January 13, 2012 — Out of view from the general public desperately desiring a Norman Rockwell existence, the real world environment of business is akin to a physical contact sport like boxing, hockey or rugby. And it is in that arena that the hard-ball Gladiators play rough, are out to win and like vultures ripping at a carcass they have a take-no-prisoners attitude when profits are the primary objective.
So here’s the scoop. First off, the Associated Press just released a report this week saying “Squeezed by rising living costs, a record number of Americans — nearly 1 in 2 — have fallen into poverty or are scraping by on earnings that classify them as low income.
“About 97.3 million Americans fall into a low-income category, commonly defined as those earning between 100 and 199 percent of the poverty level, based on a new supplemental measure by the Census Bureau that is designed to provide a fuller picture of poverty. Together with the 49.1 million who fall below the poverty line and are counted as poor, they number 146.4 million, or 48 percent of the U.S. population.”
Worth repeating: “48% of the US population”. And that is even more important for timeshare developers who still believe in having an ‘income’ qualification of $40-50,000 for sales guests to visit their sales centers.
The Associated Press also reported that “Mayors in 29 cities say more than 1 in 4 people needing emergency food assistance did not receive it. Many middle-class Americans are dropping below the low-income threshold — roughly $45,000 for a family of four — because of pay cuts, a forced reduction of work hours or a spouse losing a job. Housing and child-care costs are consuming up to half of a family’s income.”
Now add to those realities and this economy the credit card myth whereby many timeshare developers still rely on their sales guests possessing a major Credit Card as one aspect of being ‘Qualified’ to attend their sales presentation.
As I’ve been warning for years, regardless of a consumer’s FICO score, previous bankruptcies, being unemployed, etc., scores of millions of consumers have obtained, have in their possession and are using ‘pre-paid’ credit cards (PPCC) for their general shopping needs and those have the nationally recognized Visa, MasterCard, etc., logos affixed to them.
Then here comes John and Mary, parents to two, three or four young children, to the developer’s sales center with a claimed household income of $48-K. When checking in they are asked by the receptionist if they have a ‘nationally recognized credit card’ with them, and they then proudly whip out their ‘PPCC’.
And because there is no visible difference between those cards and a credit card issued to a ‘credit-worthy’ consumer— nor is there a process used at most sales centers (although available) to verify ‘income’ etc.— the sales guest is deemed, instantly, as a ‘Q’ and off they go on their merry and very expensive (to the developer) way with a talented sales professional for their ’90 minute informative…’.
Timeshare developers and management need to accept that the financial calamity that began in December of 2007, the ensuing results of that reality on consumers (aka: sales guests) and the fact that ‘pre-paid’ credit card business is exploding with tens of millions more consumers toting those cards means these fine folks (sales guests) are nothing but a drain on an already over-worked and excessively expensive marketing and sales system and process.
Developers and management also need to finally concede, especially in these challenging times, that for every 100 ‘Qs’ who visit their sales centers with these cards and low incomes there ‘would’ have been, based on a meager 15% industry ARDA-reported closing average, 15 sales generated from ‘Q’s who were actually financially qualified.
Any timeshare developer still soliciting prospects to visit their sales centers whose income is even close to the “near poverty level” and who only have these pre-paid CC cards and then expects to profit from them surely has one oar out of the water. It is ludicrous thinking and poor management at best.
The simple truth is these ‘Qs’ are most often in a situation whereby Hell will freeze over before they can afford a TS (or ‘Exit’) plan and wasting time and money on them would be like the coach of a pee-wee (Pop Warner) football team insisting their team be permitted to participate in the NFL play-offs!
This all reminds me of the adage that a chain is only as strong as its weakest link. And one of the most fragile links developers have always had has been their sales guests’ qualifications (and/or lack thereof). It is time they face the market conditions as they are, put on their ‘big-boy/girl’ business pants, play hard-ball and adjust accordingly.
And the first place to start that process is to stop with that antiquated and incorrect pervasive timeshare industry theory that ‘an up is an up’, a ‘Q’ is a ‘Q’ and the old ‘throw it against the wall and see what sticks’ approach to their management, marketing and sales models.
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©2012 Inside The Gate