Voices: How to Market Repositioned Senior Living Assets
In this Voices interview, Senior Housing News sits down with Living Forward Partner Dana Wollschlager to learn sales and marketing techniques for repositioning senior living assets, why market studies are critical for success and how one operator in Michigan used free meals as a touchpoint with prospects for a repositioned community.
Senior Housing News: How do you know when it’s time to reposition? Is there a list of factors you use to compare when it’s time versus when it isn’t?
Dana Wollschlager: Yes. I think the most obvious one is your building is empty. If you have assets where you’re struggling to maintain census or occupancy, that’s probably the first tip-off. Or you may be seeing a slow decline in your census. Part of it might be driven by new assets coming into the marketplace. People are often attracted to the shiny penny. That can have an impact on your assets.
The majority of the clients that we work with that are reconsidering any sort of repositioning options are really looking at their long-term-care product, as well as maybe some of their assisted living product. Clearly, from a long-term care perspective, people are not interested in shared rooms. If you’re a provider that still has three- or four-bed wards or have rooms that do not even have a bathroom, shared or not, that’s even worse. That’s for sure a sign you need to reposition.
Another area to consider is if you’re struggling to see move-ins, you do a market study and it shows that the market is overbedded for a specific product type — that should tell you right there that you need to reposition. And if the market study shows there is plenty of market demand, but prospects aren’t moving in, then the issue could be your position and perception among consumers in the market.
What is the biggest mistake that communities make when planning a repositioning?
Number one, your decision to make those types of capital investments needs to be based on facts. The market study uses data to tell us that there is demand for the type of product that you want to reposition it into. Just because we know the consumer isn’t super interested in long-term care doesn’t necessarily mean that equates to, “I should convert that area over to assisted living.” You could be overbedded for long-term care and overbedded for assisted living, or just not have enough demand. The last thing you would want to do is spend a lot of money and not be able to generate revenue from that decision.
Number two, your decision needs to make financial sense. You need the data from a pro forma that tells you that you can make that work. It is hard. Providers get really fixated on the revenue that long-term-care beds generate. What they don’t fixate on enough are the margins and how narrow those are. If they’ve got a lot of overhead that they’ve allocated to the long-term care side, taking 60 beds offline is going to have a significant impact on the bottom line, and many times makes paying off debt difficult. Understanding the market dynamics, as well as the financial dynamics, is really what should guide decisions.
How does a market study help marketing and sales? You touched on this, but let’s go further.
First of all, the basics are going to tell you what there’s demand for. As you dig deeper into the market study, it’s rich with data. It will tell you how your competitors in your market area are positioning their products and services. It will tell you what they’re charging for rent and what’s included in that rent. It’ll tell you how they’re pricing any additional services like levels of care, or any ancillary fees that they have for maybe additional meals, housekeeping or a second person occupancy.
It is going to give you a whole host of information that helps you better understand your position in the marketplace compared to your competitors. It will also show you penetration rates. It should look at gross market penetration rates and project penetration rates. That will tell you what percent of the market you need to capture in order to maintain a 95% occupancy.
One of the things that we always include in our market studies is a construction versus inventory calculation. We will look at all the new products coming into the marketplace as a percent of the existing product. The lower that percent, the better off you are. The higher the percent, that would suggest that it’s going to take quite a while for you to fill those units that you’re bringing online. That’s not a bad thing. You could have a very high construction versus inventory calculation but still have demand in the market area. It just means you’re going to take longer to fill. That’s important to understand so you’ve got enough working capital to cover it. This can also tell you to what level of repositioning you need to do; is your main competition for residents going to be brand new communities or older properties? This is important to understand and can have a big impact on the costs of the reposition.
How is marketing a repositioned or repositioning campus different from marketing an existing campus?
If you are repositioning any long-term-care or skilled nursing environment to a housing-with-services environment, you want to be really thoughtful about rebranding and creating a new image for this campus. You don’t want people to say, “That was the old nursing home and it still feels like the old nursing home.”
