Take the "Mystery" Out of Research

Seniors' Housing News, Fall 2003

As more developers and builders move into the seniors housing market, they are realizing the integral role thorough research can play in determining their success. They increasingly use front-end demographics, feasibility studies, phone surveys and focus groups to analyze potential customers for senior or market-targeted options and to test market response before finalizing design.

One of the first challenges a developer faces is defining the seniors housing products he or she wants to introduce. Will it be an active adult lifestyle community, an independent or assisted living or a service-enriched community; or, increasingly, a mixed-use, multigenerational neighborhood that combines several or all of these categories? Because all of the nuances of mature market and senior living options are confusing enough to industry professionals themselves, one can only imagine how confused a prospective buyer might feel.

Enter consumer-based research to fine-tune the product offering, keep the developer focused on his or her market, and keep the market informed.

Consumer-Based Research May Provide Answers

Let's assume that highest and best use and demographic studies have been completed, and initial indications are that the project is feasible. The next step might be mail or phone surveys to discuss the potential product being offered directly with the targeted market. In these studies, typical questions can deal with reaction to location, type of housing desired, numbers and types of rooms desired in the home, services and amenities desired both in the community and in the clubhouse, reactions to Home Owner Associations fees and maintenance programs, just to name a few.

Generally speaking we look at a 5 percent to 7 percent response to mail surveys. On a sampling of 5,000 mailed out this could mean up to 250 responses. Of those, it is not unusual to have 90 percent or more ask to be kept on a mailing list for more information. This can equate to a cost per lead of about $50, a nice investment to get marketing efforts started. Another option may be to survey via email following initial phone calls. The younger the market, the more likely they will favor this method. However with new programs under way to restrict telemarketing by removing names from solicitation lists, the mail survey may take on even greater importance as a method to reach potential prospects.

If a community has received good "press" prior to the beginning of construction, a phone survey to business professionals or other potential referral sources might be in order to test their knowledge or perception of the new proposed development. Getting a good "buzz" going in the community can be worth its weight in gold for pre-marketing efforts.

Focus groups are a logical progression following a more broad-based survey. Participants can be drawn from the survey respondents, as well as from other key constituencies to the developer, including Realtors, business professionals and frequently adult children of aging parents. Focus groups help the developer move to the next level of refining the product and better understanding the local market

Using Research for Existing Communities

What if sales are down or moving slowly at an existing development? You know your salespeople are doing a good job - or at least you think they are. Your staff consists of warm friendly people, they have been trained on how to present homes or condos, and the property looks great. Although inquiries are high and walk-in traffic is good, they aren't closing sales. What could possibly be wrong?

With increased frequency, housing companies are starting to apply research techniques used in other industries. In many cases this consists of "mystery shopping" both the company's own sales staff and/or that of their competitors. This is not intended as a "big brother" approach to spying without being seen; mystery shopping actually bears a closer relationship to quality control. Some forward looking companies actually use the data gathered to create a benchmark or standard for excellence in sales performance against which all of their sites and on-site staff can be measured.

We recently traveled to mystery shop over 30 different under development or management by a top-ranked company. In nearly every case, we found warm friendly staff. These were people devoted to their profession of guiding prospects into the appropriate lifestyle choice. In addition they asked good qualifying questions about the prospect's housing preferences and were fair on determining social needs or desires. They understood their product, the community benefits, the types of services and amenities available and the price structure. They also gave tours of the common areas that were interesting and informative.

But, there were two areas where the process almost always broke down. One was in determining the financial qualifications of the prospect. When retirees buy their "last home" they are more focused than most buyers on the costs involved in purchase price, transitional financing options and HOA fees. These people are either on a fixed income or about to go into that mode. Sales staff must be comfortable in probing these issues and be well informed on options available. If salespeople aren't discussing these subjects with their prospects face-to-face, they have lost the opportunity to meet objections, answer questions, provide reassurance and move a step closer to the sale.

Picking the Fruit That Hangs Low on the Tree

The other area of weakness that we see in most shopping assignments comes at the very end of the sales process. Salespeople simply do not "ask for the business." The best presentation in the world will not work if at the end the professional salesperson does not close the sale. Unfortunately, our fine salespeople have been pre-conditioned to expect that the prospect will have to think it over. This buyer has a reputation for doing a lot of research and visiting many times before making a decision, which has created a small army of senior housing salespeople who are "Tour Givers and Order Takers." By this we mean staff who can demonstrate the community and write up the contract if, just by chance, the prospect decides on their own that they wish to live there. One of the deciding factors in this type of sales will be giving the prospect a clear understanding of the HOA documents and deeds and restrictions if the community is structured in that manner.

