It is always tricky creating the right Sales Toolbox – one that creates urgency without eroding revenue. Used correctly, incentives can be used to shorten the sales cycle and achieve move-in targets but they can also be overused leaving money on the table. Choosing the tools that are right for the job of occupancy & revenue growth requires good analysis and the flexibility to make changes as occupancy fluctuates. Here are a few things to consider:
Customize the Toolbox for the Size of the Job
Different tools are needed to boost occupancy by 20% than by 5 % so create different toolboxes for communities at various levels of vacancy. This can be accomplished by simply using the same incentives but with different values (dollar amounts or percentages) or by sweetening the incentives when the occupancy drops to a certain level. For example, communities above 90% occupancy may be able to offer a variety of incentives up to a certain dollar amount (reimburse moving costs, apartment upgrades, etc.) or use discount percentage (discount community fee by x%, etc.) but if occupancy drops below 90% the dollar amounts and percentages increase.
Short Term vs. Long Term incentives
Some incentives are short term as the incentive is applied once, usually upfront, and other incentives are applied on an ongoing basis. This is where the revenue vs. occupancy growth must be considered and balanced. Waiving or discounting a month’s rent or community fee is a short term incentive that erodes revenue for only the month the incentive is applied; discounting rent or offering rent locks erodes revenue over a longer period of time. Operators and sales leaders have to work together to determine what the goals are in order to create the right toolbox.
Inspect, Analyze and Adjust
There are certain trends to look at in creating the right toolbox. The first is the average length of stay by lifestyle (IL, AL, ALZ), which helps to project the impact of long-term incentives. There is a difference in offering a two-year rate lock when the average length of stay is 18 months then when it is 48 months. Also, the average rate per unit by type of your current residents is helpful to consider ensuring that new residents are not paying less on average than your residents who have lived in the community for years. Once the sales toolbox is created and approved, an approval process must be established for transparency and to track the success of each incentive offered. If families show no interest in one of the offers, change it up!
Here is what I have learned in building sales toolboxes over the years:
- Have a sales toolbox for the Sales Team and another one for the Executive Directors. I like to give the sales team the short-term incentives and empower them to use the toolbox to shorten the sales cycle and reserve any incentive that impacts ongoing revenue in the hands of the Executive Director.
- Get feedback from the community and regional teams while creating the toolbox and be willing to adjust the incentives based on individual market differences. Everyone likes to be part of the process and collaboration increases buy-in.
- Make sure there are good systems to track the impact of the incentives. Knowing the historical move-in numbers, market rates and actual collected rates will help evaluate the impact of the program. The purpose of a sales toolbox is to increase the move-in volume by empowering community teams to overcome objections and shorten the sales cycle. In six months the trend should show a correlation of incentive dollars relating to increased move-in volume.
- Evaluate which incentives are working as it may reveal an underlying issue that can be addressed. For example, if most families are choosing a 5% rent reduction, you may have a pricing issue or if they are choosing an apartment upgrade (a studio deluxe for the same price as a standard studio), you may have a barrier based on the size of your apartments.
Are there any other tools you would add to your sales toolbox? Let’s Chat