THE AVERAGE ASSISTED LIVING COMMUNITY IS LOSING $100,000 PER MONTH RIGHT NOW, HERE ARE 9-STEPS TO PIVOT AND RECAPTURE LOST REVENUE
IT’S TIME ASSISTED LIVING OWNERS, INVESTORS, AND OPERATORS EXPEDITE THE PATH TO FINANCIAL RECOVERY
I’ll never forget being at an Argentum Conference, then ALFA, when the CEO of a seniors housing portfolio walked up to me and said, “Zero Lost Revenue Days, that’s a ridiculous name for a book, it’s not even possible.”
Raised to be polite, in my head I thought, “Sadly, not for you because to achieve something you must first believe it’s possible.”
I do agree that when the first edition of Zero Lost Revenue Days was published, it was a more of a concept; yet over the past two decades the Bild & Co team has proved again and again, that it is indeed possible. I’ve had many people write me over the years to say that they had achieved and held zero lost revenue days for three months, six months, a year, or more. It’s something they are very proud of and should be because it’s a tremendous accomplishment.
WHAT DOES IT MEAN, ZERO LOST REVENUE DAYS ANYWAY?
SIMPLE FORMULA:
NUMBER OF VACANT UNITS X AVERAGE MONTHLY RENT AND CARE FEES PER UNIT = LOST REVENUE/MO
HOW DO YOU MAINTAIN 100% OCCUPANCY, ZERO LOST REVENUE DAYS?
Once you achieve this goal of selling every single apartment in your community, then the next goal is to build out a solid wait list with non-refundable deposits. People always want what they can’t have so having that non-refundable deposit in place ensures people are serious and that they take financial possession of the apartment as soon as it’s vacated and turned.
SPEAKING OF TURNING OVER APARTMENTS, EXPEDITE THIS AND MAKE IT A PRIORITY
A barrier we see frequently is turning over vacated apartments. Sales Directors are often frustrated in that it can takes weeks if not a month or more to get an apartment rent ready. Meaning that apartment is sitting empty losing revenue. I have had salespeople tell me they bribe their maintenance staff with cases of beer to turn it faster (and that it works). I know, that’s extreme; what you need is a policy that states the expected turn time and the system in place to drive that process.
COMFORT ZONES ARE THE GREATEST THREAT TO ACHIEVING ZERO LOST REVENUE DAYS
In two decades of seniors housing coaching, the single greatest barrier to selling 100% of independent, assisted living, and memory care units is complacency. We have historically found that communities sell all but four or five of their units upon stabilization. My question when training Executive Directors and Sales Directors is, “If you could sell 95 out of 100 apartments, why in the world can’t you sell the last five?” Think about that for a moment.
There is a mental barrier that sets in once a budget or goal is hit that keeps communities from maximizing all possible revenue. The only way to fix it is to change expectations. If I owned an assisted living community with 150 units, my directive would be to fill all 150 units, to build a wait list of non-refundable deposits, and incentivize the team handsomely to achieve this objective. It’s also important to have a full occupancy bonus in place so that people don’t make less money due to a full building with nothing to sell! It might be an incentive that states for each rolling 30-day period the community is fully occupied, at 100% occupancy, zero lost revenue, a $5,000 bonus is paid to the sales director and a pot of $5,000 is split among staff equally. This is just an example, but this type of incentive does work.
DEMAND ALLOWS FOR AN INCREASE IN RATE
Another important aspect of achieving zero lost revenue days is the old supply and demand concept. We advise that as you approach full occupancy, begin to premium price the remaining units. This is a proven business practice that can further optimize net operating income for the assisted living community and ultimately the valuation of the business.
THE PATH TO ZERO LOST REVENUE DAYS IS NOT AS LONG AS YOU THINK
With COVID-19 vaccines distributed at most if not all senior living communities and the remaining population currently being vaccinated, I predict we are going to see a surge in interest, particularly in assisted living.
People who should have moved a year ago are still sitting at home and most likely their condition has worsened. Those adult care givers who have been stepping in are tired and in need of a lifeline to someone who can assist with the day-to-day challenges of caring for an aging parent. Despite the negative press, we offer a product that is invaluable, and that people need. It’s up to us as an industry to change that press narrative and roll out the red carpet for prospective buyers who are a bit weary about a move.
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WHERE TO START: 9-STEPS TO GAUGE THE OVERALL BUYER EXPERIENCE
Achieving the pinnacle of success in the seniors housing industry, where every apartment is occupied, residents are thriving, and investors are happy, takes a lot of work. Yet it’s not rocket science. Use these 9-Steps to start the process of moving toward 100% occupancy, zero lost revenue. Each stage of the buyer experience must be inspected, systems put in place, inspection of implementation of those systems, and constant feedback and communication around creating a raving fan buyer experience. Start with the buyer journey.
