Assisted Living Operational Turnaround
Financial trouble at Assisted Living projects is most commonly due to challenges with occupancy. While Senior Living Occupancy overall has been negatively impacted by the Covid pandemic, many well managed properties remained well occupied and profitable throughout these challenging times.
To achieve and maintain high occupancy, Senior Housing Operators and Managers must understand the unique challenges and needs of their target resident, and the arduous process needed to attract them to your building.
Many owners and investors enter the industry without the necessary understanding needed and are ill equipped for success. A successful operational turnaround requires a thorough understanding of the situations, experience leadership, and tremendous amounts of attention and energy.
Operational Turnaround: Understanding the Situation
Assisted Living marketing is unlike marketing Skilled Nursing or Independent Living. The resident and their needs differ in each segment of Senior Housing Business and attracting residents requires a different approach. Therefore, an operation turnaround of an Assisted Living, would be vastly different from turning around a Skilled Nursing or Independent Living.
Independent Living offers no health care component and residents, as the name suggests, seek to maintain their independence. Independent Living sales and marketing therefore aims to find a maximize the amenities offered for the value.
Skilled Nursing residents primarily arrive after a hospital stay and require substantial nursing care and assistance with activities of daily living. Skilled Nursing sales and marketing is therefore focused on the hospital discharge process and the staff that administer it.
The needs of Assisted Living resident needs are somewhere in between those of an independent living resident and a skilled nursing resident. They struggle to live independently but do not need full-time medical attention. They are often resistant to leaving their home and in denial of their need for more help. This is the primary challenge of Assisted Living Marketing and Sales and where assisted living management companies often fail; Trying to convince prospective residents to leave home, surrender to frailty, and spend their life’s savings to pay for something they do not want.
To succeed with Assisted Living sales requires training, a structured process, and tremendous tenacity. Most assisted living that struggle with occupancy have either hired the wrong person for the sales position or have done a poor job training and overseeing that person. In some areas of the Senior Housing industry, the salesperson can be merely an order taker; reactively picking up the phone when it rings from referral sources. That is not the case in Assisted Living. Successful Assisted Living sales requires proactive outreach, tremendous persistence, and drive.
- The typical assisted living potential resident requires 40 touch points from the community before deciding to move in.
- The average length of the buying cycle (inquiry to move in) and decision process is 145 days. For reference, the buying cycle for skilled nursing is only 4.9 days.
- Only 10% of new leads ultimately result in a move-in.
- The average cost to generate a move in is nearly $10,000.
- With the average length of stay of only 675 days, the sales process is perpetual.
In recent years, there has been a sharp increase in the prevalence of paid referral sources. Many Assisted Living properties find themselves dependent on these sources. While at times a necessity for an operational turnaround, these lead sources are not only expensive, but the quality of these leads is lower than traditional sources such as marketing and unpaid referrals.
- While paid referrals make up more than 75% of total leads, the leads are of low quality and less than 50% of move-ins coming from these sources.
- The length of stay of move-ins from paid leads is less than 1/3 of those move-ins that came from other sources.
The volume of leads coming from paid referral will overwhelm the sales staff as they compete with other communities for the same lower quality leads rather than focus on more productive sales and marketing efforts.
Overall, paid referral sources are expensive, they generate an overwhelming abundance of lower quality leads that if converted turn to lower quality tenants. In an operational turnaround, they may be a useful temporary tool, but should not be a permanent solution.
Marketing, selling and filling an assisted living facility is an intensely dynamic strategic process. One that is grossly underestimated by developers and investors.
IT IS NOT PASSIVE ORDER TAKING, SUCH AS RENTING APARTMENTS OR HEALTH CARE, REFFERAL BASED ADMISSIONS.
Understanding the Market
We often find that a struggling Assisted Living operator does not fully understand their target market. For an operational turnaround to be successful, we must develop a thorough understanding of our potential customers.
Where are the customers – demographically and geographically?
Who are the customers – psychographic. What do they think and feel? How do they buy? Etc.
The typical assisted living customer is resistant, fearful, penurious and does not want to move. Their reluctance will not be overcome by being pulled in by glitzy advertising. For them and their family to make the decision to move-in to an Assisted Living they will to be pushed.
- Fear and loneliness are major determining push factors. Many seniors live alone with diminishing and social interaction leading isolation which significantly increased a person’s risk of a wide variety of ailments and premature death.
- Our customers do not have a real estate problem and are not shopping for real estate. They need care assistance and peace of mind.
- Industry marketing and sales efforts are mediocre, careless and sloppy; hence a quality operation will stand out in customers’ minds and the marketplace.
- They don’t need different real estate. A discount or an onsite movie theater will not create desire to buy. They don’t buy fluff.
