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. Providers 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.”
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 and we win them because they are private pay and 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, and what is revealed is 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.
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.”
Wondering how to find (or create) your own blue ocean?
Life2 is a predictive analytics company that helps operators find their “blue ocean” by focusing on the aspect of occupancy growth that all others ignore – proactively managing move-outs.
While other operators are putting all their energy exclusively on generating more move-ins, Life2 identifies factors such as unexpected move-outs, declining health conditions, timeframe for move-out, effective interventions, and readmissions. They also increase sales conversions by scoring leads and predicting the timeframe for moving in and expected length of stay. With this tool, senior living sales teams can focus on prospects with longer lengths of stay, and care teams can focus on supporting residents with proactive interventions to improve resident retention. This is what creates stable occupancy!
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.
Interested in learning more? Please attend the session “How to REALLY Build Stabilized Occupancy” at the Argentum Conference in Denver on May 10th from 1:30 – 2:45 pm.
See Life2 in Action! Download our free ‘Predictive Analytics’ case study by filling out form below: