Best Fractional Ownership Sales Techniques
Vacation homes are among the ultimate discretionary purchases — something most people want, but do not absolutely need. Wanting is not synonymous with purchasing.
This article demonstrates how techniques of relationship selling can actively involve affluent purchasers in the sales process and lead them toward a making a commitment to purchase.
Definition of Affluent
For purposes of this article, the term, “affluent,” is used to refer to the income qualification for fractional interest ownership—a minimum of US$150,000 annually and for private residence club ownership—a minimum of US$250,000 annually.
10 Insights into the Mindset of Today’s Affluent Purchasers
Following are ten important insights to keep in mind and act on when dealing with affluent potential fractional purchasers.
The “New Normal”: As a result of the recession, the economy has been transformed from a “spend society” to a “save society.” Purchasers have become thriftier, more cautious and less trusting. They have sustained significant portfolio losses due to relying on the advice of financial advisors. They have therefore become more suspicious of nearly anyone trying to sell them something.
Financially Conservative: Contrary to popular belief, most of today’s affluent people have not been born into wealth. The vast majority come from middle-class backgrounds and hold on to their middle-class values: hard work, perseverance, integrity, treating others well and thrift. Despite their financial success, most still believe they must spend their money carefully. They treat their household budget and personal expenditures according to the same principles that have brought them success in their businesses.
Money Is Important: The affluent believe that money is important They comparison shop—often on the internet—in order to find the best deal for themselves. Value is as important to them as it is to other purchasers. They like bargains and discounts. They clip store coupons. Though they love a great deal as much as the next person, a discount or rebate on its own is not enough to persuade them to purchase a fractional interest they don’t genuinely like and does not meet their vacation needs.
Money Has Always Been Important to the Affluent: The affluent have always been cautious, frugal and careful with money, Most tend to live within their considerable means. That’s why they are affluent. The “new normal” is not “new” to the affluent. It’s normal.
Time Is Money: For the affluent time is money. These are people who TiVo favorite television programs so they can watch them at their leisure sans commercial interruption. Sales people need to respect the time schedules of their affluent purchasers and not talk too much. Enough said.
Numerous Options: The affluent arrange to have numerous options of properties to purchase, including purchasing none of them. Having alternatives enables them to negotiate the best deal for themselves and walk away from opportunities that are not advantageous.
Careful Decision Making: The affluent take their time deciding whether or not to make a large purchase. They could need as much as a month to think over carefully what to do, if anything, about a fractional purchase.
Resistance to High-Pressure Sales Techniques: Heavy sales pressure is counter-productive. Time deadlines, price rises and fear of loss of an opportunity are more likely to stimulate resistance or disappearance than agreement to purchase.
Independent: The affluent are successful professionals and heads of successful businesses. Some of them are entrepreneurs who have founded one or more highly profitable businesses. They are independent and prefer making their own decisions, rather than relying solely on the advice others, particularly if in the past, this advice has led to financial losses. An agent can “tell” customers what to do, but why should they listen? What can an agent possibly say to persuade these high-achievers? In who’s interest is the advice given?
Devoted to Family: Family is vitally important to the affluent. For them, the most rewarding aspect of life is time spent with children and grandchildren. Time with loved ones is far more important to them than time spent at work. Nevertheless, they report that they split their time about equally between family and workS. When asked what they would like more of, the top answer among the affluent was, “More time with family.” This contrasts sharply with the responses of those with incomes of US$75,000 who reported, understandably, that they would like “More money.”
Given this mindset, what can a fractional sales agent do?
“Relationship selling” places the customer at the center of the sales process. This process focuses on the customers’ need for guidance in decision making, rather than on a salesperson’s need to close a transaction. Customers need to feel that the agent cares about them as people, rather than just as sources of business. Sales agents can develop a strong, caring relationship with customers by listening closely to them.
The magic of relationship selling is steady, low-pressure questioning by the sales agent that stimulates high-involvement responses from the customers.
The agents’ questions are designed to guide the customers’ thought processes along pre-determined pathways to ownership. These questions actively engage the customers both rationally and emotionally in the sales process. If the sales agent is talking more or working harder than the customers, then the sales agent will wind up “purchasing” the property.