ONLY TRUST BUILDING, PROBLEM SOLVING, AND SELF-REALIZATION WILL MOVE THEM FORWARD.
The Orchard – Cultavating Your Lead Database
Selling to a reluctant customer takes time and concerted, continues effort. Cultivating a strong lead database must become the focal of your building’s sales and marketing strategy for your operational turnaround plan to be successful. For ease of visualizing the market, we tell the story of an apple orchard. Rows of trees with apples on each, all in different stages of ripeness. While each apple will be ripe someday, if you don’t tend to the orchard intently, looking at each tree each day, week, or month, it is difficult to know specifically which one on which day will be ripe. Some apples are not yet ripe while others are too far gone.
This is similar to us working our lead base in the specific market universe in which we must survive. We know our markets have specific customers aged 75+ who are homeowners with financial means to pay for our services. Some will be in need today, some in the future. We must try and have a relationship with each one so we know which one is ripe and when.
Building this orchard of relationships over time gives us a stream of customers to fill our project and keep it full. Once stabilized, the project will constantly have turnover of approximately 50% per year, so we must continue to cultivate the orchard even after stabilization. We must utilize many strategies and techniques to build these relationships, as it could take more than 10 leads to fill one unit. This requires an active lead base or orchard of about 1,500 lead at all times for a 100 unit project.
The Orchard boundaries are defined geographically by using demographic data combined with mapping techniques to define your project’s true primary market area (PMA) and the density of prospects within it.
THE ORCHARD IS YOUR PROJECT’S MOST VALUABLE ASSET AND SHOULD BE VIEWED AS SUCH BY EVERYONE.
The orchard is finite – a core group that doesn’t change much over time.
- It is not going to get bigger – you must know more of the apples individually.
- You need to build a relationship with each row, tree and apple.
- Nurturing and developing over time – deeper relationships,
- This is why continuously utilizing a relationship database (CRM) is critical.
- Building relationships, history, over a protracted time period
- Thinking you can generate MORE leads is not realistic.
- More leads with superficial relationships are useless – less leads with deeper relationships are amazing…will get you full and keep you full.
- You must generate deeper relationships with the leads in the orchard.
Strategy…. Good or Bad
Assess the level of sophistication of your people & strategy. You are dealing with sophisticated customers!
Does the image you project in sales tactics or your advertising correlate with selling a reluctant customer $100k in services?
Many senior living management companies believe that advertising the attractiveness of their facility and its amenities is all that is needed to attract residents, succumbing to cliches and misunderstanding the needs of their target resident. For a successful operational turnaround, the message must be aligned with the actual immediate needs of the target customer.
AUTHENTIC ADVERTISING AND BRAND BUILDING – CANDOR –WILL SET YOU APART.
Most senior housing ads are full of useless information instead of addressing the reality facing seniors.
Amenities – Most projects offer very comparable amenities. These may entice the intended residents’ adult children, yet the lack of material differentiation leads to a price war.
Sales incentives – Ads that promote discounts and other incentives, show the market that the project is desperate and leads to further discounts at closing to get the deal done. Selling by cultivation of real relationships lead to private pay full rate move-ins many months or years before a resident would have moved in on their own.
Photos – The photos in your ads are just as important as the copy. Real estate is not personal, ads should have photos of people so your customer can relate to the photo and content of your ad. Make them think, pull out the emotion, remind them they aren’t alone, you understand and can help.
Stop selling real estate and:
- Start calling and writing to the bored and lonely
- Start trying to “get to know” your customer
- Start talking less and listening more
- Start building trusting relationships
- Be brave! – ask the tough implication questions, does mom still have to go to the basement to do laundry, are you worried she will fall again?
- Care enough to learn all you can about them, their life, their children, their grand children, Dr., Pastor, prior occupation, interests, do they know someone already living in your project? Etc.
- Be a reliable resource and guide the process for the customer and their family.
Operational Turnaround: Our Approach
- The top Priority is to drive leads and revenues.
- Cost control is priority when project is stable.
- Daily sales support from the corporate team, lead updates and strategy for each.
- Swift consistent follow-up – SAME DAY no matter what.
- Weekend sales calling and coverage.
- Micro manage all aspects of sales.
- Showcase the urgency of their situation – be brave!
Active vs. Passive…. proactive vs reactive
- Most health care is marketed not sold – credentialed – expertise
- Marketing is passive waiting for qualified patients to show up
- Mindset of market will support the facility vs hunting for customers.
- Sales is Active – engaged relationship building
- Sales serve customers first not regulations or burdens of the business
- Sales deals with customer emotions, fears, worries, desires posturing to please the customer vs pleasing owner, management or regulator
- Sales is a servant attitude and is a proactive vs reactive endeavor