20% OF ALL APARTMENTS ARE CURRENTLY VACANT WITH SENIOR LIVING COMMUNITIES LOSING ON AVERAGE, $100K IN REVENUE PER MONTH
Senior living owners, operators, and investors have seen a good uptick in occupancy the last few months, giving a reprieve to what was one of the worst declines in occupancy, bottoming out in 1Q21 and 2Q21 at 78.7%; a 15-year low. The big question is, “what happens next, will seniors housing occupancy continue to rebound, plateau, or decline as we approach year’s end?” I do believe we will see a slight bump in 3Q21 but another decline in 4Q21.
As the CEO of Bild & Co, I’ve been in the trenches consulting seniors housing organizations for two decades; everything from assisted and independent living, memory care, life plan, skilled nursing, PACE programs, home health, hotel conversions, multi-family; you name it and we’ve done it.
While I haven’t been in the field for some time thanks to the amazing Bild team, I am on the phone every day with executives on both the operational and investor side and get a bird’s eye view into seniors housing organizations of all sizes, in the U.S., Canada, and the U.K. What I can tell you is that as good as everyone says it is, I still think we have a long way to go in our financial recovery.
It’s not just the pandemic and its resurgence that has me concerned but operator resistance to professionalizing their sales organization. Don’t click away just yet, particularly if this is a sore spot for you. The assisted living organization of today, is not the organization of yesterday yet operators still utilize the same skill set and best practices they did a decade ago. Historically, senior living has always offered a blend of health care and hospitality; that is not the case today- senior living is above all a health care product and involves a complex sales process.
Oakmont COO Matt Stevenson said it best in his interview with Senior Housing News in June, “Pre-Covid, our value proposition was the luxury of a highly amenitized building, hospitality, renowned five-star dining experiences, amenities like massage rooms, fitness centers, pool, spa and sauna … and that’s what enticed many seniors to move into our community, Covid shifted the value proposition completely.”
Here’s what else has changed and why I believe this one barrier will continue to hinder the financial recovery of assisted and independent living as well as memory care and 55+ operators in particular:
These three changes are important to put in perspective. While assisted living operators have made many improvements to the operation of their communities to support high acuity residents, they have not professionalized the single source of revenue within each of their communities: The Sales Director. Historically, we have never seen other team members sell within a senior living community, except for the person hired for that specific role. Most other staff steer clear of sales, to include the executive director.
Considering that the average assisted living community is 100 units with a revenue potential of $5M per year, it’s time to reconsider why operators consistently leave $900K or more in revenue on the table annually. That’s in good times. Today, the average operator has over $1.3M in lost revenue per community and while that will improve with time, without investing in your sales and marketing staff, it’s going to be a very slow go.
Senior living owners and operators can continue to slug along or be proactive. Investing more in lead generation is not going to solve this problem; educating sales directors to convert those leads to tours and move ins will.
STAT 1: FIVE OUT OF TEN SALES DIRECTORS IN YOUR ASSISTED LIVING COMMUNITIES DO NOT HAVE THE SKILLSET NEEDED TO MEET THEIR MOVE IN GOALS
Selling assisted living or memory care is no easy feat. Studies show that 55% of people making their living in sales don’t have the right skills to be successful. Here are the minimal skills needed to be effective in seniors housing sales.
SKILLSET REQUIRED: THE ABILITY TO
The single barrier that keeps operators from meeting their financial obligations to their owners is poorly trained salespeople. The only way to improve net operating income is to grow top line revenue; there is nothing left to cut. Operators have become masters of efficiency as it relates to expenses. It’s time to pivot and put focus on top line revenue growth meaning, increased sales.
BUYER EXPERIENCE SCORE: 56%
This sample is consistent with trends we’ve seen all year; we are not curating a positive buyer experience. The skillset required to find needs and build enough value to get a prospective buyer to come visit an assisted living community was just 56% out of a possible 100%.
The result is just 22% of inquirers scheduling an on-site visit (compared to 45% pre-pandemic). It’s safe to say you’re losing valuable leads and move ins due to a poor sales skill set. Let’s take a closer look at what is happening.
FIRST IMPRESSIONS: 80%
I’m happy to say that assisted living operators are doing a fantastic job of capturing incoming calls and making a great impression! As an industry this was a barrier for years which further demonstrates that we can improve with a focused effort.