We worked with a client in western Michigan that took 72 beds of long-term care and converted it to 22 high-end, entrance-fee independent living units. They really had an entirely different demographic that they wanted to attract. Not only did they want individuals who could afford the entrance fee, but they wanted a younger older adult.
They had to reshape their message and brand to attract people to that unit. And because they did a great job of rebranding it, they had no trouble filling that building. People didn’t look at it like it was the old nursing home. People looked at it like it was a brand-new independent living building, and were very attracted to it.
How should the marketing and sales teams adapt their communications for a repositioning?
They have to get creative, they have to be thoughtful and they have to make that human connection. If you’re not making that human connection, your prospects are not coming. I remember in my former life when I first started out in senior living, I might tour a family three or four times before they could make that decision and that choice. That has not changed. The reason it takes that long is because they need to develop a relationship with you; ultimately they have to trust what you and others are telling them and what they are seeing.
You have the same thing that the community down the street has. You both have an apartment, and you’re both trying to create community. You offer dining, they offer dining. You have activities, they have activities. So what you’re selling is, in large part, a trusting relationship, and that’s what they’re hoping to feel that connection with.
Another real advantage of marketing a repositioning effort is you have a story to tell about the longevity of your organization. When you reposition your campus, you are reinventing the organization to serve future residents. In this day and time, we don’t know if the new shiny penny down the street will be here or will be sold in 18 months. You also have an advantage of existing resident ambassadors being able to tell their stories and how excited they are for the positive changes to the campus. Referrals are still the best indicator of success in filling up a campus. If residents love where they live, they will want their friends and family to join them.
What steps should you take to successfully market a newly positioned campus?
This this is going to sound incredibly obvious, but you first need a marketing strategy. You would be surprised at the number of organizations that are still taking a “If you build it, they will come” approach. You need a comprehensive marketing strategy that includes a vision, a digital media platform, and models that people can see what your product is going to look like. Even just having a strategy puts you ahead of most competitors.
It’s especially important during COVID to have an online presence and virtual tours, so people can get the sense of the environment and culture. Equally important is making sure that there’s accountability on your sales staff. For example, we want 50 new leads that we are going to convert into four different move-ins. If you’re not getting those 50 leads, why is that? Go back and figure it out. Oftentimes, organizations wait way too long and then they end up doing a lot of backtracking.
Do you have any favorite examples of communities in the past few months that have taken a really innovative approach to marketing a repositioning?
Yes. The organization I mentioned that was repositioning from a skilled nursing environment to an independent living environment really wanted to attract that younger older adult. They already had independent living on their campus, but it was a little bit different because it was a cottage environment, and they converted this existing building into apartments. It was more like a hybrid of 24 units.
They continued to leverage the relationship with their existing independent living residents and they said, “Look, do you have any friends who are out in the community who you really believe would benefit and enjoy living on this campus and living in this community? If you do, would you be willing to share their name with us? We’d like to reach out to them through our volunteers and touch base once a week to make sure that they’re doing OK and to help alleviate some of the social isolation. Then number two, if they’re amenable to it, we’d love to deliver them a fresh, healthy meal once a week just to check in on them and see how they’re doing.”
Not only did they deliver one fresh meal, but they delivered one fresh frozen meal that they could eat later on in the week, too. They saw more than a 30% uptick in lead generation to their campus.
Lastly, how has COVID affected marketing and sales for senior living communities? And what do you anticipate seeing in 2021?
I would highly encourage every provider to go read our new COVID-19 sentiment report, because what that report demonstrates is that residents were very happy to be living in a senior living community during COVID. It gave great feedback on where operators could make improvements, but one of the things that we discovered, hands down, was that residents felt safe and they felt that the providers did everything they could do to keep them safe. That’s a great message.
The data came directly from residents and staff members, with more than 100 pages of information that you can start leveraging in your marketing materials. There’s something in there for everybody, at every level of care.
Editor’s note: This interview has been edited for length and clarity.
Plante Moran Living Forward provides development advisory and owner’s representation services that address the evolving real estate, development, and construction needs of senior living communities. To learn more about how Plante Moran Living Forward can help your business, visit pmlivingforward.com.
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