Here are the Golden Rules of Relationship Selling to an Affluent Fractional Clientele:
Empathic Listening to Develop Trust
Forming a strong relationship with customers involves letting them know they are heard, understood and accepted. Trust is the foundation of a business relationship. Trust is cultivated by listening attentively, without interrupting. Wait a second or two before responding. (Who wants a fast-talking sales person?)
Show that you have heard your customers by reflecting back their questions with, “If I’m hearing correctly, you have some questions about…Is that right?”
You have two ears, but only one mouth. Listen twice as much as you speak.
“Empathic listening” involves demonstrating to customers that you have heard what they have said, care about their feelings, support their right to express their opinion—whether you agree with it or not—and are genuinely concerned with promoting their best interests. This non-judgmental, non-combative atmosphere serves to encourage customers to express freely the objections preventing them from moving forward and purchasing the property.
Four Techniques of Empathic Listening
Restating or Reflecting Back: Restating is repeating either exactly or closely what the customer has said. This validates the customer’s statement—and the customer and demonstrates that the agent cares about whathas been said and about the person saying it. Be careful not to overuse this. It can be irritating. Save it for long or complex utterances.
Supporting: Supporting is expressing support—not necessarily agreement—with what the customer has said. Supporting includes, “I hear you.” “I understand how you think/feel.” Supporting is important, especially before posing questions that lead the customer toward a slightly different line of thought.
Probing/Clarifying: Probing is exploring what lies beneath a statement that is too vague or general to permit a response. “What do you mean by a ”good value?”
Reframing: Reframing is repeating the customer’s statement or question and rephrasing it so that it can be answered more easily. “I don’t plan on deciding today.” “Certainly, I understand your position.”(supporting) “Could you please share with me your thoughts on not taking advantage of the opportunity offered now?” [reframing, probing]
Ask, Don’t Tell
A novice sales person once asked a master sales person, “Why do you answer a question with a question?” The master replied, “Why do you ask?”
Involve customers actively in the sales process by asking them questions that clarify their thinking. For example, a customer might ask, “Is this a good investment?” The agent responds: “What do you mean by a good investment?”
Request Permission to Make a Lengthy Explanation or Presentation
In this internet age, when customers may already possess a lot of information about the property, it is important to ask them what they already know and what they still want to know. The sales person may repeat the customer’s request, “If I hear correctly, you still want to know more about the reservation system…” and then proceed with, “May I present this fully to you? (This could be considered the verbal equivalent of opt-in email.)
It’s About Them, Not You
In customer-centered, relationship selling, the focus is on the customers’ needs and opinions, not those of the agent. If customers say, “Is this a good investment, the agent can respond, “What do you mean by a good investment?” Then, the agent may continue, “Given all we’ve discussed, what do you think?” Of course, the agent can express, an opinion—if customers ask.
Offer Low-Pressure Questions to Elicit High-Energy Responses
People are affluent because they have managed their money carefully. They plan for themselves several alternative courses of action—including “none of the above,” so as to negotiate their best deal. It is unlikely that they can they be coerced into doing anything against their will.
High pressure just stimulates high resistance. Affluent clients do not respond well to sales pressure such as time deadlines, hints of imminent price rises or fear of losing the property they are considering. They believe, if not today, we can wait for another opportunity.
What to do? A sales person can influence high-end clientele through a series of gentle, structured questions that lead them toward finding and verbalizing their own answers.
“We don’t think we can use the vacation home enough?” The agent can clarify this with, “Are you saying that you don’t have enough vacation time?” Or, “Do you mean that you want more flexibility in where you vacation?
”We don’t have enough vacation time.”
“Certainly, with the busy lives we all lead (empathic listening, supporting), it’s often hard to find time to get away, isn’t it?” (actively involving through a question). “And demands at work take away from the time you want to spend with your family, don’t they?´ “Well, wouldn’t having a vacation home here be a great reason to make the time to get away with your family and have some fun together? (actively involving with questions, rather than telling)
The customer persists, “But, we still wouldn’t have enough time to use all the vacation time allowed?”
