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Senior Living Sales: How To REALLY Build Stabilized Occupancy

Senior Living Sales: How To REALLY Build Stabilized Occupancy

In the bestselling book Blue Ocean Strategy, authors W. Chan Kim and Renée Mauborgne compare “red ocean” markets (where companies compete in an already crowded space) with “blue oceans” of uncontested market space. These so-called blue oceans have untapped demand and the opportunity for highly profitable growth.

As you probably already know, the water is very red in the senior living space. Senior living sales reps are constantly trying to outperform their rivals to grab more market share, all while using similar strategies. As new product enters the market, existing operators are competing for a share of a contracting market, and, as a result, occupancy rates are stalling. This situation pressures operators to “go beyond competing and create blue oceans.”

Senior Living Sales in a Red Ocean – Increasing Price Wars, Shrinking Profit, & Becoming a Commodity

The pressure to get quicker move-ins to satisfy the “we need occupancy today” mantra has resulted in a feeding frenzy for urgent/crisis-driven prospects. These prospects represent only 10% of the total market. We win them because they are private pay and because we are “better than a nursing home.”

These residents bring with them high acuity, declining length of stays, greater risk and liability, increasing worker’s comp claims, and dependency on third party lead generation. The impact of this reality is higher resident acquisition costs and declining revenue. Many providers report that by the time they pay room turn expenses, sales commissions, incentives, and the move-in transaction fee, they do not show a profit until month six.

Consumers researching senior housing options are faced with the same messaging and value statements from every community: “We have the best people.” “We offer the best care.” “We offer great food, activities, transportation, housekeeping, laundry, maintenance.” Blah, blah, blah.

For the most part, providers withhold basic pricing information. What is revealed is often confusing—levels, points, packages, all-inclusive, some utilities, no utilities, some meals, no meals—help! Since we have created this commodity mentality, the only differentiator left for families to consider is price.

Senior Living Sales in a Blue Ocean – Reaching the Untapped Market

“Blue Ocean Strategy” offers insights on how companies find their untapped markets. One principle is to “Reconstruct Market Boundaries” to break from the competition.

Here’s a real-life “blue ocean” example to consider. David Smith owns three communities representing independent, assisted, and memory care lifestyles. He found his blue ocean by focusing on the 90% of the market that is “not ready” for community living. With his prospect-centered approach to sales, he created strategies to engage and nurture prospects who identified themselves as being in denial and in “thinking and planning” stages rather than in an “action” stage.

His communities consistently maintain waiting lists of residents who are not “ready”—with the highest rates in his markets. And it goes beyond a sales approach. His communities actually deliver a resident-centered lifestyle. He built a better product than his competitors, and he always finds a way to deliver what he promises. The Gatesworth has won numerous local and national awards, including being named one of the “Nation’s Top 10 Retirement Communities” by Forbes Magazine.

Here’s another example of a blue ocean in action. Zeke Turner of Mainstreet remade his market boundaries by finding a gap between the hospital and skilled nursing space and defining a new transitional care market focused on hospitality, amenities, and more services and attention while providing an unmatched level of post-acute care and accommodations in a state-of-the-art medical resort setting. Mainstreet has also been recognized by Entrepreneur for “creating an exceptional culture that drives employee engagement, exceeds employee expectations and directly impacts company success.”

Senior Living Sales Teams: Wondering How to Find (or Create) Your Own Blue Ocean? We Can Help.

Set sails for your “blue ocean” by remaking your product, amenities, service, and culture or by focusing where your competitors are not to stabilize your occupancy and make competition irrelevant. We work closely with senior living sales and marketing teams to accomplish this. Let us help!

pricing strategy

3 Pricing Strategies to Grow Rate, Grow Occupancy – or Both!

There are many traditional pricing models offered by senior living operators in an effort to grow rate and increase occupancy.  There are no right or wrong answers as long as the strategy is in alignment with your goals.  Generally, pricing strategy is directly related to the stability of occupancy.  With a higher occupancy, operators can push rate. When occupancy declines, incentives may be offered to boost occupancy and that erodes RPU.  The balance is in knowing when to turn the rate and incentive levers and to be flexible and proactive enough to make regular adjustments.  Pricing is not something that operators can do once a year during budget season and then forget about.