Mystery shopping by a highly qualified shopping company can identify some of these problems and set the stage for coaching or formalized training so that staff can deal with this challenging buyer.

We recently shopped a community with multiple sites, and analyzed the staff performance of the salespeople who gave the tour. Some were primary sales staff and some were fill-in personnel. We evaluated initial impressions of the community and staff and initial greeting. We rated the staff person's ability to create a bond and establish timetable and price, as well as the way they presented the physical features and lifestyle of the community. We noted how well they met objections, created value and developed a relationship with us. We graded them on their level of real interest in us, if they discussed financial considerations and if they attempted a close.

What we learned was that of the 31 communities, those with scores at 90 percent and higher had 93 percent and higher occupancy; that tours given by non-marketing staff grade much lower (65 percent) but they do 45 percent of the tours, and that 61 percent of the communities scored less than 79 percent on the evaluations.

It seems clear that doing this type of sales staff and community analysis can give a developer/builder an opportunity to set benchmarks for quality control and sales excellence programs.

What Are Your Competitors Doing?

As long as your mystery shoppers are at it they might as well check out your competitors to learn what you are selling against. You can be sure your prospects are. Each senior targeted community seems to offer a slightly different take on how their homes and lifestyle options are offered. Having this knowledge allows you to revise or meet any incentives that may be offered by the competition and prepares you to feature your strengths and unique characteristics.

Exit Surveys and Lost or Delayed Prospects

Let's fast forward and assume that we've found out that the salespeople are doing a great job and still sales are stalled. At this point it may be necessary to climb out of our defensive attitude and put ego aside. It probably is time to find out why the target market is not responding to our product offering. One method is to stage exit interviews. This process involves a third party research company that intercepts prospects as they leave the models. Having a comfortable place to sit and a well-designed survey form are essential. This method gives the prospect a chance to share reactions to the model immediately upon walking out. The builder can analyze this data and seize the opportunity to make product or pricing modifications to stem the tide of prospects slipping away.

Lost prospect surveys can be conducted by phone, to gain reaction to visits to a community or homes. Many times this type of survey can provide great insights to sales staff and management as to why they are not still on the shopping list. Frequently when we conduct these surveys we stir up renewed interest and are able to turn over the prospect to sales staff for additional follow up.

Adapting any or all of these research techniques can assist the developer in doing a better job of designing a product that will gain wider market acceptance and creating a top level sales force that will move into the rarefied air of top level sales professionals. And the side benefit? No more slow sales and reduced marketing costs. I can live with that, how about you?

How to Choose the Right Mystery Shopping Research Company

Here are key questions to ask before selecting a research company to mystery shop your community and sales staff and to scout the competition.

What are the shoppers' qualifications?

Check out the mystery shoppers' profiles with the research company. Many times the company will not reveal names, but might give you a profile sheet so you can match the shoppers' age, income and educational level with that of your buyer. The shopper should be able to dress appropriately, drive the right car and have some knowledge of the housing market in the area in which you are doing business.

Do they have real industry experience or closely fit the profile of a resident or adult child influencer?

Ideally, mystery shoppers should come with a strong background in some aspect of the active adult or retirement housing industry. They may be retired professional salespeople or consumers who, as an adult child, may have influenced their parent's decision to make a move.

What type of training does the firm provide to the shoppers?

A research company should provide a training manual and a video to orient the shopper to the aspects of sales you will be looking at. They may also need to brief the shopper on special issues the client wishes to probe.

How much research is the firm willing to put in to understand your community and market area before it goes shopping?

Research companies should have the ability to research the market area online or through a network of local contacts; checking out points of interest, major employers in the area they may reside in and convincing addresses and phone numbers. These abilities will enable the shopper to create a plausible and convincing scenario.

How believable is the scenario that the shopper uses? Does it express urgency?

You shouldn't view this type of work as fabrication or "big brother is watching." Instead, mystery shoppers are playing a role or acting a part that ultimately will enable your salespeople to be the best they can be. The scenario should reflect a degree of urgency with a definite timeline for purchase or lease so that it is possible to test a sales person's closing skills.

What type of questionnaire and report will they use to show you the results of the shop?

The instrument used should have customizable features and all sales steps covered in a logical progression. The sales director should feel that comments and constructive criticism are phrased in a manner that makes a salesperson feel they have been coached, not criticized. In addition, you should be able to create a measurable benchmark and quality control program from the results.

What type of clients have they had in the past and what do those former clients say?

The research firm should be willing to share former clients as references, both from the management side and, if at all possible, from the people who have been coached. You should also find out how much repeat business the firm receives.