The science of cause and effect regarding the structural foundation of the senior housing and care industry.
By Anthony J. Mullen, Founder, Advanced Sales Summit
THE SCIENCE AND THE SIREN’S CALL
ISSUE 1: Why Flawed Thinking Causes Poor Occupancy and Move-In Results
For 30 plus years, I have passionately sought to understand the science of cause and effect – the structural foundation of the senior housing and care industry. Some of you know of me through NIC and the NIC map data base (which I was blessed to conceive and help bring into existence for the industry), and some of you know me for the many research projects I have authored or co-authored in the field, especially in the sales and marketing discipline, which are presented each year at the Advanced Sales Summit.
As a student of Peter Drucker and his critical insight: “that any business has two – and only two – basic functions, marketing and innovation, all the rest are costs,” my passion has been to scientifically understand the metrics of marketing, and especially its most important single component (for high-end purchases/ leases) which is personal selling. Personal selling is by far the most important of all the “Ps” or components of the marketing science for our field, but this fact is poorly understood in our field.
Floundering at 88%
In this inaugural issue, I wanted to share the critically important evidence as to why the assisted living industry is floundering at an 88.3% average occupancy, while independent living is doing just a bit better at 91.3%. In fact, occupancy has been declining/flat for the last two quarters in assisted living, despite the fact that we are 7 years into an economic recovery. This is proprietary research, which has never been shared before in a public outlet, and I am pleased to share it with the readers of “Senior Housing Forum” in honor of the work Steve Moran is doing to help the industry get significantly better at what we do.
So, what explains this harsh reality? Certainly, about 15% of the occupancy loss in assisted living is due to a higher than normal amount of new openings, but the major reason by far is that there is very little understanding of the importance of the sales position, especially the necessity of improving the closing ratio (the percentage of those who visit/tour with a sales professional at least once who move in).
Productive Selling Time
After many years of tracking results from my own communities and good samples by other companies, I believe the evidence is overwhelming that in about 95% of the cases, 100% occupancy or maximum revenue can only occur through more “productive selling time” and not through more leads and thus more tours. Yet, virtually all the top 50 companies operate by thinking that a maximization of leads/tours approach is the superior approach to maximizing occupancy and revenue. It is not! The overwhelming evidence of the typical approach is that it is far inferior.
The Evidence
Here is the empirical evidence based upon many years of research:
The Average Assisted Living Community of 60 Units Which Maximizes Leads/Tours
| Annual Visits/Tours | Close Ratio | Close/Move In | Average Occupancy |
| 130 | 23% | 30 | 88% |
The “Professional Selling” Assisted Living Community of 60 Units Which Maximizes Closing Ratio
| Annual Visits/Tours | Close Ratio | Close/Move In | Average Occupancy |
| 90 | 50% | 45 | 99% |
Note Well This Truth: The assisted living community focused on professional selling will actually have 30% fewer visits/tours over a full year, but will produce 15 more move-ins from virtually the same pool of leads (in some cases from even fewer leads than the average AL community focused on maximizing leads and tours).
Now, the same science applies to independent living as well (both rental and entrance fee). Here are the metrics for rental independent living.
The Average Independent Living Community of 130 Units Which Maximize Leads/Tours
| Annual Visits/Tours | Close Ratio | Close/Move In | Average Occupancy |
| 186 | 23% | 42 | 91% |
The “Productive Time” IL Community of 130 Units Which Maximize Closing Ratio
| Annual Visits/Tours | Close Ratio | Close/Move In | Average Occupancy |
| 130 | 46% | 60 | 99% |
Now, there are a number of critical skills that must be learned, practiced and mastered in order for a sales professional to increase their closing ratio to 46-50%. We will cover these in the next few issues of the “Science and the Siren’s Call” at Senior Housing Forum. You will be amazed at the skills, which the very best sales professionals have mastered. The exciting reality is these skills can be mastered by anyone willing to put the time and effort into learning them and practicing them, but it takes focused time and ongoing practice.
Issue 1: Do You Know What It Takes to Master Your Closing Ratio?
Anthony Mullen is a partner in Royal Star Properties and Journey to Mastery. He also founded and chairs the Advanced Sales Summit, which will be held for the 20th time on June 27-28, 2016 in Jupiter Beach, FL. More information can be found at TheAdvancedSalesSummit.com.
