Timeshare Game Plan: A Closer Look at the On-Site Hard Sales Operations

O. Cenk DEMIROGLU, October 2003

Introduction

Timesharing offers people the opportunity to purchase time at fully furnished vacation accommodations - usually in weekly increments - for a fraction of the cost of full vacation home ownership. For a one-time purchase price and an annual maintenance fee, timeshare purchasers own their vacations forever, or for a predetermined number of years, depending upon the purchase agreement.

Timesharing can take a variety of forms. The most common is a resort condominium (which can range from a studio with a partial kitchen, all the way up to a five-bedroom unit with a full kitchen and luxury amenities). Lock-off is another unit option. They are unique because they can be separated into smaller components by locking a door. Other less-common timeshare accommodations include hotel rooms, houseboats and motor homes. Unlike owning a vacation home, timeshare owners do not worry about taking care of the maintenance on their units and, if they are members of an exchange company, they are not locked into returning to their same vacation home year after year. Timeshare ownership also provides a financial benefit for the consumers, since by locking in the purchase price; consumers are assured future vacations at their home resort at today's discounted prices.

Evolution of Timeshare

The timeshare concept came on the scene in 1960 in the Alps of Europe, when owners of the ski lodges started to market their units on an annual common-share basis. The concept had its evolution in the 70s when the overbuilt summerhouses in the US – especially in Hawaii and Florida – were converted into timeshares with the exchange option provided by RCI (1974) and Interval (1976). Timeshare industry has been booming starting with the 80s, and became the fastest-growing segment of the global travel and tourism industry since 1995 with the global sales climbing 9% annually. There are now 3,600 RCI affiliated resorts and 1,900 Interval affiliated resorts in more than 90 countries.

Today's timeshare industry offers numerous purchase options to meet consumers' desire for vacation variety and flexibility. Although the availability of these purchase options varies from resort to resort, here are the most common:

Fixed Week: Timeshare units sold for use during a specific week of the year.

Floating Week: This can be any week reserved for the timeshare owner during a certain season.

Fractional: Ownership is sold in multiple-week packages, usually four or five weeks in each year, or as a quartershare (13 weeks). This type of purchase option is popular in high-demand spots such as ski, beach and island resorts.

Vacation Clubs: Rather than purchasing timeshare in a certain size of unit at a particular resort, Vacation club members purchase the opportunity to use a variety of timeshare accommodations at various resort locations, usually within one developer’s chain of resorts. Many clubs operate on a points system, but not all.

Points Systems: These offer the greatest flexibility to the timeshare owner. Participants of these systems purchase points which they use as currency to reserve timeshare accommodations of various sizes, during different seasons and for varying lengths of time. The points can also be used for other vacation products such as airfare, hotel stays and car rentals.

Deeded Agreements: These allow the timeshare owner to use his/her interval forever, just like buying a house. Under this agreement, the owner may rent, sell, exchange or bequeath the vacation interval. Deeded agreements can be for fixed or floating weeks.

Right-to-Use Agreements: These stipulate that ownership of the resort remains with the developer. The timeshare developer gives the purchaser the right to use the specified resort accommodations for a certain number of years, usually ranging from 10 to 50, after which all rights return to the developer. These agreements can be for either fixed or floating weeks and are also commonly part of vacation club or points-based memberships.

The Participants

There are three major players in the timeshare industry. These are the developer, the exchange company, and the marketer. The developer invests and usually operates the resort. The exchange company, as explained above, whether RCI or Interval, provides the exchange opportunity for the purchasers of the resort’s timeshares. And then comes an important player – the marketer. Whether it operates in-house or as a sole agency, their fee structure is mostly incentive-based and sometimes, especially when the team morale is low or high performance is achieved, SPIFs (special interest fee) are distributed to the team members without informing them before. The team members are specialized marketers who apply hard sales methods which are essential for selling such an unsought product as timeshare, in other words; a product for whose consumption the demand has to be stimulated. Hard sales team members are:

LM (Line Manager) who is in charge of the whole team and needs to have high experience and charisma.

T/Os (Take-over manager) who negotiate the price and closes the deal.

B/U (Button-up) who makes the contract and clarifies any questions in the customers’ minds. They need to be superior over the contract.

Reps (Representative) who are to explain all aspects of the product through pencil pitches. They view the customers as UPs (unhappy person), and their task is to satisfy them.

OPCs (Off-premise contact) who distribute invitation flyers for presentation meetings to people who they view as Qs (qualified). They usually have a manager who assigns them to locations where the potential Qs exist.

CONFs (Confirmers) who call and invite the UPs to presentations referring to the questionnaires administered by OPCs during off-site operations.

ADMIN (Administrator) who does the paperwork such as preparation of contracts, proposal forms, bonds etc. and acts as an accountant that deals with the calculation of success fees regarding the sales.

F/U (Follow-up) who is in charge of keeping track of the installment payments and is to handle any conflicts regarding the payments.

Receptionist who is specialized in eliminating the NQ (unqualified) UPs.

DF (Deadf***er) whose role is to get the UPs, who have left the deck or refused resort tour, back to presentation.