NEED DEVELOPMENT AND RELATIONSHIP BUILDING: 51%
Once the call is transferred from the front desk to the sales director things begin to go downhill. Rather than asking a series of open-ended questions to find needs and build value regarding the next step-an on-site visit, sales directors are talking, pre-qualifying, and rambling off rent and care fees in hopes of finding a quick easy sale.
SALES PRESENTATION: 50%
When a sales director is talking rather than listening, it’s impossible to personalize a sales presentation and to be empathetic. In this sample of shops, there is no differentiation among competitors because every community sounds the same.
NEXT ACTION STEP: 45%
If there are no identified needs, it’s impossible to build value. The only people a sales director is going to bring in for a visit are those who have waited too long and must make a move. I call these the quick, easy sales. But what about those prospective buyers who are concerned about their loved ones and exploring options? A sales director with a strong sales skillset will be able to build enough value to get those people in to tour. This is that 50% improvement that will yield move ins that otherwise would not have happened.
As the data shows, each stage of the sales cycle declines as it relates to the capability of an assisted living community to take inquiry calls and convert them to an on-site visit. In my 20 years of consulting seniors housing owners and operators, I can tell you that this is by far the easiest skillset to repair. Alternatively, tour to move in conversion ratios are at an all time high! This means once you get people on-site, they are likely to move so put your focus on improving the inquiry process and overall buyer experience.
With a resurgence in COVID-19 and the holiday season right around the corner, you are at risk of seeing further decline. This one strategic action, to prepare your sales and executive directors today to proactively sell rather than take orders can be the difference needed to sustain and grow in 4Q21.
STAT 2: CONTINUOUS TRAINING GIVES 50% HIGHER NET SALES PER EMPLOYEE
Read that again! It’s tough to get senior living operators to invest in the training and education of their salesforce, let alone doing it consistently. That leads me to one of my favorite quotes, “you get what you put your focus on.”
Occupancy is at historic lows because we’ve not equipped our sales directors to sell in a pandemic. Aging hasn’t stopped and care needs are real. What’s different today is that people are fearful and while they know what they must do, most are avoiding the decision in hopes of waiting it out. A skilled sales director understands how to build enough value to offset the pain of making a move during a pandemic. Meaning, the grass must be greener on your side of the fence! If not, people will wait.
If your average sales director is moving in four new residents each month, imagine the impact of moving in six new residents each month. Multiply that by 20 locations! What impact would it make on your senior living organization if you were able to net 40 new residents each month in 4Q21? How would an additional $200,000 per month in increased cash flow affect your company?
To see the results of sales training you must do the following:
The biggest question is who has the time and capability to do this within your organization? That leads to the question of what training are they to reinforce and inspect in the first place? These are the first two questions you must answer before you can begin any type of implementation.
STAT 3: THE AVERAGE COMPANY SPENDS $10K – $15K HIRING AN INDIVIDUAL AND ONLY $2K A YEAR IN SALES TRAINING
If we get what we put our focus on, then it’s easy to understand why just 78.7% of all senior living units are occupied. Sales is not a priority for operators and given what it costs to hire a new sales director, it’s time more of an investment is made in retaining them. Being that we have transitioned from a hospitality model to a solid healthcare model that will play a bigger role in healthcare networks, it’s time to pivot how we hire, onboard, and continuously train sales directors to meet these changing demands.
Sales directors who have experience are great, yet those who have experience and solid sales training with focus on relationship selling and family advocacy which is paramount to experience alone. Those salespeople who were top performers prior to the pandemic have struggled to adapt and meet their sales goals; yet with proper retraining, can quickly become your greatest asset for driving revenue.
PAUSE MARKETING INVESTMENTS AND FOCUS ON PEOPLE INVESTMENTS
The answer to your occupancy woes is not more lead generation but rather focusing on the leads you have and to provide salespeople with the skillset needed to advance those leads forward in the sales process.
Each aspect of a sales director’s job has changed- it’s time you change too. Both your executive and sales directors as well as your department heads and line staff must understand the sales process and how it impacts the overall buyer experience, reputation, and long-term viability of your organization.
There are assisted living communities that get this and that are right now, during the pandemic experiencing Zero Lost Revenue Days, where each apartment in their assisted living communities are occupied. While this may seem like a far-off dream, it’s not; but you can’t keep taking the same actions and expect to see a different result.
Not sure where to start? Here are two actions you can take right now that won’t cost you a dime but will begin your transformation journey:
Join our book club and begin to learn together as an organization, igniting a growth mindset within your employee base.
Click here and have the Bild & Co research team complete a random sample of mystery shops to gauge the buyer experience at any three senior living communities within your portfolio.