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As the vacation ownership business nears its third decade of existence, our industry has matured in many ways. Today’s product is better designed and better managed. But while we have thankfully shed some of the less-than-desirable lead generation practices of yesteryear, it seems that we’ve taken an eternity to create and implement more original, cost-effective sales and marketing strategies. Perhaps some reflection on our past progresses will help stimulate some creative thinking for the future.
In the early days, pioneer land developers’ central economic planning issues were cost and financing of raw land and development of the infrastructure, commissions and operations overhead to support the sales activity, and financing of receivables created by the sales program. Marketing costs were usually determined simply by the number of pieces of mail, times the percentage needed to give salesperson two or three tours each day. Referral efforts were left to the salespeople to pursue and drop-ins were usually counted as a self-generated guest.
Land was developed primarily as lots for second homes, retirement homes, or campgrounds. Most of ARDA’s members (then ALDA – American Land Development Association) developed high-end programs with ski runs, golf courses as well as more modestly priced projects that allowed motor homes and campers. These early products were developed by estimating the capital (and sales) required to cover the carrying costs and maintain the amenities. Although sales were fair, the use of the facilities was often so limited that developers had to subsidize them. This cut into their cash flow and ultimately proved to be a problem for some projects.
Most of these developers had not concerned themselves with matching their product’s development to it’s available market. This process is completely reversed today. The early thinking was that if there was a good product in a good location, there would always be a market: “We’ll build it. If it’s nice enough they’ll come.” Something akin to the tail wagging the dog. Unfortunately, many of these early developers lost out due to a lack of experience and ended up with someone else completing the resort.
As vacation ownership began to gather force and mushroomed into a new product, developers soon recognized that some old practices had to be discarded. They began to study and analyze closing percentages, average sales prices and volume sold by each individual. They also studied the cost of generating prospects. This was one step in the right direction.
At the same time, they developed a “Black List” of people they felt would never purchase. This included existing owners, singles, local residents and families who had previously visited and were considered “exempt from invitation.” Salespeople soon added to this list anyone who was an engineer, an accountant, carried an umbrella, wore a hat, owned a poodle or couples traveling with other couples. There was no such thing as a be-back. Often, management bought into this and agreed that such prospects would not be counted against closing percentages. This kind of thinking lasted for over two decades. While most now understand the folly of such biases, some still haven’t seen the light.
A Wake-Up Call is Sounded
Although the vacation ownership industry hasn’t suffered many of the major economic crises that have affected others in the past, the economic bump caused by the oil embargo sounded a significant wake-up call. Rapidly increasing marketing costs suddenly became important and the cost-per-prospect was given greater attention. Telemarketing was introduced to deliver day-drive prospects; the “local-resident” myth vanished. There were other significant changes:
As recently as five years ago, sellers at resorts thought existing owners were not legitimate prospects. Lead generators proclaimed that owners were NQ (not qualified) because they already owned, and this was enforced with marketing disclaimers which stated: “This offer not applicable to employees or owners at X resort.” Today, some of the more mature timeshare developers attribute as much as 40 percent of their sales to existing owners.
Years ago, quenellas, which are double referrals – two couples – with neither having bought were considered NQ, but are now welcomed at many sales presentations.
Renters and exchange guests were also added to the “OK to tour” list. Some resorts even solicit referrals from non-buyers.
Many sales lines now accept single individuals and younger prospects. One Maui developer, who previously ignored young honeymooners, now ranks them at 18 percent of their sales.
Shorter-term entry (sometimes called exit) programs were also introduced to encourage be-backs through test-drive or sampler programs. A very large percentage of these groups has been easily converted to the full term product after a year’s usage.
Efforts to control dramatically increasing marketing costs have caused previously ignored market segments to now be considered as real prospects. By the 1990’s, most project economic models and all annual budget forecasts included a marketing cost-per-prospect. While we’ve made great progress, there’s still a long way to go.
Goodwill Hunting
Hoteliers have long been experts at measuring their future ability to rent rooms and appear to be far advanced in their ability to preserve their existing market. Here’s how:
Hoteliers are teaching timeshare professionals how to make site selections by placing their product only in locations that will generate an identified number of prospects to sustain its operation. Before even thinking of developing a property today, we know we must first determine if we can produce a substantial flow of prospects at a dependable economic cost.
