July 3, 2015 — I have written several hundred columns for ITG over the last six years and often I use words/phrases/clauses, etc. that, according to e-mails I receive, some readers do not understand my meaning and ask for an explanation. What I have also learned recently is that ITG is not only very popular within the industry but our readership is also gaining favor among consumers and timeshare owners/members so I’m beginning to hear from those folks as often as I hear from ‘biz-peeps’. There is however one particular phrase I use often that requires further clarification for some readers within both ‘camps’.
So Here’s The Scoop: For simplicity’s sake, to explain I’ll use a real front-to-back (F/B) timeshare sales rep with a net closing ratio of 25% and an average 1-week contract price of $15,000.00. This F/B’er works a few hours each day, 6 days a week, will ‘meet/greet’ one (1) new sales guest each day and takes off 4 weeks a year for vacation time. The end result is this F/B’er ‘pitches’ 288 sales guests in 1 year generating 72 contracts with an annual net sales volume of $1,080,000.00 (Million).
But there is much more to this F/B’er’s story. First let me explain that – again for simplicity and demonstrational purposes – those 72 contracts were sold to married couples in their mid 40’s to their late 50’s who already love to travel, who do take vacations often and who value the idea of a owning a vacation plan; plus they have the income, etc. to comfortably afford, like millions of others, being timeshare owners/members.
With that in mind and continuing to keep this simple, all those 72 contracts (sales) were written with a 15% down payment plus a modest closing cost of $400 and the balance financed was carried over 60 months by the developer at 14% interest.
As such, in just 12 months, this F/B’er sold, closed and collected $28,800 in closing costs, $162,000 in down payments and the 72 new owners/members agreed to pay the developer the principal and interest over 5 years collectively totaling about $1,281,615.25, of which $363,615.25 is interest. Thus, the dollars generated by this one F/B’er in those 12 months from 72 ‘buyers’ is about $1,472,415.25.
Then during those first five years there will be the annual maintenance fees (AMF) these 72 new owners/members agree to pay the developer and in this example we’ll say their AMF is $700 (each); meaning this F/B’er was able to get the new ‘buyers’ to (collectively) agree to pay the developer $252,000 more for ‘maintenance’.
Let’s also assume these 72 new owners/members will also exchange their 1 ‘week’ each year those first 5 years and pay a $200 exchange fee each time. Collectively, these new owners/members will also pay a major exchange company about $72,000 to travel the world while enjoying some wonderful vacations as timeshare owners/members.
Excluding all other monies these 72 new owner/members will spend on travel each year such as airfare or while vacationing at the resorts on dining, shopping, activities, etc. when you tally it all up over the first 60 months the collective ‘tab’ for these 72 new owners/members this F/B’er sold will be not one penny less than $1,796,415.25.
But what about those five specific words? Well, in this real example this F/B rep raised nearly $1.8 Million in just 12 months mostly working on “those magical little round tables”, a phrase I use to describe the sales rep’s ‘desk’ at the ‘office’ (sales center) where this F/B’er conducts, excluding the ‘model’ tour, the sales presentation.
And I call those little round tables “MAGICAL” because if you break the numbers down for each new owner/member (72) it turns out that this F/B’er sold ’em all on the idea of paying about $24,950.21 (each) the first five years (vacations) for 35 nights of accommodations at a cost, in today’s dollars, of about $712.86 per night!
And if that ain’t fricken ‘MAGICAL’ it’s nothing short of astonishing!
By the way – even if we eliminate the exchange fees ($72,000) altogether and also reduce the AMF’s ($252,000) by 50% that still breaks down to a nightly cost of $634.29 – and that, too, is ‘magical’.
But let’s get crazy and eliminate the closing costs entirely and all the interest payments, too, because those 72 buyers paid cash. And if we remove the exchange fees (because they’ll vacation at their home resort for the first five years) and keep the lower AMF at $350 per week (Vs $700) that still breaks down to a nightly rate of $478.57.
Hell, let’s get outright insane and along with all the aforementioned ‘cuts’ if we reduce the original 1 ‘week’ $15-K ‘buy-in’ by 50% to $7,500 the ‘nightly’ rate comes in around $264.29 the first 5 years and that is a pretty amazing accomplishment on “those magical little round tables” – now isn’t it?
Any way you slice it the honest, ethical & professional sales reps in our industry are truly awesome – though at the same time, going back 50 years, they’ve not always been treated and/or appreciated by those ‘upstairs’ as the dedicated, loyal, talented, hard-working people and ‘revenue-generators’ they all represent.
Now what do you suppose I meant by that last statement? If you have some ideas or opinions on that or other thoughts then, anonymously if you prefer, share those below in the comments section with our worldwide audience in the Land of Time.
Good Luck Out There!
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Contributing sometimes extravagant, bombastic, emotional, pompous or even pretentious writings about the timeshare industry (but always spot on!), 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’.