How Often Do Referrals From A Place for Mom Stick to Their Stated Budgets?
Should you ignore a referral alert from A Place for Mom because their stated budget falls slightly under your price range? To find out, we looked at tens of thousands of move-ins that resulted from referrals from our Senior Living Advisors to our Partner communities, comparing the actual monthly charges at move-in to the family’s stated budget range at time of referral.
We found that 46% of move-ins with a budget max below $2,500 (13% of move-ins) accepted a price point above their budget max. About 29% of move-ins with a budget max above $4,000 (29% of move-ins) also spent more than their stated budget range. So don’t dismiss that referral just yet.
The Range of the Stated Budget Matters
We found that leads with smaller budgets often end up spending more than they initially planned. Fewer leads at the high end do so. To put this finding in perspective, assisted living move-ins with a budget max of $2,499 spend on average about $670 more than their max whereas those with a max of $5,999 spend only about $109 more than their min. For memory care, those figures are about $1,550 and $764, respectively.
Below we plot the median and spread of move-in charges against stated budget ranges. Notice how nearly half of the leads with a budget $2,499 or below spend more than their budget max. On the other hand, nearly half of move-ins in the top budget category spend less than their min.
You may wonder whether the effect of the stated budget varies by care acuity. After all, most people searching for senior housing for the first time probably don’t think about care acuity that much because the concept is all but unknown to them. But if care acuity doesn’t affect the stated budget much, it sure affects the cost of senior housing! So we would expect the difference between stated budget and actual move-in charges to increase with care acuity.
You may also wonder if this trend is driven mostly by seniors calling about care for themselves. There are at least three reasons to think this the case:
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Maybe leads who call about care for themselves are calling earlier in life. Anticipating higher care costs in the future, perhaps they open with a more conservative budget.
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Alternatively, seniors who call for themselves may simply have fewer assets to contribute to their own care.
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Lastly, maybe seniors who call for themselves have outdated expectations about the cost of living.
In any of these three cases, we would expect the trend to exist only for seniors who call for themselves and not for leads calling for another.
The Budget Range Matters More in Higher-Acuity Care Settings
To see how care acuity matters, we took for each move-in the difference between their actual move-in charges and their stated budget’s midpoint as a percentage of the budget midpoint. Then we looked at the median and spread of that percent difference for each care type, including assisted living, independent living and memory care. We also compared leads who called to inquire about care for themselves versus those who called for someone else.
Below, we plot the spread of the percent difference. Notice how the budget-amount trend gets stronger with higher care acuity. Independent living has the weakest trend and memory care the strongest. The trend also exists both for leads who called for themselves and those who called for another. In fact, the results are very similar for both lead types, at least for independent and assisted living. So the budget trend we see isn’t driven by the fact that seniors calling for themselves may have more conservative budgets, fewer assets or outdated expectations about the cost of living.
Why Does the Stated Budget Matter?
There are two questions here. First, why do leads with smaller budgets overshoot them so often? Second, why do leads with larger budgets often undershoot?
It’s likely that leads with smaller budgets overshoot because they lack the knowledge of how much senior living costs. This lack of understanding is driven mostly by the dearth of free and open cost-comparison tools, but also because many people do not know the value of modern senior living. It also stands to reason that the more modest the lead’s budget, the less access and familiarity they have with the senior living market, so the less realistic their budget will be.
For larger budgets, it may be that high-end leads end up spending less than they could afford in the anticipation of needing those funds down the road when their care needs increase. It could also be that communities are more likely to offer move-in incentives to high-end leads, much like how real estate agents accept lower commission percentages for multi-million-dollar home sales.
The Takeaways
Based on these findings, it’s clear that you should think twice before dismissing a referral alert just because the stated budget falls slightly under your price range. These leads may just need to modify their expectations, especially for assisted living and memory care costs. As for high-end leads, the jury is still out about why they often undershoot their stated budget, and we’ll dig deeper into this in later articles. For now, just remember that a sizable number of high-end leads also end up moving in at a price point higher than their stated budget.
Coming up
Later this year, we’ll shed more light on this topic by looking at how financial options and care needs explain these trends. We’ll also help you build a more complete strategy around leads with budgets below your price range by looking at how their stated budget affects move-in rate, not just the difference between stated budget and actual move-in charges.
Have you noticed a difference between a prospect’s stated budget and their actual monthly charges? Discuss in the comments below!
ABOUT THE STUDY
The Details
The Data
Our previous analysis looked at a small subset of our Community Partners. This time we look at data from over 6,000 independent living, assisted living and memory care communities across the United States, managed by over 1,000 of our Partners and representing tens of thousands of moved-in residents where the lead stated their monthly senior-living budget range to a Senior Living Advisor at A Place for Mom. We include move-ins from 2014 through February 2016, but exclude data from Partners who are on a subscription or flat fee schedule (due to state regulations) because we do not collect data on move-in charges from those communities. We also include only move-ins with a stated budget between $1,500 and $5,999 due to the rarity of move-ins outside that range.
The Methods
When calculating percent difference between actual move-in charges and stated budgets, we adjust both for inflation using the monthly national Consumer Price Index for All Urban Consumers (seasonally adjusted) relative to its 2015 average. All statistics reported are summary statistics, not model estimates. We exclude the top level budget ($6,000 and above) because there is no budget maximum for comparison.
The Caveats
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Senior living is a large purchase decision. Families will not always share their full budget until they have toured a few communities. Some families never share their budget range even if they end up moving in and still others have an incomplete knowledge about what their budget even is. Obviously, we are unable to compare move-in charges to a budget that leads refuse to state, nor are we able to validate stated budgets against the actual wealth status of leads.
- We define care type as the one into which a lead eventually moved. It would be more useful to see how the requested care type influences the difference between move-in charges and stated budget. Yet defining requested care type is more complex than placement care type because leads often do not know enough about their care needs to make a specific request. Leads may also consider more than one care type.