait long enough, the Boomers will eventually come, if we wait another month or two the community will turn around on its own, if we wait until the “busy” season, we’ll see an uptick in occupancy. It’s maddening!
Why you ask? Because I know what’s on the other side of all that waiting- massive success. Seniors housing is an investor’s dream when financially optimized. We have a recession proof product that everyone will need at some point in their life.
Yet we can’t break the 90% occupancy threshold?
There is always a reason for an occupancy plateau, whether competitive pressure from new development, prices being too high or simply not enough demand. Or my favorite, “our occupancy is right in line with the industry.” It has become common practice to pass the buck as to why a community is underperforming financially even when it’s operationally sound. If you want to turn the tide and get proactive, rather than waiting it out, continue reading. If not, perhaps its best you close out this blog right now.
SENIORS HOUSING MARKETING IS NOT FOR THE FAINT OF HEART
Strong financial performance in seniors housing requires hard work, but the rewards are worth the effort. If there were an easy button, operators would have pushed it a long time ago! Sales and marketing of seniors housing communities is subpar at best.
In fact, while the industry uses these terms interchangeably, marketing and sales is nowhere near the same. Marketing is all about branding and lead generation while the role of sales is to convert those leads into new customers. Executing these two roles requires completely different skill sets.
Marketing is extremely complex and demands an individual who is dedicated to being on the cutting edge of what’s happening in the digital world. There is tremendous expertise that is needed to properly cultivate a strong presence both online and offline. While creating an ad, running a direct mail campaign or designing collateral is easy for most marketing executives in our space; optimizing a website, writing and distributing weekly content, building sales funnels, using keywords, SEO, retargeting and closely monitoring associated metrics is like a foreign language to most.
Every effort and spend must be tracked and measured to determine what is working and what’s not; as well as to determine return on investment (most seniors housing organizations have no clue what that number is; they just continue to spend with a blindfold on).
SENIORS HOUSING SALES IS SEVERLY MISUNDERSTOOD BY OPERATORS
If marketing is Spanish, then sales is Chinese; it’s a whole other language and completely foreign to most people. Sales is the engine that drives the revenue in your business. Imagine what would happen if we only put gas in our cars once a year? We wouldn’t get very far! Salespeople need proper sales training and consistent recurrent training to be successful and it simply does not happen.
Sales has historically been an afterthought in seniors housing and something to be invested in when there is time or money to do so. As we can see in looking at industry metrics, we’ve had little time or money and it shows in investor returns. As a result, investors are beginning to look elsewhere for returns.
Mad at me yet?
THE BUYER EXPERIENCE WOULD EMBARRASS YOU AS AN OWNER: A PEEK AT THE BUYER JOURNEY
Seniors and their adult children are referred to assisted living or memory care by a trusted physician or friend, while active adults are referred to independent living and continuum care retirement communities or maybe life plan by financial advisors or residents of communities who think it would be a good move…Something sparks a search.
MARKETING: STARTING A SEARCH, WHAT’S IT LIKE TO BE A SENIORS HOUSING BUYER?
Most people will start their journey with a google search and be snagged by a third party paid referral company, posing as a seniors housing operator. The individual calling assumes that the person they are speaking with has their best interest in mind; not realizing that a referral fee will be received, upwards of $5,000 (or the first months rent) once the caller moves into one of their “partner” communities.
What the caller doesn’t realize is that while the best community might be just two miles from their home and tucked back off the road, they will never hear of it unless there is a paid referral agreement in place. What this means is that good, hard working operators who refuse to pay for referrals, won’t even show up on the first page of a google search. It’s frustrating.
Once on an operator website, what the inquirer will find is lots of content about the company itself. There will be photos of the communities, void of people (meaning empty restaurants, gyms and apartments) and most likely a form to request further information.
If an auto-responder is set up, upon filling out the form, an email will be sent from the community with a multitude of attachments: a brochure, floor plans, pricing, specials and an event calendar offering fun from bingo and chair yoga to Bible study and trips to Walmart. Are you excited yet?
If there is not an auto-responder, odds are the inquiry will be ignored altogether. If the inquirer is lucky he or she will receive a response within a week (when time permits as web leads are considered cold by most salespeople).
Unless a call is made direct to the community requesting a tour, nothing will happen beyond this point. While you may try to convince yourself that this simply is not true, walk through the customer journey as a prospect yourself; find out what it feels like personally to try and learn about independent or assisted living or memory care. You decide if the process and experience is acceptable.
If there is an autoresponder and the website is integrated into the database, the inquirer might begin to receive a monthly newsletter and event invites, nothing more.
SALES: CALLING IN A TIME OF NEED, WHAT’S IT LIKE TO BE A SENIORS HOUSING BUYER?
To become a lead, a prospective buyer had to have heard about the community somewhere (if only we asked). Whether a referral, drive by, event invite or ad; there was an event that lead to an introduction to your community. Today, up to 50% of seniors housing leads inquire via the web.
At some point prospective buyers will take the next step and attempt to visit. They might walk in or telephone; depending on what time will determine if they are successful. If it’s during morning stand up, lunch, a weeknight, weekend or when another family is touring; they will have to wait. As crazy as it sounds, communities are simply unprepared to properly handle inquiries.
