Do you see the glass half-full or are you a half-empty kind of person? Many people consider themselves optimistic, and studies show that optimistic people are more successful than pessimists. If you are a positive person, here is an interesting question: Can being optimistic be harmful to you or your business in certain circumstances? The answer is definitely YES.
Optimism Bias
Experts in human behavioral science refer to this aspect of how we act as optimism bias. Optimism bias is common and transcends gender, ethnicity, nationality, and age. It is defined in the book The Optimism Bias: A Tour of the Irrationally Positive Brain by Tali Sharot as “the inclination to overestimate the likelihood of encountering positive events in the future and underestimate the likelihood of experiencing negative events.”
For example, some people believe that they are less likely to be a victim of a crime. Individual smokers might think they are less likely to develop lung cancer or another disease than other smokers. Perhaps a stock trader believes he’s less exposed to potential losses in the stock market.
Optimism Bias & Occupancy
Optimism bias undeniably exists in the senior living industry. However, many in this field are unaware of its negative impact. Yes, owner-operators, managers, salespeople, and the prospective residents and their influencers are predisposed to optimism bias in various ways. How so, you ask.
Over the past several years, the senior living industry’s mentality has been “if we build it, they will come.” Yes, that was the mantra, and for the most part, it was true. An operator or developer built a community in a particular location. Over time, individuals from the local area would find out about the community through advertising or see the signage and seek out the services provided. Eventually, if everything proceeded according to plan, the community would reach occupancy goals where it was a profitable business for the owners.
What Happened?
However, even before the COVID pandemic, the landscape began to change, and reaching goals became more difficult. Some companies were already seeing a considerable decline in occupancy. New communities were increasingly becoming “never fills.” They would build it, and it wasn’t reaching the anticipated occupancy goals in the expected timeframe. Being optimistic did not change the fact that new consumers were not showing up.
Of course, we can debate why things were changing, but here are a few potential causes:
- Overbuilding and increased competition
- Home care companies playing on the prior commitments of the senior and their influencer, encouraging seniors to stay home with a caregiver
- The age-in-place movement using technology and other methods to support seniors in their home
There is strong evidence that there is declining demand for senior living. Some operators are under the impression that they can market their way out of this situation by increasing lead flow and interest for their communities. However, more leads will not solve the occupancy problem if the community relations manager or sales leader cannot convince an interested prospect to use the service.
The Remedy
The only way to remedy the situation is to increase conversion rates at the point of sale. When measurable interest is shown, seniors and their influencers need to be convinced that living in a community is a better option.
No longer can owners build communities and believe that “if we build it, they will come” and move-in. To continue with this optimism bias will have a negative impact on the bottom line of their business.
On the consumer side, we have the senior living prospect and their influencers. As I describe this situation, I am sure you will agree that optimism bias has always affected how seniors perceive their situation. Even though an aged senior is struggling with routine tasks at home and may also be experiencing periods of loneliness, the senior believes they will still have a good outcome and are optimistic. Why? Because they think they are different from other seniors experiencing similar situations. They also convince their family members that they are the “exception to the rule.” Yes, in many cases, the prospect believes this and convinces the influencers to believe it.
A Different Approach
So, suppose the senior living salesperson continues the same selling approach as has been done in the past decades. Selling the building and services such as meals, housekeeping, transportation, activities, and care. And not addressing the optimism bias of the prospect. In that case, they will continue losing move-ins that could have been persuaded to act.
Remember, optimism bias is when someone ignores facts and takes unnecessary risks — financially or personally. That is what is happening in senior living. Companies take financial risks, and aged seniors take personal and financial risks that they should not take, simply because they do not see the clear picture.
For additional reading, see the following articles:
Declining Occupancy in Good Times and The Prior Commitment Effect.
