I was speaking with Jennifer Saxman, Bild & Co’s COO who runs the day-to-day business. We were brainstorming emerging trends in assisted living and the resulting responses that she and the Bild team had seen in the last quarter.
Disconcerted, she was trying to communicate the team’s observations the best she could, “it’s like having a sick child but waiting to go to the doctor because you think it’s going to get better. Yet the next week ending up in the ER due to a 104-degree fever, earache, and sore throat that is diagnosed as strep throat. If you had only gone to the doctor sooner and had the illness assessed, both the ER visit and the strep would have been averted altogether.”
She went on to say, “What we are seeing is that assisted living owners and operators are waiting too long to address performance gaps, waiting until they become a crisis that is almost beyond repair. Rather than needing a simple assessment and turnaround plan that takes 90 days, it becomes a situation that requires the recruitment of a new sales or executive director which is incredibly disruptive, a database scrub to re-engage prospective buyers, training and coaching implementation of the new hires, competitive and reputation analysis, and six to twelve months of hyper-focused hard work with the on-site team to repair the broken community.”
The Bild team provides consulting services to hundreds of independent and assisted living, memory care, and active adult communities both nationally and internationally each year. I can say with certainty that we have our finger on the pulse of the senior living industry and what’s happening real time. We can quickly assess and diagnose a brewing problem and help owners nip further losses before they occur. The issue is so many owners come to us when the community is in disrepair and while we turn them around, it takes much longer and is far more costly and taxing to do. The solution is to be proactive and to pay attention to the early warning signs before they become screaming problems.
Like all things in life, we tend to overcomplicate that which we don’t understand. Many executives prefer to stay in their lane of operations and are uncomfortable with performing sales. If you can relate, take heart in knowing that the six warning signs I’m about to share with you are rather easy to diagnose. In fact, they are so obvious that you otherwise would probably ignore them. What’s important is that you have the foresight to recognize and respond quickly when the following warning signs are observed.
1. THE SENIOR LIVING COMMUNITY IS NET NEGATIVE FOR THREE MONTHS OR MORE.
If you have seen three months of net negative move ins, your community is in serious trouble and likely to enter a revenue crisis. Several factors contribute to net negative months from high attrition to a disengaged sales director unable to sell enough new residents to offset the outs. With fourth quarter in question due to the pandemic and first quarter historically seeing flat or declining occupancy trends industry-wide, take this warning sign seriously. As Steve Monroe of The Senior Care Investor attested, “Assisted living has never seen a sequential rise in occupancy in the first quarter of any year during the past ten years. Worse, assisted living has never seen a rise in occupancy in the first HALF of any year during the past eight years. The only quarter that showed a consistent sequential increase was the third quarter, and the fourth quarter.”
It is likely to get far worse with owners feeding cash into operations to keep the community afloat. If you’re an operator and fail to act, it will likely result in the loss of the management contract and a ding in your reputation so move and fast!
2. A STEADY FLOW OF LEADS THAT FAIL TO CONVERT TO MOVE INS
If you’re perplexed as to why more people are not moving into an assisted living community that is seeing good lead traffic, you should be. Oftentimes sales directors will state that the leads are not qualified when the reality is they don’t have the skillset to convert those leads into a new resident. The fact is every lead is a hot lead; no one calls an assisted living or memory care community for fun and it’s time salespeople stop looking for a quick, easy sale.
It’s the sales director who has the emotional intelligence, patience, curiosity, and ability to problem solve and establish confirmed next steps that will convert 35% or more of those new leads into a moved in resident in as little as 30 days.
When seniors housing owners or operators reach out to us to assess an underperforming asset most believe they have a lead generation problem. A quick dive into their data consistently proves that it’s not a marketing; but a sales problem which is an easier and far more affordable fix. If you are being told an underperforming community needs more leads, look at the evidence and verify the lead trends yourself. If a 100 unit assisted living community is getting seven to ten leads a week, that’s good traffic; enough to net even if not up. The next two trends to inspect are both inquiry to tour and tour to move in conversion ratios. If your inquiry to tour is not at 50% or more and your total tour to move in at 35% or more, you have a sales conversion problem. Throwing more money at marketing, to generate leads is not going to fix occupancy, revenue, or cash flow problems.
