The majority of senior living providers pay commissions to their sales and marketing staff, suggesting that a robust incentive structure is crucial for attracting top talent, according to a recent CFO Hotline poll conducted by investment bank Ziegler.
Overall, about 70% of respondents said they pay commissions. A total of 182 organizations participated in the poll, conducted over the past two months. The majority of respondents were chief financial officers and other finance leaders at non-profit continuing care retirement communities.
There was notable variation between multi-site and single-site organizations. Nearly 78% of multi-site organizations pay a commission, compared to roughly 66% of single-site organizations.
“I don’t know that I expected the single-site and multi-site organizations to differ,” Ziegler’s Lisa McCracken, vice president of senior living research and development, tells Senior Housing News. “The why behind that is not known. It could be that single sites might pay a higher base salary.”
Given this uncertainty, the fact that multi-site organizations are more likely to pay commissions should not be interpreted as a “good or bad thing,” McCracken cautions. However, she says the poll results indicate that top sales and marketing talent likely do expect a competitive compensation package, which might include some form of incentive.
“I think our general takeaway is that organizations need to invest in their sales and marketing staff, budgets and so forth,” McCracken says. “They need to not underestimate the talent they need to attract and the funds they need to allocate appropriately.”
Ziegler conducted the poll in response to multiple requests from senior living CFOs. Their interest in this topic suggests that they recognize the increasingly crucial role of marketing in a post-recession economy, McCracken surmises.
In 2005 and 2006, there was a steady influx of new senior living customers, she notes. Now, many of these consumers have seen investment portfolios and retirement savings diminished, and they are more cautious with their money. More skillful sales staff and expansive marketing efforts are needed as a result.
The largest proportion of CFO Hotline respondents—41%—said that annual marketing costs per budgeted sale are between $10,000 and $20,000. While there is no prior data for comparison, McCracken suspects that this number has been on the rise. She points to other Ziegler research, showing that marketing costs for new CCRC campuses increased from $13,000 per unit in the 1990s to $41,000 per unit this decade.
Written by Tim Mullaney