It’s been said that making sales in leisure resort real estate is not rocket science. Perhaps not, but it is a discipline that requires attentive strategies be employed to enhance sales pace and to mitigate risk. Consider the following tenets:
1. Coordinate Marketing and Sales Activities with a Properly Funded Budget. The marketing and sales function is the most important component to the profitable operation of any luxury second home real estate venture. This activity is as equally important, if not more so, than as the quality of the product itself – “the sticks, bricks and furnishings”, if you will. The long accepted adage of “Build it and they will come” is being challenged daily in today’s competitive real estate boom. Even among projects of equal quality, the better marketing and sales entity will inevitably capture a disproportionate share of the market.
As a point of definition, Marketing covers all of the activities required to get a qualified prospect in front of a salesperson. The Sales function covers what happens from that point forward. The two must obviously work hand in hand. We believe marketing and sales efforts must be dovetailed to achieve the common goal of cost-efficient sales that are retained long-term, in order to generate additional downstream revenues. It quickly becomes clear that a well-tuned and balanced marketing and sales campaign can have a very significant impact on the development company’s financial performance. A faster sales pace and shorter sellout reduces both the developer’s and lender’s exposure time and expense.
So, how to get there? Prepare and administer a coherent and appropriate marketing plan that is understood by all – one that can be modified as the circumstances dictate. One requisite of any such plan or campaign is the significant and rapid flow of money necessary to pay for the many promotions, especially in pre-sales start-up activities. There are always several programs that are simultaneously used that all require quick and significant funding.
Strategy: An adequately funded start-up budget to accomplish any pre-sales goals prior to lender funding is essential. Delays in paying for marketing activities can be disastrous. Worse yet, running out of dollars before your marketing program is launched is sheer project suicide.
2. Utilize One Sales Team to Represent All Leisure Real Estate Products. From our experiences in the industry both past and present, we know some simple truths about the leisure real estate buying market. The first fact is that no one buys a real estate product sight unseen. A second corollary is that the bulk of the sales will be generated from prospects that are repeat visitors to the destination resort area. And, the third corollary is that no prospect has a clear idea of which product is right for them until they hear of their options. No one walks through the door wanting to buy a fractional or a condo-hotel interest. The prospect’s opening statement may be that they simply want to hear about the condos for sale.
Relationship selling techniques are in vogue and are appropriate for leisure real estate sales. Here, a sales representative first builds trust with his/her prospects and then proceeds with a discovery phase to determine their prospects’ needs, attitudes, preferences and motivations along with a finding of how often they might use the second home product. The agent can then present the real estate options in light of the solutions afforded to that particular prospect and to advise each prospect on which of the multiple products is best for them. Prospective buyers resent being flipped to another agent after they’ve vested themselves in the one agent, who has now become their friend and trusted consultant. This overriding factor underpins our philosophical approach that emphasizes a single sales team approach to presenting leisure real estate product options.
Strategy: If you are a resort developer with a mixture of residential program offerings, cross train your sales representatives on all second home leisure real estate products. Consider abandoning the idea of maintaining separate sales teams that sell strictly lots, or strictly whole ownership or shared ownership interests or strictly condo-hotel interests. You’ll find that your product options will not cannibalize one another and the project will make more sales faster while experiencing less rescission.
3. Get the Right People on the Team. In order to have a successful ongoing marketing and sales operation, a team of talented, disciplined and motivated people must be assembled and paid well for results. We believe it is imperative to bring in a few key people experienced in the particular product format you plan on offering around which to build your team. It is much more costly to get off to a slow start or not get off at all for lack of talent or expertise.
To achieve the results projected, we believe in acquiring good people, training them and paying them well to retain them. Highly trained and motivated salespeople can maintain significantly higher closing percentages than those of average salespeople.
Strategy: Recruit, train and properly compensate a professional sales team for your leisure real estate project. Hold all accountable to performance standards for the project and tie compensation to performance as much as possible. Having the wrong people on your sales team can be very costly to the project, both in lost sales and wasted marketing dollars. The losses can amount to millions of dollars.
4. Deliver Well Qualified Prospects to the Sales Team
An exemplary and consistent flow of well-qualified prospects will yield much higher closing percentages for your leisure real estate project. Between marketing and sales, the more important and variable of the two is marketing. All other things being equal, the sales staff with its capabilities and closing percentages is predictable and controllable. The overall success of the sales offering is, more often than not, made or broken by the marketing component.
For most properties in resort destination areas, we expect to see real estate product sales consummated by prospective buyers that are generated from three general sources:
A. Group One: Those guests that are physically already there visiting the resort area.
B. Group Two: Those prospects who are planning on coming to the resort area, but who are as yet unfamiliar with the project’s real estate product offering opportunity.
C. Group Three: Those prospects who know the resort area, but who are not planning on visiting the destination this upcoming year.
Interest from prospective buyers tends to be piqued when they see a resort’s new buildings coming out of the ground. And, as that activity becomes evident and exciting, prospects will walk into the preview center to ask “what’s it all about” and investigate whether there is a significant opportunity for them. Until construction stages begin and during pre-sales activities, the question remains as to how to get those guests and prospects mentioned above to inquire about your real estate opportunity.
Strategy: The thrust of any project’s marketing and sales pre-sales plan, along with the attendant expenditure of marketing dollars, should be strictly focused on just this tactical approach – getting well qualified prospective buyers who are sold on the destination resort area to visit the preview center.
5. Get Sales Posted Quickly to Create a Project Buzz. The thrust of any marketing campaign for an upcoming pre-sales season should have an emphasis on “Awareness” – getting the word out on your project’s offering. For Groups One and Two, this awareness campaign will work to ensure that prospects will stop in the preview center to check out your opportunity while at the resort area. For Group Three prospects, the awareness campaign may actually serve to encourage those prospects to rearrange their schedules to accommodate a trip to the resort area sooner than they had planned.
All in all, the marketing campaign should direct prospects to your resort website or sales center, where they can opt in for more information and to set an appointment. The ability to generate walk-in traffic will be the key to absolute sales success. With a properly designed project that incorporates a use plan that makes perfect sense to the consumer, people will buy and sales will flow steadily.
Strategy: The immediate mission is to get sales on the board quickly in order to build momentum and the sense of a successful project. Salespeople need confidence. A sense of urgency must be instilled in them as well as in the prospects. Making sales steadily builds that confidence, creates a “buzz of success” for the project and satisfies everyone involved with the project – the consumers, the developer, his investors and lenders and the sales representatives. Win-win for all is the name of the game.