Non-profit Operators Set Higher Marketing Budgets as Shift to Digital Takes Hold – Senior Housing News

Senior living operators are on average spending more of their operating budgets on marketing in 2022, and more of them are offering sales commissions than they did seven years prior.

That’s according to the latest CFO Hotline survey from Chicago-based specialty investment bank Ziegler, which collected responses from 195 CFOs and other financial professionals with nonprofit senior living operators. The survey, published this week, solicited responses on marketing budgets in 2022 and then compared them with responses from a similar survey conducted in December 2014 and January 2015.

Slightly more than two-thirds of those surveyed worked at single-site senior living organizations, with the remaining 31% represented multi-site organizations.

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According to the report, single- and multi-site senior living nonprofits are spending an average of 4.86% of their operating budget on marketing in 2022, an increase from 2015, when they devoted 3.9% of their budgets to marketing.

Single-site operations reported spending 4.22% of their operating budgets on marketing in 2022, compared to 3.4% in 2015. Multi-site operators reported spending 6.3% of the operating budget on marketing in 2022, compared with 4.7% in 2015.

How senior living operators approach sales and marketing has shifted in the last two years, according to Ziegler’s director of senior living research, Lisa McCracken.

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“The transformation to more digital approaches and investment in data-driven approaches has increased for sure,” McCracken told Senior Housing News.

Although the overall average percentage of their operating budget that operators spent on marketing rose between 2015 and 2022, slightly more than half of the surveyed operators (54%) spent 3% or less of their operating budgets on marketing in 2022.

Slightly more than one-quarter of the surveyed operators spent 4% to 6% of their operating budget marketing in 2022, and a little fewer than one-tenth of them spent 7% to 10% of their operating budgets on marketing.

A scant number of the surveyed operators (2%) — mainly multi-site organizations — reported devoting more than 20% of their operating budgets on marketing.

The number of senior living operators that pay their sales and marketing staff a commission increased to 75% in 2022, up from 70% in 2015.

Most of the surveyed operators told Ziegler that they currently budget $10,000 or less (34%) or between $10,000 and $20,000 per sale (30%); while fewer said they budget between $21,000 and $25,000 (12%) and greater than $25,000 per sale (12%).

“We know that marketing cost per sale is going to be much higher for a new community under development than an expansion project with an existing community,” McCracken said. “So, these figures will vary depending on the project, the geographic location, the product type, et cetera.”

Another notable data point is that nearly three out of every 10 surveyed operators said they are looking to make changes to their contract options.

“I anticipated this to actually be a little higher as communities really try to integrate more choice for today’s consumer and potentially hit on different income groups,” McCracken said. “We’ve been seeing communities look at their contract options and provide some greater flexibility, allowing the consumer to select an option that is ideal for them.”

Closing a sale in 2022 also “takes more work and touchpoints today than it did five years ago or 10 years ago,” she added.

“There have been times when things get tight and people look to the marketing budget for expense reduction,” McCracken said. “During those difficult times, we should be doing the opposite.”

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