While hoteliers are learning how to truly sell their rooms rather than just rent them, perhaps the timeshare operators can learn a few lessons and develop their own style of “goodwill hunting” in the marketing process.
We need to take their lead and learn how to use – and not abuse – the market. The non-buyer of today can be the potential buyer of tomorrow with a serious capacity to influence scores of future buyers.
Times, They Are A-Changing: New Ideas
Today, many developers are active in various operations which produce sales prospects. At the Roark Vacation Club in Branson, many prospects come from their Ticket Outlets that sell tickets to Branson’s many musical shows. These ticket services stores also provide room reservation services, advertising extensively in many regional publications.
Cooperative marketing alliances with WalMart and shopping malls also generate prospects interested in coming to Branson. The Branson Hotline promotes the sale of the tickets at box office prices, suggesting that advance purchases will result in better seats. These retail activities are highly successful at attracting potential prospects for Roark’s Vacation Club and are much more effective than hawking people on the sidewalk.
Clearly we have matured, improved our product and become more effective in selling. But we must learn to become creative thinker. A few examples:
Most in-house sales programs don’t come close to reaching their potential. A 200-unit project with two to three in-house people is understaffed. The ideal situation is an absolute minimum of one working sales professional for every ten occupied units. (“Nay, nay!” comes the in-house response!) This ration is needed for several reasons. How many in-house people call before the owners arrive? Although the owners would welcome such a call, very few do this because of understaffing. Fewer still invite owners to participate in a referral program while they are on-site. And even less identify and talk to incoming owners about things they know will be of interest to them – tennis court availability, tee times, etc. The trick is to listen to owners needs and try to find a common thread by which you can open the doors of communication – and of further sales.
Many of today’s timeshare prospects take two to three contacts before they are convinced to buy or make return visit. Be-backs do indeed come back – especially when they are being asked to make a $15,000 purchase decision. Disney has proven this. The sales staff contacts them before, during and after they are there. How many organizations have a director of marketing exclusively for their in-house sales department?
With entry/discovery programs, interest is greatest on the day a consumer buys. As time passes, the owner has less recall and only a monthly payment. Light your own fires by rekindling memories of the resort. Invite them to come back before their time has expired. The trick is inventing more and more opportunities that will generate dependable prospects as a fixed cost. Think: Who is the prospect and what is the cost to get them back? Find out their interests and tailor a product to their tastes. It’s a referral that’s already there.
Meeting the Challenge
Unlike the vacation buyer of yesteryear, today’s sophisticated consumers are well-traveled and have much more defined expectations of quality and service. We can’t automatically turn them into prospects by using old marketing practices. We must meet this challenge by dramatically adjusting our techniques. In the past, our marketers and sellers were not always in sync with each other. Now we need to march to the same drummer as our product enters a new era.
The requirement is to have a clearer understanding of who our buyers really are. Who is buying and who is not? What are more effective and economical ways to reach those who are buying? Where is our market? We must learn how to determine when a market is over-saturated and seek other still untapped horizons with the potential for positive results. Is gross income a qualifier or is disposable earning the proper measure? Perhaps the affinity of the candidate is more critical than their income in determining their propensity to buy. We must learn how to become more adept at database marketing, pinpointing our efforts past the zip code of the prospect right down to the house in which they live.
The need of the future is to better define the market. Existing owners, non-buyers, exchangers, referrals and quenelles were all no-no’s just a few years ago. We all need to put on our creative thinking caps and investigate and implement opportunities we’ve never considered in the past.
There’s a new frontier out there for our marketing professionals. While preserving existing markets is important, so is the discovery of sources we’ve never considered in the past. In the process, don’t treat people like the relationship is ending just because you’ve exchanged, sold or not sold to them. Treat each as though it’s a non-ending relationship. Remember that every ending is a new beginning.
Written in collaboration with Marge Lennon. Marge Lennon-Rubin is president of Lennon Communications Group in Fort Myers, Florida.
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