Arrow Senior Living CEO: Too Many Providers Have ‘Gotten Lost’ in the Sales Process

Arrow Senior Living is scaling up in the Midwest, differentiating itself with a sales approach to drive earlier move-ins and longer lengths of stay.

“Although adult children are the initial inquiry into senior housing, they’re not the consumer,” Arrow founder and CEO Stephanie Harris told Senior Housing News. “I think our industry has gotten lost in that process, and they sell behind adult children instead of alongside.”

Harris cut her teeth in the world of politics, working on campaigns around the country and as a legislative aide in Washington, D.C. But that career trajectory went off course when she was unexpectedly fired from a national Senate campaign about 20 years ago. Having previously held telemarketing jobs in senior living, she found work in the industry at that time and has not looked back.

“From the rubble of losing a job to finding a passion and career out of it, it was meant to be,” she said.

From her start as a turnaround specialist who would lead “SWAT teams” at distressed properties, she went on to found St. Louis, Missouri-based Arrow Senior Living. Today, Arrow has a portfolio of 12 communities, with eight under development. In building the company, and in particular its approach to sales, Harris brings the local focus and work ethic from her days on the campaign trail.

“A lot of it is about developing a grassroots effort,” she said. “Applying those same principles to sales, and overcoming the …  indecision or bias against senior housing, was similar to trying to win over constituents.”

No Pollyanna story

Harris’ sales philosophy stems from her days doing turnarounds, when she and her team would go into the existing sales databases of distressed properties and “work them differently” — specifically by changing the relationship with adult children who were exploring senior living options for their parents.

Frequently, these adult children come to senior living communities to gather information. They intend to present this information to their parents and make a case for senior living. Harris believes that trying to dazzle these adult children by showing off the community — telling them a “Pollyanna story” about why their parents will be sure to love it — is not as productive as having a harder conversation, about the fact that their parents are likely to resist moving into senior living.

As part of this approach, Arrow sales representatives might even share the low overall penetration rate of senior living, to make the case that older adults do not readily embrace this option. Ultimately, Arrow presents itself as a potential partner to adult children, offering to help them persuade their parents to consider senior living.

“They may not have the trust level upfront and say, I’m going to let you work alongside me to have access to my parents, but we can earn their trust by being direct with them,” Harris said.

Some of these adult children do come back to Arrow when they encounter resistance from their parents. Arrow reps then have a chance to be in the room with the prospective resident or residents and help them “navigate that extra 12 inches from their head to their heart to know that this is the right decision,” Harris said.

Situations like this play out for one or two prospects out of every 10, Harris estimated. This might not seem like a high number, but it translates to closing ratios that are 10% to 20% better than communities where the sales process loses these types of prospects.

A further benefit is that this sales approach also results in longer length of stay.

If Arrow can convince an older adult to move in prior to experiencing a health crisis that forces the transition, the company is gaining a resident who is in better health than someone coming straight from rehab or the hospital. Programs and technology can be leveraged to keep that senior healthy, preventing or delaying move-outs to higher levels of care.

Harris credits therapy partners such as Fox for helping in this effort. Less than one year after Arrow acquired a distressed Cleveland community, Fox’s programs helped boost average length of stay from nine months to about 15 months, she said.

On the tech side, Arrow was a beta tester for a Stanley Healthcare monitoring solution and now has the largest senior living deployment of the product nationwide, Harris said. The technology monitors residents’ gait and calculates fall risk, enabling earlier interventions to prevent incidents.

Arrow generally sees length of stay increase by six or seven months over a two-year period, after the introduction of its sales and marketing approach, according to Harris.

The senior living industry as a whole could benefit from a more widespread adoption of Arrow’s approach and less reliance on residents who move in due to a health crisis, she believes.

If more communities embraced the slower process of winning family members and seniors over, properties would lease up faster, and longer length of stay would alleviate “the turnover frenzy our industry is continuing to experience,” she said.

An expanding footprint

The Arrow sales process also helps maintain occupancy in the face of industry headwinds, such as the new supply that has hit some markets hard in the last two years.

“There are definitely markets that are tougher, and they do mirror the national trends, but we’re still leasing up communities in under a year, we’re still opening some of our properties nearly fully reserved when we open,” Harris said. “It’s that patience in working the leads a little bit differently so that we’re not just fighting for the same group of leads who are going to choose here or somewhere else, we’re working with seniors and families who are right on the fence.”

And Harris is not deterred by tough market conditions, particularly given Arrow’s history.

She and her “SWAT team” were succeeding as turnaround specialists, but grew tired of handing the keys back once the mission was accomplished. So, Harris decided to found Arrow, and the company started its first ground-up development in 2008 — soon enough, the nation was in the teeth of the Great Recession.

After managing to get that 86-unit building fully leased up within 90 days despite the economic crisis, Harris and her team were convinced that their approach would work for new construction, just as it did for distressed properties. Since then, the portfolio has been built up through about a fifty-fifty mix of acquisitions and new development.

The typical Arrow building offers a continuum of market-rate independent living, assisted living and memory care. Arrow’s usual mix favors independent living, with about 80 to 100 units, versus 40 to 50 units of assisted living. Memory care is usually just 16 to 20 units, intended primarily for IL and AL residents who develop cognitive support needs.

Arrow works with a variety of investment partners, including the real estate development arm of O’Reilly, a company well known for its auto parts stores. Most projects are developed on a joint venture basis, with Arrow maintaining an equity stake. The portfolio has some sub-brands, such as several “Vitalia” communities in Ohio, all of which involve the same capital partner. In general, though, Harris believes that communities should have a strong local feel, including a name that has significance to the area.

Arrow’s primary footprint is in Ohio and Missouri, in markets such as St. Charles, just outside St. Louis, and Hilliard, near Columbus, Ohio. The availability of labor is one major consideration in site selection, with workforce challenges keeping Harris up at night more than new competition.

About two years ago, Arrow brought on a recruitment specialist who previously worked for Louisville-based post-acute health care giant Kindred. Arrow has also installed recruitment teams at each community to vet applicants and manage hiring efforts.

The current development pipeline will bring the company into new metro markets in Missouri and Ohio and also expand its reach across the Midwest, with projects in Indiana and Iowa. Arrow also has a community in Illinois and one in Florida, but the Sunshine State is not targeted for growth.

“We’re not looking to be some large-scale operator as much as an aggressive regional group that outperforms the competition,” Harris said. “That’s the goal.”

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Source: Senior Housing News