Pricing That Offers a Greater Price Range for Prospects without Eroding Rate

Value/ Premium Pricing

This strategy allows a pricing spread throughout the community that offers greater pricing elasticity to meet a wider range of financial options for prospects without eroding rate/ RPU.  Apartments with a premium location (near an elevator, on the first floor, near dining room etc.), premium view or with premium amenities (upgrades, closet space square footage) are priced at higher rates.  Apartments with undesirable locations (end of long hallways, upper floors), undesirable views (parking lot, dumpster, mechanical units) or with a lack of amenities (dark, small, limited closet space) are priced at lower rates.  This strategy allows 3 price points for each apartment type – standard, premium, and value so the overall community still achieves the average rate while offering a greater range of pricing options.

Variable Pricing

Much like paying points on a mortgage, the greater the upfront move-in fee, the lower the monthly base rent.  For example, for every $2000 more paid up front, the resident base rent is reduced by $200.  This gives the community good cash flow up front, and the advantage for the resident is that the investment is paid back within 10 months. Then all future increases are based on the lower rate.

This strategy provides solutions for prospects who:

  • Have good liquidity from the sale of their home or from strong investments, but they do not have much income (they can put up a large move-in fee and buy down their monthly price that is within their income range).
  • Have a strong income, but do not have upfront cash (waiting to sell their home, money tied up in annuities, CDs or other investment).

Companion Living

In addition to “purpose built” companion apartments, this strategy creates companion living apartments out of studio, alcove, and traditionally private one  &  two bedroom apartments.  The companion price is set between 55 – 65% of the private rate for each resident.  It creates a very low price point, which is attractive to residents who would traditionally be financially disqualified.  It provides the community with 110 – 130% of the private rent revenue and two LOCs.

To be successful, the community needs to set up companion model apartments to show how a small space can work for two unrelated residents.  It may also require some form of divider for privacy.

There are probably many other great ideas out there! Are there other creative pricing strategies you have used successfully to balance the growth of both rate and occupancy? Let’s Chat

 

sales

How to Increase Sales In Senior Living: The Occupancy Conundrum

Senior living operators often use the words “sales” and “occupancy” interchangeably.  While closing sales is a key component of growing occupancy, sustainable results require a more collaborative strategy. Occupancy involves sales AND marketing alignment, effective service delivery, and strong retention efforts.

Let’s break down each component and learn how to increase sales in senior living. 

Align marketing with senior living sales.

The senior living sales and marketing teams need to collaborate. Together, they will create and execute a marketing plan that will result in more move-ins. A good plan will include things like website optimization, paid advertising, direct mail, social media, and marketing events. The plan should also include specific sales activities, such as nurturing leads, generating tours, doing site visits, networking, and conducting scheduled sales calls.

But even if your sales and marketing teams work swimmingly together and bring in quality leads that convert to move-ins, that might not be enough. Bad services, such as med errors, yucky food, and boring activities, will turn those move-ins into move-outs. Obviously, move-outs erode occupancy and revenue.

Bottom line: Before bugging the senior living sales director for more move-ins, evaluate move-outs. Are they unusually high? If yes, assess your services and retention efforts across all areas of operations. (Keep reading for details.)

Improve your service delivery.

Are you delivering the services promised in your collaterals?  Many “silent” move-outs happen due to issues no one wants to talk about. Sure, some folks will move to a competitor. But what about people who move out for the following reasons:

  • Respites that don’t convert – they “tried out” the community but didn’t have a good enough experience to become a permanent resident
  • Moved home with family (thought the family would do a better job)
  • Financial move-out – they may be able to afford it but no longer see the value
  • Residents who move out into their own condo or apartment and bring in-home care

Even worse: Many dissatisfied residents simply stay, but they tell everyone that the community is not what they expected. They share their disillusionment with their physicians, family, and friends. No, they may not erode occupancy, but they won’t help increase occupancy with referrals. Remember, resident and family referrals have one of the highest conversion rates of any source (30 – 35%).

Boost retention efforts.

If senior living operators spent as much time managing the back door as they do driving move-ins through the front door, occupancy and revenue would be far greater. Some ideas to proactively retain residents longer include:

  • Invest in updated technology and software that monitors resident patterns and health trends with predictive functions to detect changes before an incident or decline occurs.
  • Hold weekly resident tracking meetings to pro-actively manage resident care collaboratively.  These meetings should include representatives from every department and always include input from caregiving staff.
  • Establish protocols for visiting residents when they are out of the community in an acute setting and managing their care by participating in care planning/ discharge planning meetings.
  • Set retention goals for your nurses to mirror the move-in goals for your sales team.

If you only focus on the sales portion of the occupancy equation, you will miss 2/3 of your opportunity to grow your market share & profitability.

Need help with any of the above? Before we created our agency, we spent decades working in the industry (sales, marketing, and operations). We know how to increase sales in senior living. Let us help!