No sales data is 100% clean but most is useful!

Few if any data sets are a product of pristine data input, but, examine enough data sets from varied sources with enough different organizations, market segments and geography and useful data and trends are obtainable. So that is what I have been doing, and of course, the data I have been interrogating is UK sales data in the Retirement Living Sector. Trust me, I am the man you want to sit next to at dinner parties.

To be exact I am looking at Sales ‘Conversion Rates’ from 12 UK based AL / IL and Care Operators over the last 365 days. The overall data set is approx. 950 completed ‘sales’ (both rental and purchase) and covers all elements of the private pay market. From High End to Mid-Market.

The data is anonymous and aggregated, less the Gods of GDPR smite me down. It’s being published because it’s illuminating,, and should add to the productive debate about sales rates and occupancy in our burgeoning industry. ???

Let me define my terms first. The conversation rate I am referring to is, Visit to Move in. By this I mean, leads (individuals and couples) who have been:

·?????? Directly engaged and ‘worked’ by the sales team.

·?????? who have come on at least one tour of the community,

·?????? and who have subsequently moved in.

Before we get into the numbers, let’s take a moment as to why this particular number is so critical? Indeed, why this number is probably ‘the’ single most useful Sales metric. It’s an important statistic because this ratio is as close to a measure of objective sales performance that exists. To me the above three data points, which generate this number are the Airline Pilots equivalent of: altitude, speed and direction. ??

The reason this Tour to Move-in Conversion Ratio is so revealing is that is cuts out a lot of statistical noise. (see ‘Noise’ A flaw in Human Judgment, by Daniel Kahneman, Oliver Sibony and Cass R. Sunstein)?

If you simply use Sales rates (example: 2.1 units sold a month), as your headline measure of sales performance it’s a misleading metric of overall performance in comparison to your conversion ratio.? ?

For example. Operator A with a 150-unit community, may be selling an average of 2.18 units per month. Operator A has a sales team of 3 full time employees, with part time support from head office, and has ‘worked’ 14,000 leads and carried out 200 tours in the year. Input not unreasonable by UK standards. The output of this sales resource investment is 26 sales across the 12 months.? This generates a conversion ratio of 7.69%

In comparison Operator B has an 80-unit community with only 1 full time Salesperson and no support. Has worked 1400 leads, conducted 120 tours, and has sold 13 units. This generates a conversion ratio of 9.23%.?

If you focus your attention on units sold, its Operator A who has sold 50% more than operator B. Success? No, it’s actually operator B who is delivering a better sales performance. Further more where profitability is concerned, Operator A has a sales team salary bill of ￡150,000 and has spent ￡250,000 on marketing in the year. This generates a cost of ￡16,000 per unit sold.

Operator B has spent ￡50,000 on salary (+on costs) and ￡70,000 on marketing, generating a cost of ￡9,230 per unit sold.

Which operator would you rather be, and which operator is delivering the superior sales performance? This is why your conversion rate is so important and why it’s the dial on sales performance that probably matters most.

If you ask an Airline Pilot “What’s our speed, altitude and direction?” and their response is “I don’t know, but I can give you the data for the last quarter!” get off the plane. ???

So here is the sales ‘flight data’ extracted from the Sherpa/Aline black box:

·?????? Average Visit to Purchase Conversion ratio across all categories – 13.4%

·?????? Average Visit to Purchase Conversion ratio for AL / Care categories – 23.35%

·?????? Average Visit to Purchase Conversion ratio for IL / AL categories – 11.64%?

Now please re-visit the title of this article and consume a ‘pinch of salt’. Some of the users in this sample are very new to Prospect Centred Selling? so they are in the process of adjusting their Sales culture away from the Transactional Lifestyle Focused volume and velocity approach to sales, towards the more ethical and productive Prospect Centred Sales? methodology that we advocate. It’s also a small sample, but we have to start somewhere.

Please note that If I select data from the 5 operators in this sample who have a) all been using Prospect Centred Selling? for over 2 years b) have embraced the discipline of accurate data input c) who cover IL/AL and Care, their: ??

·?????? Average Visit to Purchase Conversion ratio is - 18.2%.

If I select the Operators in this sample who are ARCO members and who represent what most of us in the industry would consider to be mid-market private pay IL / AL IRC product, the:

·?????? Average Visit to Purchase Conversion ratio is 14.9%.?

The above two numbers, or the mid-point between them, are the ones you might consider measuring your sales performance against.?

In short, for every 100 site tours your Sales Teams conduct at your community, you should be closing 15-18 deals!

The Top 5% of sales performers in the US who use the traditional transactional approach to selling achieve an average of 22% conversion rates. The top 5% of ‘Sherpa/Aline’ performers achieve 36% so there is hard evidence as to what is possible. Before the naysayer’s chime in about British exceptionalism remember that whilst the US is indeed a mature market blah blah blah, it is also a saturated market with more product than buyers, so its much more competitive than the UK. Also human nature, is human nature when it comes to selling change, irrespective of which side of the Atlantic you live on.??

It’s perhaps time we started using more nuanced and meaningful measures of sales performance in our industry. FD’s and Investors will always want to know how many unit Sales have been made, that’s easy, that’s counting, but more sophisticated Operators should ask these three key questions:

·?????? What are our conversion ratios...and what are the trends?

·?????? What is the total cost per Sale?

·?????? Is our data transparent, accurate and current?

Meanwhile if you do find a Pilot who can’t answer the: direction, speed and altitude questions, muse on this. They may be able to fly a plane, but the chances are you are not going to land where you want to, and you may be in the process of crashing without even knowing it. Please enjoy the flight! ???

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