In a previous blog post, we discussed the resident lifetime value calculation and its significance in senior living marketing. Today, we’ll take a deeper dive into this critical metric and the insights it delivers.
Below, we’ll discuss how the resident lifetime value calculation . . .
- Provides better visibility into your community’s overall financial health
- Empowers you to forecast move-out projections—and to do something about them before they happen
- Reminds you why it’s essential to develop a pipeline with longer-stay prospects in the awareness stage
- Inspires your resident retention initiatives
What is the resident lifetime value calculation?
The resident lifetime value is the revenue you can expect the average resident to generate throughout their stay.
You will have different resident lifetime values for different levels of care. For example, maybe your memory care resident stays 24 months on average, while the average resident in your independent living community stays seven years (84 months).
The lifetime value calculation per resident is straightforward: Length of stay (in months) multiplied by the monthly rent (plus the entrance fee, if applicable).
Riffing on the numbers provided above, let’s say your monthly rent for memory care is $7,000. In this case, the resident lifetime value for a memory care resident would be $168,000 (24 months x $7,000/month).
You will also have different resident lifetime values depending on the referral source. Leads from third-party lead aggregators often result in shorter stays than leads from other channels, like organic and paid search.
Not to mention, working with third-party lead aggregators isn’t cheap—you’ll often need to reduce the length-of-stay number in your calculation by a whole month because of the aggregator’s commission.
Why is knowing the lifetime value of a resident vital from a marketing and sales perspective?
1. Knowing the lifetime value of a resident provides better visibility into your community’s overall financial health.
Armed with the resident lifetime value calculation, you’ll gain insight into the long-term financial stability of each community in your portfolio.
This means you can better plan marketing budgets, allocate resources, and make informed decisions about things like capital investments, renovations, and improvements. This knowledge is invaluable for ensuring your senior living portfolio’s continued success and growth.
2. Knowing the lifetime value of a resident empowers you to forecast move-out projections—and to do something about them before they happen.
Let’s face it: The prevailing mentality in our industry is to focus on move-in projections rather than move-out projections. However, the lifetime value calculation can help you anticipate move-outs since one of the calculation’s key components is the average length of stay.
This is empowering intel! Now, you can be proactive. For example, you might say, “Okay, these four residents moved in eight months ago. The average length of stay for this level of care in this community is 14 months. So chances are good that we’ll need to refill those apartments in six months.”
Instead of waiting for the inevitable, you can ramp up marketing tactics to attract and nurture the leads you’ll need to fill those vacancies.
3. Knowing the lifetime value of a resident will remind you why it’s essential to develop a pipeline with longer-stay prospects in the awareness stage.
In most instances, the longer-stay resident has less of an urgent need at the outset—it’s not an illness or some other external event that’s forcing them to move into senior living. As a result, the sales cycle for these prospects is longer. They won’t be high acuity residents that will most likely move out when their care needs exceed the capabilities of your staff.
So, rather than spreading your marketing dollars thinly across all leads, you can invest more in nurturing leads that have the potential for longer stays. This means being intentional about pipeline development, engaging prospects in the early stages of awareness and research, and providing reasons for them to stay connected with your community.
4. Knowing the lifetime value of a resident can inspire your resident retention initiatives.
Knowing the components of the lifetime value calculation—particularly the average length of stay for each level of care—provides an excellent benchmark for resident retention goals. You can work on bolstering programs to maintain this average—and possibly exceed it.
For example, what are the top three reasons your longest-staying residents move out? Is there anything the community can do to address the reasons and encourage an even longer stay?
Bottom line: The resident lifetime value calculation is essential to your senior living marketing.
This metric will help unlock insights that can transform your marketing and sales strategies and provide visibility into your community’s overall financial health, empower you to face move-out projections, help you build a stronger pipeline with longer-stay prospects, and inspire your resident retention initiatives.
Need guidance? Get in touch.
We work closely with marketing and sales teams to help you understand key analytics like resident lifetime value so that you can make smarter decisions about your marketing. Let’s talk!