Take a walk in your buyer’s shoes and inspect each aspect of the sales process:
1. Web Search: Google assisted living in Joplin Missouri (or wherever your community(s) is located) and see if your community comes up in the top three or five listing. If it does, evaluate what happens when you click on that link and land on your company website or the community landing page. If it doesn’t, you have a lot of work to do (be sure to watch for an upcoming blog series and 4-Week Marketing Academy to learn how to make this happen quickly).
2. Website: Is your website easy to navigate and is it clear what step I should take next or is it a wordy brochure espousing how great your company is with no indication as to what I should do next? Can I take a virtual tour of the community, schedule an on-site visit online, see a physical apartment, review pricing and customer reviews, and chat my questions right then and there while they are top of mind?
3. Request for Information: When I request information, is it a form email with a plethora of attachments or will I receive a personal email directed to me with time options to jump on a quick call or an offer to stop by, bring lunch, and talk about what’s going on (depending on your state of course)?
4. Community Inquiry: Upon calling the senior living community, will I reach an individual who can help me right now, while I’m in a shopping mindset or will I be sent to voice mail, told to call back, or hung up on by accident in the transfer?
5. Sales Call: When I do speak with someone who can help me, whether it’s the sales or executive director, or the individual back up team member taking my call, will the person I’m speaking with verbal vomit information all over me in attempt to pre-qualify and deem if I’m a viable lead, or will that person take time to ask me open-ended questions in an attempt to build a relationship and establish an emotional connection with me? Will I be directed as to what the next step is, or will I be told to let that person know when I’m ready to move?
6. On-Site Visit: Upon visiting your community, will someone sit down and take the time to get to know me or my loved one? Will this person see me as a person with a lifetime of memories and experiences who is frightened and skeptical or as a lead that needs to be vetted out as qualified or a waste of time?
When passing residents and staff, will I be introduced and able to talk to them or will we speed by so there’s no risk of negative feedback? Will the apartment I see be unfurnished and unappealing because it’s “in transition” or will I see a beautiful well-staged model that enables me to envision myself living there? Will you clarify what the next step is in the process or will I be left to figure that out on my own?
7. Follow Up: After I leave your community or talk to someone on the telephone, will I receive any type of follow up call to see what my overall thoughts were on the visit, perhaps a handwritten note card that will surprise me when I check the mail, and will you clearly state what the next step is before we conclude our conversation or once again, will that be left to me to figure out?
8. Closing: Will you throw deals and incentives at me to create urgency relating to a move or will you build so much value as it relates to my wants and needs and how the community can meet those wants and needs that I am excited to move and don’t even think to ask for a discount because I see how much better my life will be? Will you secure my deposit and immediately set up lunch or dinner with a resident ambassador so I can start meeting people and set my mind at ease because my fear is that I may not fit in?
9. Post-Closing: When all is said and done and I’ve moved in and am acclimating to the independent or assisted living community, will you take the time to see what my overall buyer experience was, to include what made the greatest impact on me and what ultimately made me say yes as well as what I would improve about the experience? Will you do the same with my daughter who helped guide me through this process? Or will you assume everything was great because I moved in?
This is what I mean by inspect what you expect. There is a lot involved in seniors housing sales and whether you are selling independent or assisted living, memory care, or a life plan community, every detail matters. You must have a clearly defined sales system and/or buyer experience that ensures the expectations put in place by your organization are not just in a policy and procedure manual but being implemented consistently at the site level.
Achieving Zero Lost Revenue Days is not an easy feat, but it is very possible. First you must see it in your mind, then speak it out loud, create the process or road map to get there, put in the work, tweak, and coach to the systems you put in place.
IT’S ABOUT MORE THAN ZERO LOST REVENUE, FAR MORE
While zero lost revenue is nice, changed lives is even better. Imagine the impact on the lives of seniors you are making when every single apartment in your community and/or portfolio is occupied by a living, breathing person. Think of all the people you will put to work and families you will provide for as a result. Imagine what referral sources will say about you, “that place is amazing, in fact, you’re lucky if you can get in because it’s been full for a year!” American’s always want what they can’t have and trust me, your phone will continue to ring!
Success breeds success and nothing is more exhilarating than being at the top of your game while changing lives in a way you will never fully comprehend. You’ve got this, you can do it, it’s time to get serious about what’s possible for your seniors housing organization and to make it happen in 2021!