A walk in will most-often be provided a tour if it’s during business hours and if someone is free to do it. Prospective buyers calling on the phone will not be so lucky and will need to call back two to three times to reach someone who can help. If a message is left, a call may or may not be returned and if it is returned, it is typically two to three days later. Because people don’t tend to answer their home phones it becomes a game of phone tag and depending “who’s it” and what is going on in that given day; it may result in a returned call or not.
If the prospective buyer is fortunate enough to catch the salesperson, they will be asked one question: “what made you call today?” and then receive an overwhelming amount of information on the community to include pricing, discounts, floor plans, activities and more. The entire call will last about two minutes and no contact information will be requested. As a result, they will most likely never hear from the community again. Keep in mind, that each lead costs on average $500 to acquire; that’s a lot of waste.
DATABASE? WHAT DATABASE?
Leads typically won’t make it into the database because most seniors housing CRM (customer relationship management) are antiquated, slow and stapled onto an operational platform; an after-thought. Because salespeople decide who goes into the database and who doesn’t, as well as if they feel like using the CRM or not, that data leadership depends on to forecast sales and revenue trends is inaccurate. Many operators are embarrassed by poor data and think they are the only ones with this problem. The truth is, we find it to be the norm.
THE TOUR, THE CHANCE TO SHINE! OR NOT.
If a tour is scheduled, which is about 38% of the time (which means 62% of the time a tour is not scheduled), the salesperson will be very nice, well dressed and engaging. The community may even be draw dropping beautiful but there will be a disconnect that people can’t quite put their finger on.
The fact that prospective buyers visiting are guarded, highly emotional and in uncharted territory will be completely ignored by the salesperson who will show every aspect of the community to include the gym, menu, model apartment, activities calendar and more; whether it’s important or not. The person conducting the visit will not know any more post-tour than they did pre-tour because they don’t understand the importance of open-ended questions, body language and emotional intelligence.
Just like meeting an old acquaintance, everyone will appear happy and promise to be in touch, but it simply won’t happen. Life will get busy and until a crisis occurs and the prospective buyer calls back, there will be no communication. Ever wonder why acuity is so high, and the length of stay is so short? People don’t move until they must because our sales teams don’t know how to build value as it relates to moving today versus tomorrow.
Agree or not, until you as an executive get in the weeds and experience the sales and marketing process of seniors housing communities yourself, you are not going to believe it or do anything differently. In that case you will continue to hover at budget, discount and use third party referral agencies; negatively impacting both your top and bottom line as well as the valuation of your community.
RATE, RATE, RATE; EVERYONE WANTS TO INCREASE RATE
If you’re still reading; know that until you fix your seniors housing sales and marketing problem and invest in the infrastructure, retraining and on-going education of individuals responsible for this aspect of the business, to include your executive directors; you are never going to see the rate you want. You might ask for it, but the communities are going to discount because that’s the only way they know how to offer value; making such a good deal prospects can’t walk away.
To ask for and get market rate, you must go back to the heart of what we do. This is a people business and people buy people, not communities. Time must be invested into the proper marketing of your company and its communities. The content must be emotionally engaging, and you must make it easy for people to buy. This means having a chat feature, pricing and floor plans on the site, videos that include resident life and various floor plans with furniture, testimonials, appointment setting features and upcoming events visitors can rsvp to online that allow people to learn more in a group setting.
Photos of the community must have people in them, and you need opt in forms where guests can download great content from cutting edge research on things like preventative aging and talking to your loved one about a move. The content should not be about you but them and when they respond, someone must follow up, meaning your opt in must include asking for a cell phone and email address.
This is just the beginning.
At the point a prospective buyer gets out of their comfort zone and calls or visits, they should feel like the star of the show. It needs to be all about them. First, we must answer our phones and connect callers with someone who can help them immediately. The person they speak to needs to take a genuine interest in them, not dump information and try to qualify the lead as hot or cold.
A series of open-ended, thought provoking questions need to be asked because people don’t know what they want or need; it’s our job to help them sort through that and then it’s our job to move them to the next step in the process; whether to visit, attend an event, deposit or simply allow you to drop off a delicious meal creating a raving fan customer experience.
We must have the confidence to ask for email and cell phones so we can communicate via text, email and phone calls; not voice mail. And your salespeople need company cell phones, they are in sales! Copious notes must be taken and put in the database so follow up can be purposeful and details learned remembered; making the prospective buyer feel important. People want to know they matter and as it relates to the sales and marketing process, we tend to be more like the person at the party who does nothing but talk about him or herself. That must change.
WHILE IT’S OVERWHELMING, YOU MUST START SOMEWHERE
The first two steps that you as an owner, operator or investor must take to improve occupancy and rate is to walk through the buyer experience. Do it first on the marketing side and then on the sales side. Pay close attention to the experience and how it makes you feel. From there, make a list, delegate and start executing change.
It is very possible to fill your community to 100% occupancy at market rate rent and add new streams of revenue while permanently eliminating your dependency on third party paid referral sources. You can dramatically grow top and bottom line revenue and the overall value of your communities and yes you can change a lot more lives by filling every single apartment or bed achieving both Mission and Margin goals.
Traci Bild and Jennifer Saxman will be at NIC in San Diego, CA March4 – 6, 2020.
Ready for a transformation or simply want to explore if the sales and marketing possibilities exist for your seniors housing investments?
Click here to access our calendar, call 1.800.640.0688 or email Revenue@BildandCo.com to speak with Traci or Jennifer.