insights 2008
Finding the Right Affluent Buyers for Fractional Ownership
It is an uncertain economy. For many this is a challenge. For others, it’s an unchanged opportunity. There are affluent groups that are still growing and spending. How do you find these super affluent customers? Where are the people who buy what they want, when they want it? What do we really mean by the affluent buyer?
On one level it can be affluent people seeking a lifestyle for a vacation home or homes… and with the financial means to make such a purchase when they want to do so. Part of this group may be aspirational. They are not the core group. They are stepping up to something that was previously out of their reach because of the price points. They can afford a fractional (as opposed to whole ownership of a second home) but now really do have to evaluate it, financially. These are the ones sitting on the sidelines today worried about the economy. Not to say that millionaires aren’t worried. Many of them probably are… especially about their financial investments.
Point is there may be a myth about “the affluent buyer.” Often times we believe we are not reaching or talking to the affluent buyer. In truth, “affluent people” may not be that elusive. They’re in specific areas. They know each other. And they talk. If there’s one observation about super affluent households it is that they want their experiences to be clearly above the rest. At the same time, they want the very best for less. Isn’t that the essence of fractional ownership? Finding the right buyers is mostly about knowing where to look.
Successful fractional ownership projects today are often characterized by authenticity, enrichment, and sustainability more so than just “luxury” - which is clearly an overused term. With price points ranging from $100K to one million dollars, they will most likely be purchased by more of the “super affluent.” But it is more than just income and assets. It’s also about inner life and their propensity to indulge in a preferred lifestyle that their wealth allows.
Let’s call them the right affluent. If generally speaking, the right affluent are potential buyers of fractional products, then you need to know something about their lifestyle and consumer behaviors compared to the mass affluent… If you are personally in this group, you will relate, if you are not personally in this group, you have to believe that you are in it. From these observations, your branding, marketing, and sales approach will become that much more relevant.
In a recent study by Packaged Facts across all affluent groups, there were some findings that tell a lot about how the super affluent are different than the mass affluent. There were particular findings related to demographics, consumer behaviors, and leisure time that give us some insights.
1) The super affluent are primarily found along the coasts, in very large cities, and a handful of metro areas dominate the market. They are politically involved and socially engaged.
2.) They focus on staying young and keeping fit, fashion and specialty stores are drivers, they go out more often, and organic foods entice them. They are inveterate travelers and are tied to the Internet
3.) They are willing to pay full price to buy what they want when they want it!
From a branding perspective, it about offering differentiated, authentic vacation and destination experiences; communicated by relevant and emotional messages and stories. Sales success comes from those places that have a really good story to tell. That good story, so to speak, is inevitably based on guest and internal staff experiences.
Whether a project is in already in existence or just an idea, you want to have experiences and stories for your message. Then you need to share it with your social and business networks and then the networks that will connect to the right affluent groups.
With a powerful story the network grows among friends and associates. Stories quite often they happen naturally…At the same time, you always need to talk to customers and prospects…maintain a dialog and get feedback… this is often the material for stories. Having internal people embrace your brand and the product and be well trained in the essence of fractional ownership lifestyles. It’s not a timeshare message. It’s not a real estate message. It’s not psychological message, and it’s certainly not a financial investment message.
The message comes from a different mindset that requires a balance of emotion, education, and relevance. You do need to have the psychological insights into the mindset of a luxury consumer. Only by understanding the super affluent consumer's underlying psychology can you tailor your marketing messages. When consumers look at similar offerings (expressed in features and benefits) within fractional ownership or even destination clubs, they hear things like ski in/ski out, oceanfront, 2100 square feet, million dollar homes, exchange around the world…
Many developers and destinations can say the same thing. One way buyers will differentiate a “brand” is from the people they interact with; the touch points, the management, the sales people, the concierge, the front desk people…etc. That is the message. The other consideration for the message today is the optimization of the marketing channels and the return on very limited marketing dollars. Ask the question, what do the big players do that I can do as well? It certainly depends on the audience and the buyers concerns. In the near term fractional marketers may find consumer resistance to their marketing efforts. Here are some tips:
1.) Align the messaging with buyer concerns and offer more choices. Marketers that want to ignite their projects will want to make their offering truly irresistible and the rewards more immediate. For example, “Stay for a week as our guest (with us or somewhere nearby).” Chances are you have available inventory to offer. (You know how much it will cost you.) You just may need to make the customers an offer they can't refuse, which might include a higher added value to go to the next step, such as product category upgrades. Even super affluent consumers like to know they are getting a good deal.
2.) Lead follow up - Is every lead immediately embraced and nurtured? Be consistent and relevant in the follow up. Try your own mystery shopping. And get a detailed disposition on every lead. Talk about it as group and learn from each one.