“I hear you saying that you don’t want your unused time to go to waste, is that right?” “When not using your property, would you consider renting it…(if the property permits rentals), exchanging it… (if the property belongs to an exchange network), offering it to a friend or family member…donating it to a charity benefit… hosting a business associate?… Is there someone you can think of now who would enjoy being your guest?”
If the customer continues resisting, “Do you have some other objections to moving forward, perhaps something we have not yet discussed?
All Answers Are Correct
No matter what customers respond, be supportive, accepting and non-judgmental. All responses are the right responses—even if you believe otherwise—because it is good that the customers are involved. Create an accepting atmosphere where customers feel free to express their opinions.
Acknowledge and support the statements you agree with, (“Yes, that’s a good point”) and question the ones you believe need clarification. Avoid conflicts and arguments. If you disagree with a customer’s statement, be agreeable. Preface the disagreement with, “I hear what you are saying and appreciate what you believe, but perhaps you could consider that…Isn’t that so?” If you engage in arguments, the customers will win.
Use Time Efficiently
Many of the affluent are high-performing business and professional people. Keep your remarks to the point and brief. Don’t waste their time with idle chit chat or more information than needed at a particular moment, especially at the start of an appointment. Remember, for the affluent, “Time is money.” Detailed information can be offered later in the presentation, when customers are more involved with learning about the property.
Understand the Relationship Selling Process
Recognize that purchasing a vacation home is an emotional process made in a rational way. Ask questions about what customers feel, as well as about what they think.
Choose Carrots, Rather Than Sticks
For an affluent clientele, incentives to become members (carrots) are far more effective than sticks (fear of loss of the opportunity). The affluent love bargains and discounts. When handled in a tasteful, low-key way, incentives can support a decision to move forward, but absent a genuine desire to own the property, they are ineffective.
Communicate Urgency Calmly
Over-emphasizing upcoming price increases or loss of an opportunity to purchase may exert too much pressure and be counter-productive. These items may be mentioned, in a factual, “by the way manner.”
Plan for Internal Appreciation
Schedule a series of small price increases to establish a record of appreciation of the fractional interests.
Control the Release of Inventory
Limit the number of residence sizes or types available at any one time to narrow purchasers’ alternatives and convey scarcity and the need to act now.
Anticipate in advance the fact questions that are likely to arise and write answers to them. Anticipate in advance the objections that customers are likely to raise and write scripted answers for sales agents to follow.
Effective Closing Techniques
Order Blank Close: The sales agent simply fills out an agreement. “What is your middle initial?” or “Let’s write this up,” This simple close is very commonly used.
Assumptive Close: Technically, most closes are assumptive because they involve the agent’s assumption that customers will purchase. “So, you prefer the penthouse.” [assumptive] “Okay, let’s move ahead with this.” [order blank]
Forced Choice Close: This is used often in retail sales. “Will that be cash or charge?” No matter what the choice, a purchase is assumed. In real estate, this can be, “Do you prefer the 2-bedroom or the 3-bedroom size?”
“Let Me Make a Note of That”: This is closely related to the order blank close. “So, you are choosing the 3-bedroom. That’s residence plan A. “Let me make a note of that.” The plan or unit number is written on an agreement. This is a variation of the order blank close.
Hand The Customer a Pen: “With you authorization here on the agreement, we can move forward toward your membership.”
Closing on a Secondary Issue: Will your refundable deposit be by check or do you prefer to charge it?” This is closing on a secondary issue, forced choice and assumptive.
Sharp-Angle Close: The sales person artfully uses several small steps to turn a customer’s objection into a closing question. “I’m not liquid right now.” “I hear you and understand your position.” [supporting] “Are you saying that the question for you is a timing or cash flow issue?” [reframing, probing] “And what would be better timing for you?” [probing] “If I can arrange for you a later closing date/payment terms, will you move forward with your membership?” [sharp-angle close]
Closing/Moving Forward on the Objection: The sales agent turns the customers’ own objection into a reason to purchase or to move forward in their decision-making process. “The economy is uncertain now.” “Yes, the economy is not yet as strong as it will be in the future. [supporting, reframing] That’s why there are great opportunities available now. Can we count you in?” [closing on the objection]
Puppy Dog Close: Who can resist a little puppy thrust into one’s arms? This close is similar to a test-drive. In real estate, it involves a stay at the resort or at the property. Once the customers have enjoyed their experiences, all a sales agent need do is ask questions soliciting “yeses” from them. “Concierge service is a great convenience on vacation, isn’t it?” “Wouldn’t it be nice to have a concierge back home?” With a good number of “yeses” from the customers, the salesperson can proceed to another of the closes on this list.
