Benchmarks and KPIs: Beware of these Numbers

Occasionally, I will have a sales and marketing director reach out to me and ask about average sales conversion ratios and how many leads they should be generating each month. My response to these questions has changed over the years because how data is tracked and reported has changed!

Historically, there are Customer Relationship Management (CRM) companies that have released senior living benchmark reports that give us some indication on how the industry is doing when it comes to how leads are generated (marketing source), how many tours are completed and what percentage of those actually move in. It’s even better when these are broken down by care level, as the sales journey will often differ for an independent living customer than an assisted living one. But beware of these numbers and how they are reported. The data is affected by how the CRM is set up and how the data is entered or tracked. What I have learned over the years is that there is not a standardized industry process for how companies track the lead source or even if they track all leads or just “qualified” leads. Since there are so many variables to how the data is collected and reported, I caution readers to take these with a grain of salt and instead of relying on so many unknowns, focus on their own internal numbers to set expectations and goals from a position they are fully aware of.

How do you do this?

First, I encourage each organization to know some basic data that is necessary to define the number of leads, tours and move-ins needed to reach their occupancy goal. Here is what you should know (by Care Level).

·         Total Capacity (generally this is # of units)

·         Starting Occupancy

·         Ending Occupancy Goal and by what timeframe

·         Annual turnover rate (attrition)

An example of the above could be a community with 100 IL units with a current occupancy of 85 (85%) and an annual attrition rate of 15%. The occupancy goal is to reach 90 (90%) by the end of the quarter (Note: each quarter has 3 months or 13 weeks).

The above is going to tell you how many move-ins you will need during the quarter.

Example: Current 85, goal is 90, you need 5 to fill the current gap and we also need to plan for the 15% move-out rate This means you will need to average 2.7 move-ins and 1.1 move-outs each month in the quarter to reach your goal of 90.

Additionally, organizations should know what their lead-to-tour and tour-to-move-in conversion ratios. The higher the ratio, the fewer leads and tours you will need to complete. Conversely, the lower the ratio, the more leads and tours you will need to complete.

The number of leads and tours will be dependent on how well you convert leads to tours and tours to move-ins. Some lead sources have a higher conversion ratio than others; it’s important to track these so that you can set expectations on how many it takes on average to equal one move-in. For example, if a referred lead converts at 20% lead to move-in and a website lead converts at 3%, you would need 5 referred leads to equal one move-in compared to 33 website leads to generate the same one move-in.

If you’re interested in learning more about how to calculate your lead needs or improve your sales conversions, reach out for a free strategy session today!