3.) Online presence – Affluent buyers are online. Update your Web site messaging- add or enhance streaming video, discover the features of You Tube. Be sure your home page engages a visitor and makes it clear what they will find on the site. Don’t make them think. Engage Web 2.0 and social networks. Wealthy consumer participation in online social networks increased to 60 % in 2008 from 27% in 2007. (Interestingly, the over 55 year old wealthy increased fivefold to 49% participation in social networks.)
4.) Create a blog with tips, useful info, how-to, press mention (that’s not too self-serving and contrived.) Communicate with destination, affinity, and cultural bloggers. Post comments, link to them, talk to them, engage them. Then when you do promote your product, those bloggers will trust you.
5.) Be Green. Be eco tourism friendly. As the new luxury consumer is adopting a 'less is more' lifestyle, there are signs that affluent people want to make the world a better place and that means giving back through charities and foundations and going green in order to have a smaller 'carbon footprint.” There are an estimated 40 million LOHAS (Lifestyle of Health and Sustainability) consumers dedicated to personal and planetary health. Not only do they make environmentally friendly purchases, they also take action – they buy green products, support advocacy programs and are active stewards of the environment.
6.) Members and owners. Stay in touch, creating meaningful referral opportunities. Embrace exclusive local events and experiences where you are there for introductions among members and guests. Have your senior management and principals there telling the story as well.
7.) Word of mouth: The right client just may come from word of mouth - consumers providing information to other consumers. Word of mouth can be encouraged and facilitated. You can work hard to make people happier, you can listen to consumers, you can make it easier for them to tell their friends, and you can make certain that influential individuals know about the differentiated qualities of your project. WOM empowers people to share their experiences. It’s harnessing the voice of the customer for the good of the brand. Word of mouth marketing is based on the concepts of customer satisfaction, two-way dialog, and transparent communications. Some of the WOM elements are:
• Educating people about your products
• Identifying people most likely to share their opinions
• Providing tools that make it easier to share information
• Studying how, where, and when opinions are being shared
8.) More word of mouth:
• Viral Marketing: Creating entertaining or informative messages that are designed to be passed along in an exponential fashion, often electronically or by email.
• Community Marketing: Forming or supporting niche communities that are likely to share interests about the brand or the destination (discussion forums); providing tools, content, and information to support those communities…
• Influencer Marketing: Identifying key communities and opinion leaders who are likely to talk about products and have the ability to influence the opinions of others. (Bloggers)
• Cause Marketing: Supporting social causes to earn respect and support from people who feel strongly about the cause.
9.) It really about encouraging communications and working with social networks. Giving people something to talk about. Information that can be shared or forwarded. Creating communities and connecting people. Tactically, it’s finding people who are likely to respond to your message:
• Identifying people who are able to influence your target customers
• Informing these individuals about what you do and encouraging them to spread the word
• Good-faith efforts to support issues and causes that are important to these individuals
10.) Instead of only looking for customers for your product, seek out other products (and services) that you can bring to your audience. Be generous.
Finding the right affluent customer means you have to have something people want and something that people want to share with others. Something they want to talk about. Give them something real to talk about. Marketing today is about doing things that people want to talk about. Every interaction should be something where everyone will tell someone else. In any economy, it mostly takes awareness for the right buyers to find fractional ownership.
insights 2007
In the coming year, as in last year, more than 7 million of people from over 100 countries around the world will be spending all, or part of, their leisure time at timeshare use properties, fractional ownership resorts, destination clubs, residence clubs, and condo-hotels. Another group of millions will be called on the phone, e-mailed, direct mailed, and hit with pop-up advertising. While still millions more will be solicited at hotels, resorts, malls, stores, beaches, pools, ski slopes, festivals, airports, trade shows, and even their company office. Is there anyone out there who has not has a timeshare related encounter?
What may be different for many of them will be a changing consumer experience in the sales and marketing process that comes from converging trends in branding, demographics, digital media, channel preference, online experience, strategic alliances, ethics, and glocalization . (Yes, glocal.) Emerging from those trends are the rapid growth of diverse customer segments, increasing channels of communication, unprecedented electronic media options, and expanding hospitality brands.
Timeshare companies are now challenged to adapt to a more complex marketing environment that must be embraced in order to be relevant to consumers. That's means changing a mindset and behaviors. Easier said than done. While the media tends to be positive about the economics of the industry, they are less enthusiastic about the consumer experience.
In the words of ARDA chairman, Howard Nusbaum… “The tolerance for aggressive, outdated direct sales practices is lower than ever before and comes with greater risks to our new-found status as the desirable vacation product timeshare.”
Until the long standing cultures of timeshare companies with its “specialized” style of marketing and sales is further evolved, expect to see the continuity of consumer complaints in the press. While some companies are already taking notice and responding at a tactical level, others are looking the other way.