Porcupine Close: If someone tosses you a porcupine, you toss it back, don’t you? (See, we just did it, didn’t we?) Sometimes, a good way to handle a “gotcha” or prickly question is simply to toss it back, then follow up with another closing question. “Why should I buy now?” “Why not?” [porcupine] said innocently or else it might come off as snarky.
Comparison to Whole Ownership: The value of the fractional interest is compared favorably to the costs of whole ownership of a comparable property.
By the way…: This is a good way to introduce in a low-pressure manner a financial incentive for closing. “By the way, I have some good news for you. The developer has arranged to offer, for a limited time, an incentive of (describe the incentive) to people who move forward with membership within (a certain amount of time) of their visit.”
Respect Your Customers’ Competence
Notice that in the scripts above the sales agent solicits the customers’ opinions rather than offering his/her own. If you think about it, what can an agent possibly say that is more persuasive than what customers themselves say? After all, these are highly successful people whose intelligence and wise business decisions have enabled them to afford a vacation home purchase.
These affluent people are accustomed to making their own decisions. They have perhaps become mistrustful of their own financial advisors and anyone trying to sell them anything. So, isn’t it a good idea for an agent just to guide thethought processes of customers by astute questioning and then let them come to their own conclusions within the conceptual framework the agent has provided?
If agents spend too much time supplying too much unnecessary information, customers can simply tune out and turn off. Sales agents need to engage their customers actively in the sales process by soliciting responses after the information the customers desire has been supplied. “Is that what you wanted to know?” “Did I make myself clear?” “Do you have any more questions?”
Of course, agents can offer written facts, statistics, trends, line charts and bar graphs plus expert advice based on personal knowledge of the area and local real estate market. Still, this data might be considered self-serving by some of today’s savvy, wary real estate purchasers who have “been there, done that.
Data can sometimes become like background noise in the customers’ head. What they may really be listening to is the voice in their heart. .
Show, Don’t Tell
Rather than telling customers about the reservation process or the bona fides of the development company etc., show them the property brochure with this important information in writing and explain these items while pointing to this brochure that they will receive as part of their owners kit.
A similar situation involves, in this article, the difference between explaining a closing technique and providing a dialog for it. Which do you find more useful, or do you prefer both the concept and the practical application of it”
Respect the Customer and the Decision-Making Process
For the affluent, purchasing a vacation home is an emotional decision—made in a rational way. And the higher the price of the home, the more emotion is invested in the decision.
So, in the end, after you have done your professional best—supplied all necessary information; involved the customers with the resort and the property; responded to all their questions and objections; and developed a good, caring relationship with them by listening closely and seeking their opinions, doesn’t it make good sense to give these intelligent, financially qualified people the time, the space, the peace and the quiet to make the right decision for themselves?
And at times, they really do need to “think about it,” “sleep on it” or “pray on it.”
Of course, there’s a closing script for “I want/need to think it over.” But, that’s for another time.
After the customers have left the “ether” of the resort, all that remains are fond memories of their vacation, their valued relationship with the sales agent and the paperwork.
If the property is a good one and a strong, trusting relationship with the sales agent has been developed over time, the customers will authorize the agreement, return it and not rescind.
About The Author
David Disick has been involved in the fractional vacation home ownership industry since 1992. His pioneering development, the award-winning Franz Klammer Lodge in Telluride, Colorado, was the first property to be branded as a Private Residence Club. This trend-setting property set the stage for the creation of the wide variety of private residence clubs in today’s market and was essential in establishing the prominence of this luxury segment of the industry.
Mr. Disick has written numerous articles on fractional ownership and spoken at many industry conferences. Fractional Life has named him to its list of The Top 21 Fractional Real Estate Professionals of 2010. He is the author of Fractional Vacation Homes: Marketing and Sales in Challenging Times, which expands on the material in this article.