07 Feb Why Your 2020 Goal Should be Building a Wait List
Last October, I asked a lot of people the same question at the LeadingAge National Conference: “Are you happy with your census levels?”
Overwhelmingly, the answers were: “We’re doing great. Almost full!”
And chances are, your community is probably doing great as well. You’re probably full or “almost full!”
But let’s not get lulled into a false sense of security. Yes, economic growth is unprecedented. Unemployment is low. Home prices are high. The stock market has set records. Earnings growth is good. Consumer confidence is above average.
All of this is terrific news for communities, retirees and all those adult children who help contribute financially to their parents’ care.
But we need to remember that a recession—just like spring, summer and fall—will come. And when it does, you’ll wish you had focused on generating a wait list when times were good.
The hidden powers of the wait list.
Recession forecasting aside, building a wait list is ALWAYS a good idea. It’s like having a higher than needed credit limit or extra money in your savings. After all, wait lists work like a reserve. But they also create sales momentum, giving you potential residents who are pre-committed and likely to follow through when the time is right. Plus, since they are committed to YOUR community, you have the opportunity to continue nurturing the relationship through wait list activities, which makes your wait list members far less likely to be snatched up by a wily competitor.
Finally, a wait list makes maintaining sales momentum much easier than starting from a standstill. Studies as far back as the 1930s have shown that brands that invest in sales, advertising and marketing during both good times and bad do better overall compared to those that advertise only when they have to, or when times are good and people are buying.
Yes, it may seem counterintuitive to advertise when you’re nearly full, but there’s another reason for it: social proof.
We assume that anything with a wait list must be good because so many other people are trying to get in. Whether it’s private schools, high-end restaurants, top doctors or a food truck with a long line, we look to the behavior of other humans as “proof” for what we should do also. This means a wait list is also very good for your brand. If you have a wait list, people will assume many great attributes about your community without necessarily requiring proof of those qualities. Moreover, they will be predisposed to look for the good in your community. In short, a wait list sets expectations in the right direction.
Conversely, we learn time and again through focus groups and research that having a “sale” on community fees is often perceived by prospects that “there is something wrong with your community.”
Using scarcity and exclusivity to your advantage.
At 3rdThird we always want people to find the right community for them. With that said, when they do like a community, it takes a nudge to get them to follow through. That’s where scarcity and exclusivity can be used to your advantage.
A wait list fulfills two prime influencers when it comes to purchasing anything. These are “scarcity” and “exclusivity.” Scarcity will drive people to buy something simply because it is hard to get or there’s very little of it. If something’s rare, we want it more than if it were plentiful. This rarity can create an aura of exclusiveness as well. Even if a community isn’t “exclusive” in the traditional sense of a select, members-only club with private buy-in opportunities, having a simple, long wait list can still create a powerful atmosphere of exclusivity.
And when it comes time to negotiate, there’s never a better counter than, “Sorry, we have several other people who are interested in this as well, so I am not willing to lower the price.” Also, if there ever comes a time when you need to raise the cost of a lease, a price hike is much easier to justify when there’s a list of people waiting to get in. People understand the simple principle of supply and demand, even if that demand was in part artificially created by you and your marketing team.
So back to recession proofing your community…
When recessions come, they usually come on slowly. But they can arrive quite quickly, like in 2008 when the housing bubble burst. Either way, a wait list can act as a buffer. Instead of dropping to 80% occupancy, you might drop only to 90% or 95%. Or, if done well, you might stay almost full. Other communities that were already hovering at 95% in good times could find themselves at 60% in less than a year or two. Unfortunately, once you’ve dug a hole, it’s much harder to get out of it than it would have cost to maintain sales momentum.
One rationale for not marketing when you’re almost full is to save money in your marketing budget. However, as you’ll see in the following scenario, it actually increases your marketing spending when you have to make up ground later.
This is a terrible scenario for a community to be in. Low census rates can mean cutting staffing, programs, food quality and services, which will invariably impact the quality of life for your residents. Then you start losing residents because “the place isn’t the same anymore.” That’s when distressed communities panic and start slashing prices just to get new residents through the door to stop the bleeding. Other communities do the same, and it quickly becomes a race to the bottom.
… Except for those communities who had a decent wait list to begin with. They can maintain their census and weather the storm without having to cut prices, staffing, programs, quality or services. And when the recession is over, they’ll be in a much stronger position to capitalize on the economic recovery.
So, if you’re “almost full” and want to be in an enviable place of having a wait list and all the advantages it confers, consider investing a little bit more in your marketing and advertising. If you are resting on your laurels today, then 2020 is the year you should aim for building a healthy wait list—just in case.
Derek Dujardin is creative director at 3rdThird Marketing in Seattle, which specializes in creative branding, lead generation, digital marketing and social media for senior living communities. Please feel free to contact Derek for further inquiries.