Branding
Consumers may start to see new ways of how, where, and when the shared ownership messages for leisure and vacation products are delivered. Companies are recognizing the need for brand marketing in engaging customers before, during, and after the point of sale. Having clear and consistent messages across all consumer and guest touch points builds trust in the brand. The facts of the story, and the story about the facts, need to be the same through all interactions. If sales training and sales management aren't enough, innovative marketers will test new brand marketing processes. For example, providing prospects at preview centers and resort properties with self guided audio tours that will give the audience a clear and consistent brand and product message, at their own pace, and in the language of their choice.
Demographics and Diversity
Perhaps the most repeated story for the next year will be the continuing growth and focus on the baby-boomer segment. Marketers will see that they are not a single segment at all, but rather a group of sub-segments differentiated by their lifestyle, life stage, and purchase behaviors, much more so than demographics of age, income, and geography. In addition, traveling with children and families is on the rise.
While timeshare and hospitality company employees already represent many countries and cultures, sales and marketing will need to adapt to the other cultures. As Japanese residents continue to visit Hawaii and Las Vegas, companies will be staffed with more Japanese speaking representatives. Orlando and Las Vegas locations will be increasingly represented with Spanish speaking representatives.
Digital and Multimedia
The days of printed collateral materials, displays, presentation books, and one-dimensional signage are fading (literally and figuratively.) Now they will be supplemented or replaced by multimedia screens, interactive touch screens, kiosks, and mobile tablet PCs. Digital multimedia will allow consumers to see, feel, and hear about the product, thereby becoming more engaged to absorb the information and feel the emotion. Multimedia displays will feature virtual reality 360 degree room tours, destination videos, and interactive audience participation. This active and sub-conscious participation will better prepare the audience when it's time to make a decision. Consumers everywhere today are accustomed to media environments that not only get their attention, but also entertain and inform them.
Channel Preference
While there never has been significant ROI from mass advertising, companies including re-sellers and brokers will be using traditional channels such as TV, print, and radio in targeted local markets depending on the audience they are trying to reach.
Face to face marketing will complement the plethora of telemarketing as a way to get consumers closer to the brand and the product. In fact, some companies will utilize sales preview centers and galleries in cities and communities away from the actual property. Consumers will have an opportunity to learn more about and purchase the product without having to actually travel to visit the property.
Those popular channels of telemarketing and e-mail marketing will continue to be impacted by concerns for privacy. New privacy rules and current federal privacy laws including Do Not Call and CAN-SPAM will still be top of mind for companies in their sales and marketing processes. With a proliferation of customer data both on paper and online, companies will want to ensure stricter compliance with laws concerning privacy and the security of their data. With that in mind, expect to see the use of sweepstakes and giveaway promotions as a way to capture customer data and ensure an opt-in for follow up contact.
The Online Experience
Timeshare Web sites will be more informative, more user friendly, more interactive and potentially more transactional. With over 60% of US Internet users having broadband; we expect to see more rich media to engage users online. Again, virtual tours, property and destination videos, talking heads, and dynamic images. Consumers, on the other hand, will leverage their online research capabilities to help make decisions along the way. Expect to see more consumers do their research online before, during, and after their timeshare encounter. Online resources, including user groups, chat rooms, and blogs, will give consumers more independent knowledge about the industry. Expect to see online communities and user content grow as visitors share their experiences and thoughts.
As the Internet allows for cost-effective, personalized, and efficient communications, some companies will attempt to generate more online leads but with better filters and qualifiers for an incentive or tour. Expect to see the use of RSS (Really Simple Syndication) where users can receive (rather than search) content such as news, tips, information and sales promotions from multiple marketers by subscribing to a personalized feed.
Alliances
Companies will seek out and embrace strategic partners for co-branding, co-marketing, and data sharing. It's no longer enough to keep talking to your own customers and prospects. It's no longer enough to analyze just in-house transactional data to make decisions about customers. It's the power of the database. Companies will enhance their database with a partner's data to gain a more robust view of their customers and prospects. Subsequently, a co-branded product message may even come from a strategic alliance or marketing partner.
Ethics
To avoid consumer dissatisfaction with the sales and marketing process, companies will pay more attention to the Code of Standards and Ethics of the American Resort Development Association also known as the Timeshare Bill of Rights. This Code was adopted unanimously in 1986 by the ARDA Board of Directors, and last amended and ratified in 2004. These guidelines are a template for best practices in sales and marketing for all timeshares, fractionals, destination clubs, and condo-hotels.
Glocalization
The coming year will be the time to watch the growth of the industry's global strategy. Some of the major players will grow their brand in more markets around the world. But, similar to the hospitality brands, it will be a learning experience for them to market globally and adapt their brand to local markets rather then a universal message. As investment interest grows, we see new development opportunities for the most nimble and innovative players in the industry that understand glocalization.
Vacation ownership, in all its versions, is clearly a mainstream vacation product. This may be the year that somebody actually wakes up one morning and says... "I want to buy a timeshare."
