By Amy Brodie, Vice President of Client Services
Life Plan Communities everywhere are approaching budget season, and this one will perhaps be like no other. In light of the tremendous level of change we have seen over the past 18 months, it is no surprise that every provider is taking a closer look at planning for the future. Whether your community is approaching the future from a position of strength, or now has some ground to make up, an effective marketing budget is paramount to success.
We’ve already covered why your senior living marketing budget needs a second look, and if you caught our recent webinar, “Approach Your Marketing Budget With Fresh Eyes,” you have gained insight into making every marketing dollar work harder while simultaneously not over- or underspending.
So, now you’re ready to start putting together your organization’s marketing budget for the next fiscal year. Here’s what to think about as you begin to build it.
Define the year ahead
As you begin to plan, your team should ask itself the following questions about the status of your organization as a whole. Try to look at these questions and answers in context of the next fiscal year or budget cycle:
- Is our organization in growth mode?
- Is our organization coming out of strategic planning?
- Did any of our buildings open five to six years ago, and if so, are we ready for increased attrition?
- Are we taking any residences offline for renovations or upgrades?
Answering those questions should give your team a feel for what kind of occupancy challenges it foresees, or what kind of major campaign goals it should factor into the next year’s marketing spend. For example, if an expansion or major renovation project is underway, it will significantly affect the required marketing dollars to generate outside interest, secure financing via deposits and close sales for the new units.
On the flip side, your organization may expect higher-than-average attrition rates, or that a block of residences will go offline for renovation. Either of those cases would create a scenario in which marketing spend would either have to fill the gaps in occupancy that would occur or effectively presell the renovated residences when they come back online. This will increase the priority of generating new move-ins.
Although the questions above may beget big-picture considerations, I’ll reintroduce what my colleague and webinar co-presenter, Lisa Pearre, shared in her recent article:
“Even though a particular goal or vision can seem far away, an organization can take proactive steps toward achieving it by factoring that goal into the next 12 months of its marketing budget,” Lisa wrote.
Just as we saw the most proactive organizations realize the most success in marketing amid COVID-19, we believe those same proactive approaches will yield the greatest success as we emerge from the pandemic.
Use the data you have
Everything that goes into your marketing budget needs to have a clear link to your occupancy goals. If you know what a lead costs you and how many leads you need to hit a goal, along with other significant data, it is a matter of doing the math. The key is to know those numbers and where to get them.
Here are some of the key metrics that Life Plan Communities should factor into any marketing budget:
- How many gross sales do you need to achieve the occupancy goal?
- Is your sales team the right size to realistically achieve the average number of sales per month based on this goal?
- What is your trend (e.g., over the past three years) for the proportion of sales that has come from major lead source categories (referrals/word of mouth, direct mail, digital advertising, traditional advertising)?
- What has the closing rate been for these leads to sales? What is your cost per lead and cost per sale, again, looking at a three-year trend?
- It’s not just about how many leads, how many contacts and appointments by your sales team, and how many sales and move-ins you generate. Look at the relationship between them: What has been your conversion rate for leads to appointments? Contacts (calls/emails/texts) to appointments? Appointments to sales? Sales to move-ins?
As your team begins rough sketches of the next fiscal year’s budget, use those questions above—and your team’s historic sales experience—to forecast the corresponding north-star metrics for your marketing and sales program.
Avoid these three mistakes
From our experience and historical knowledge on what is—and is not—effective, here are three things not to do when crafting your marketing budget:
1) Don’t mistake community support for quantifiable lead generation sources.
This may sound harsh, but spending money on advertising in programs and publications because it makes board members or residents happy to see you in those publications often does not result in quality leads or real inquiries to the sales team.
All media placements are important, but you should draw the line on which ones are really producing leads, and budget for each type of placement separately.
2) Don’t forget to build in contingencies.
Don’t allocate your marketing budget so tightly that you have no contingency to pivot to if an opportunity or challenge arises during the year. No one has a crystal ball to foresee what will be ahead in the coming months. Just look at 2020!
3) Don’t put your marketing program on autopilot.
Once you develop your goals and budget and get started, monitor the results and progress monthly and adjust as needed on a quarterly basis. This will ensure that you stick with what works and pull back on anything not producing the results you seek.
So…then what? Once your team has produced a draft of the marketing budget for next fiscal year, what’s next?
We recommend a thorough review from a marketing partner or advisor to make sure that the budget aligns with your organization’s goals. And when it’s time to present the budget to the board, invite your director of marketing to present the insight into the numbers: the “why” behind the budget.
Following the guidance here—as seen within our recent webinar—will provide the confidence in knowing that the senior living marketing budget you’ve created will get approved. More importantly, it will help accomplish your Life Plan Community’s goals.
For a deeper look at crafting an ideal senior living marketing budget, click here to watch our recent webinar, “Approach Your Marketing Budget With Fresh Eyes.” And for more thought leadership spanning the entire senior living sector, click here to visit the Love & Company blog archive.