3. CRM MISMANAGEMENT
Train your people to properly use their CRM. According to Harvard Business Review, 61% of execs admit their salespeople aren’t properly trained in pipeline management techniques. Yet, those Companies that do so see 9% faster revenue growth. This is a big problem we see consistently within seniors housing portfolios.
If you cannot pull data and be confident in its accuracy, this is a big red flag. While most seniors housing operators pay for a CRM many don’t enforce its proper use. We consistently find that sales directors are not comfortable with their software and need more training to use it properly. Many are old school and don’t want to use their CRM because it’s a hassle to input data and seen as time-consuming. This is unacceptable and your consistent revenue performance depends on proper data entry that results in accurate reporting and trend projections.
When assessing an underperforming senior living community for an owner or vice presidents of asset management, one of the first things we do is diagnose the community’s CRM. Based on leads with an established next step, completed follow up tasks, and confirmed second or third tours in place with detailed notes on the prospective buyer; we can quickly determine how many leads are viable and what the forthcoming quarter will be.
The biggest red flag we see consistently is leads with no confirmed next step. People can’t move in if they don’t know the process. Poor implementation of your CRM is an early warning sign of a bigger problem and will most often result in move ins far from expected projections.
4. MOVE INS BEING SOLD AT A PERMANENT DISCOUNT OFF THE MONTHLY RENT.
We used to see a lot of temporary discounts offered, today we most often see permanent rental discounts. That means selling a one bedroom assisted living apartment at $4,200 per month rather than the $5,100 per month market rate; creating a net loss of $12,000 per year. Move in five residents at this discounted rate and you’re now bleeding $60,000 in lost revenue annually. Even worse is these discounts are offered before it’s been established that they’re needed. Not only are you devaluing your community but impeding the ability to properly care for residents because those discounts must be recovered somewhere. Whether it’s smaller food portions, less staffing, or deferred building maintenance; the residents ultimately pay for those discounts.
5. NO MARKETING OR OUTREACH EVENTS SCHEDULED FOR 30 DAYS OR MORE.
Planned events, to court prospective residents as well as valuable referral sources are the lifeblood of any assisted living and memory care community. COVID-19 has disrupted both marketing strategies and outreach events, which have taken a toll on occupancy. If your site level teams have not yet rebooted weekly marketing events that bring prospective residents into the community and established a consistent schedule to immerse themselves into the local community to generate professional referrals, you are going to see a further decline in move ins. Additionally, you will feel compelled to spend large sums of money that you don’t have on digital and traditional marketing campaigns in hopes of generating leads that these grassroots marketing efforts would have provided.
Referred leads close four times faster than non-referred leads. This is our go to strategy to turnaround underperforming assets, to train on and implement professional outreach plans for a quick bump in leads and move ins. This is done in conjunction with a robust event schedule to entice prospective buyers to come back and get to know the community, its staff, and residents better. When I say quick, if no outreach is currently being done, it can take three months to see results but once those floodgates open, move ins spike quickly with cost per lead far less due to leveraging relationships over ad spend.
6. FAILURE TO PROPERLY ONBOARD A NEW SALES DIRECTOR
While this is very simple, it’s amazing how many sales directors are put in the seat with no training or onboarding at all. Operators tend to make assumptions about ability based on past employers and fail to invest the time needed to ensure success.
The average new hire in sales is fully productive in 5.3 months. 24% are ready in one to three months, and 16% take longer than seven months. Once trained, the average sales pro sticks around for 2.2 years at full productivity.
No matter how busy or stretched you are, failure to properly equip a new sales director with the skillset needed to sell is a big and costly mistake. When reviewing data trends, we can tell within minutes if a new hire was properly trained. Warning signs include poor inquiry to tour and tour to move in conversion ratios, inconsistent follow up of valuable leads, failure to properly use the CRM, and inconsistent move in and occupancy trends.
We’ve all been there, an internal nudge or conversation that doesn’t sit well; we know something is off but aren’t sure what it is. Now is not the time to ignore that gut instinct, in fact it’s more important than ever to listen and respond quickly. Our industry is in transformation and just as Netflix replaced Blockbuster and cell phones replaced landlines, how we respond to this moment in time will determine the trajectory of our industry. We will recover and those Boomers are coming, but not for five more years. It’s what happens in between that matters and that will determine your fate as an owner or operator in this amazing seniors housing space.
If you feel something is off, it likely is. Dig in, assess the community, and take immediate and purposeful action to fix what’s broken and don’t take no for an answer.