As explained before, timeshare requires hard sales methods to get consumed. This kind of marketing is made by specialized teams which are formed as sole agencies or in-house lines. Working with an agency, decreases risk and profitability while an in-house line increases them and demands the time of company much more. Below is an example for the routine operations of an on-site in-house hard sales team:

The team is made of a Line Manager, a T/O (Take-over), 10-20 Reps, an OPC manager, 10-20 OPCs, a receptionist, a Button-Up, an Admin and a Follow-up.

Between 6:00pm to 1:00am, the OPC manager assigns his team to locations where the Q UPs exist. At those points, they give away invitations that say “come and have a lunch with us and see the beauty of our resort”. An OPC must have himself loved by the UPs to get them into the resort. Literally, 5% of the Ups come to the presentation. When they come the next day starting at noon, they are greeted by the relevant OPC at the gate and accompanied to the front desk.

At the front desk, the receptionist rates the UP as NQ, Q or OverQ. She also records the time of arrival, names of the Ups, OPC, REP and TO. NQ Ups are kindly rejected from the presentation. The Q UP is invited to the presentation area, which is called the “deck”, by the REP that is in the first position of the line (that depends on how much and how recently they have made sales – a rep that has made 5 consecutive sales is 5 star) for a 4 hour presentation. This goes on until the deck capacity is met. If there is an excess of Ups, power-reps make “podiums” which is presentation to more than one UP. (Every morning, REPs have their training and motivation speech given by the Line Manager)

At the deck, where there is music, beverage service and a wall full of timeshare related posters, the rep who has successfully completed the first step of the game plan with a quick and warm greeting (kiss – keep it simple stupid), seats the Ups correctly so that the same gender spouse sits by and does not get irritated (WNS-Woman Not Sold is a situation where the female reps talk to the man and forget about the real consumer). And then, the rep tries to warm “UP”s in order to earn their trust and sympathy. After the warm-up a survey sheet is given that questions the ups’ vacation habits and tires to discover their purchasing power. Then comes the boardwalk, where the rep shows the ups that their dream vacation is possible in the timeshare world. Eye contact and proximity are essentials for control as in every part of the game. Boardwalk is followed by resort tour and if the ups reject it, they are rated as RT (refuse tour) by the receptionist and the OPCs do not get paid for those ups as in the case of NQ. After the resort tour, the ups are invited to lunch. During the lunch, reps should not leave the ups alone, so that they do not talk to each other, and warm them up about the RCI system.

Back to the deck, the rep starts mini marketing and states his intent that he should get an answer about their decision on that day. He should not argue with the ups and go on with pencil pitch. There starts the real game. Pencil pitch covers 4 parts: facts about the resort and timesharing, financial logic (saving advantage of timeshare with respect to traditional tours and summerhouses), RCI (information and the advantages of being an RCI member such as the exchange option and discounts at airlines) and advantages if bought that day such as a discount, free RCI membership, ease of payment. After the pencil pitch, ups are taken to the showflat where all the imaginative efforts turn into an actual quality show. The rep should maximize his enthusiasm and provoke the ups to do what they want in the suites. Finally, he should recap the presentation and ask questions like “is it understood?”, “would you use it?”, “did you like it?”, and “would you buy it if affordable?”. If the answers are “yes”, rep calls the T/O and is to remain silent during the pricing.

T/O’s fee structure is ratio-based incentive; there he tries to get the maximum cash. After finding out what unit and season (“red” for peak, “white” for shoulder, “blue” for low) suit the Up, he tries to negotiate about the payment plan. He has the right to make discounts and can offer free holiday gift. If there is an agreement, T/O rings the bell at the deck and it is a deal (The bell ring and cheering are actually Pavlovian conditioning applied on the Ups). A proposal form, which shows the information about the up and the payment type, is sent to the Admin, while the ups are directed to the contract room.

At the contract room,  the ups, having seen only the young rep and the somewhat more serious T/O, face the charismatic button-up sitting in the solemn back office. So, the ups “button up”. Meanwhile, the next-door admin prepares the bonds, their detailed account, the resort manual, receipt for payment and two copies of timeshare contract as fast as he can (usually 5 minutes) and brings them to the button-up. Button-up must provide strong assurance to the ups so that they do not “kick” the deal or cancel the contract during the 10-day cooling off period.

If there is a new membership, admin reports the related information to the follow-up. FU bypasses the cooling-off period and then tries to turn the installments into cash-outs according to the discount rate specified on the contract.

In the end of the day, the admin collects the front desk report, proposal form, and the action sheet and turns them into DSRs (daily sales report) in order to update the sales report and the timeshare inventory (e.g. 50 units * 30 weeks = 1500 timeshare intervals). Admin calculates the realized success fees of the team and the Line Manager distributes them on the payday.         

As a final word; it should be noted that no matter what the design of the marketing organization is, it is always the motivation factor that should be focused on in order to enhance the performance of the sales team and the behavioral attitudes of the consumers towards purchasing decision.

References

Lattin, G. W. (1995). The Lodging and Food Service Industry. Michigan: The Educational Institute of the American Hotel and Motel Association.

Resort Condominiums International (2002). RCI Resort Directory. London.

World Tourism Organization (1996). Timeshare, The New Force in Tourism. Madrid.