Scoop du Jour: The State of Timeshare, Part 2
-by Scoop
February 18, 2010 — Later in this series we’ll explore that relationship between developers and their marketing/sales reps referenced in Part I, which should be of interest to many reps regardless if they are of employee or I/C status, but for it all to make sense we first need to look further into what is taking place in this economy and how it affects ‘The State Of Timeshare’ (the industry).
Throughout the history of sales in our business false assertions made by many managers (and developers) have been pounded into morning meetings to such a point that too many reps consider those declarations almost as a ‘law’ or having originated from some divine entity.
Who, for example, hasn’t been told or repeatedly heard that “a sale is made every time”, that “an up is an up”, “buyers are liars”, “either you sell them or they sell you” or that “timeshare is recession proof” and sales are never affected by downturns in the economy?
I suspect these days not too many managers, PD’s, DOS’s or Developers are making such ridiculous claims (specifically about the economy in relationship to sales) because that cat is so (finally) out of the bag…
But whether the economy is bearish or bullish, the real culprit in one major dilemma that has always plagued this business continues to be sales guests attending presentations with such inadequate qualifications that a very large percentage of people who are basically ‘breathing’ can qualify as a prospect and get in the doors.
That is not a new hypothesis but considering the state of the economy (and the foreseeable future) it is one topic that needs to be addressed head on and I can’t think of any better place to start than with that credit card most sales centers require a prospect to have in their possession in order to be a ‘Q’ and attend the presentation.
First consider that a recent article dated January 12, 2010 on investors.com by Brad Kelly of Investors Business Daily tells us that “Americans cut credit-card use by nearly 19% in November, the largest drop since December 1974” (36 years).
Another interesting fact about credit card and general debt is that: “The average American with a credit file is responsible for $16,635 in debt, excluding mortgages, according to Experian. (Source: U.S. News and World Report, “The End of Credit Card Consumerism,” August 2008).
Then consider the tens of millions of ‘pre-paid’ credit cards issued to consumers with the Visa and MasterCard logos and that “In the last 12 months, 15 percent of American adults, or nearly 34 million people, have been late making a credit card payment and 8 percent (18 million people) have missed a payment entirely”. (Source: National Foundation for Credit Counseling, 2009 Financial Literacy Survey, April 2009) Now the ‘big-picture’ is becoming clear.
In addition, the credit-card industry continues to evolve with the times and is becoming even more creative. According to Mercator Advisory Group, as recently as September 2009 “Open-loop gift cards (general purpose cards, [some with consumer's name printed] that carry the American Express, Discover, MasterCard or Visa logo and can be used wherever those cards are accepted) continue to grow in popularity” representing a phenomenal “54.3 percent increase from 2007.”
Essentially, from a ‘credit-card’ qualification I would submit that at least 20-25% of all sales guests who also meet the minimum ‘income qualification’ (often $40-K annually) will likely be holding a ‘prepaid’ Visa or MC ‘credit-card’ and/or is a consumer who is either over extended and/or already behind on their (unsecured) credit card payments/bills.
But it gets worse, because nearly anyone (anywhere) can get, regardless of credit-history, bankruptcy, etc., a pre-paid credit card these days. Many card issuers (banks, etc.) only require a $100 or $200 deposit (some even less) and ‘consumers’ can obtain as many ‘cards’ as they desire (from multiple issuers).
So here it is check-in time at the reception area, the sales guests show up and when asked they proudly whip out their two ‘major-international-credit-cards’ and off they go on their merry way with an enthusiastic, eager, friendly, knowledgeable and talented sales rep…
Then, after one, two (or more) hours later it is discovered that the ‘guest’ has no means whatsoever to put down the full appropriate deposit, let alone follow through with payments, maintenance fees, etc.
Which reminds me of another adage often heard in this business which is incorrect, and that is the saying that ‘you can’t sell stupid’. Sure you can, but you can’t sell ‘broke’ and that is why no sales guest should ever be allowed to attend a full sales presentation unless they have first cleared a pre-screening process at the sales center!
Considering efficiency and the real cost per tour, the more profitable developers in this era will be the ones who realize this incredible waste of resources by meeting the realities and challenges of the ‘new’ economy and will do so, in part, by modifying their marketing/sales process and strategies to weed out those ‘guests’ who simply do not have the means to purchase and keep them out of the sales centers.
Coming next, Part III of ‘The State Of Timeshare’!
Scoop
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It was well worth the wait, Scoop! Great article, well said, now when can we expect #3???
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I didn’t know about the closed-loop/open-loop cards before, so I learned something valuable today. Thanks!
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Right on! I worked briefly for one deal and all the tours had to bring to the sales center was their check-book; I.E. No credit card of any kind was required to be a Q’d.
I also have a buddy that worked for Allegro down in Cancun a couple years back and was told they didn’t even have an income requirement and that if the tour made it to the door they were Q’d regardless!
How we are to sell these types of tours is beyond me!
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Along with the CC deal, the annual income shouldn’t be a penny less than 80 grand!!!!!
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