August 10, 2012 — We all know documented cancellations depend on many variables but in 2012 these ‘kicks’ are breaking records in sheer volume and industry-wide the specter of new owners terminating their TS contract within the rescission period is needlessly costing developers millions of dollars year after year!
So here’s the scoop. Many developers and those working in TS management, sales and marketing will point to (e.g.) the resale market and other information new owners discover online within their cancellation period as a primary cause for the majority of ‘kicks’.
Yes, there is a degree of truth to those assertions. However the fact of the matter is that the principal reason for a bulk of these cancellations has always been, as it is today, an inadequate, antiquated, often childish, unprofessional and less than stellar sales process & full presentation.
That’s right, I said it! And although cancellations have always been a factor in our industry no new owner ‘kicks’ without cause, and no sales guest has ever showed up to any TS presentation anywhere thinking that “And today Ma — we’re gonna buy one of them thar timeshares, use the money we were saving for your dentures as the deposit and then we’ll cancel a couple days later just for pure ‘kicks’ ” (so to speak)…
That simply does not happen. NASA’s Curiosity’s recent jaunt to our neighboring Red Planet this past week will likely discover colonies of little green people living on Mars long before a developer will ever uncover one prospect who shows up for the presentation with the intent to buy and ‘kick’!
This being the case, when it comes to new buyers it should be obvious that somewhere between the initial handshake (aka: ‘Meet & Greet’) with each prospect and all the way through the VLO process (including that last handshake) something goes terribly wrong that causes many of these cancellations.
And as I’ve already stated that ‘something’ is often an inadequate, antiquated, sometimes childish, unprofessional and less than stellar sales process and presentation that is so out of touch with today’s market that if an NFL team this coming season played as they did in 1964 — well, absent an act of God, their end of season stats would be predictable far in advance, to say the least.
In fact so ‘dated’ is the TS sales process that in this era some developers are experiencing ‘kick’ ratios far exceeding 15%. Yet even a modest rescission ratio is extremely costly and can be reduced significantly if the sales process & presentation evolved with and adjusted to the ‘times’.
Also consider this little reality. Even a lower rescission ratio of 5% on new business over a brief 30 day period — touring just 60 ‘Q’s’ per day, resulting in a gross sales center closing ratio of 18% at an average contract price of $14-K— the developers’ outdated sales ‘model’ that began in the late 1960’s will still produce an alarming ‘kick’ volume and loss of revenue exceeding $226,800 over those 30 days!
Aside from ‘blanking’ nothing should be more frustrating for a developer than to invest hundreds of dollars (per tour) every day to induce sales guests to their presentations and then after the rep spends several hours presenting the ‘program’ the (now) new TS ‘buyer’ turns around, within the rescission period, and cancels their contract!
And for the record the loss to the developer includes not only the contract value and the buyer’s down payment but their scheduled monthly payments, the interest revenue plus the loss of the annual maintenance fee and during a brief span of the next five years those fees alone add several thousands of dollars more (per ‘kick’) to the developer’s losses!
Obviously most TS developers factor in their cancellation losses under the old ‘cost-of-doing-business’ formula by adjusting their selling prices accordingly and/or having one or more staff members assigned to the task of attempting to ‘save’ every deal that ‘kicks’.
But in both instances developers will still lose revenue that would not be lost in the first place if they simply adjusted their sales process & presentations to reflect this new ‘era’ of competition, knowledge and information, etc.
After all the debates are done, at the end of the day the bottom line to most ‘kicks’ is that the very seed of cancellations lies within the sales process/presentation and until that changes new ‘buyers’ will continue to cancel their contracts in record numbers and cost TS developers millions of dollars in lost revenue until the end of time!
To send tips, comments, suggestions, agree and/or disagreements etc. email Scoop: [email protected]
Contributing sometimes extravagant, bombastic, emotional, pompous or even pretentious writings about the timeshare industry, Scoop covers an array of industry related subjects each week including inside information, tips, scandals, interviews, forecasts as well as new (good or bad) products and services--- and, of course, all the 'Good', the 'Bad' and the 'Ugly'.
Stay tuned for what is sure to be a fun ride and check back to Timeshare Scoop du Jour each week for more of the inside scoop.
Copyright Inside the Gate. All rights reserved