Did you know that more than 50% of all real estate leads generated are never spoken with by the sales team?  Yes, quite sobering indeed.  The majority of those precious leads that you spend good money generating are never reached.  We have a sales process that can greatly improve that percentage.  Additionally, there are components of our sales system that can add real and quantifiable value to your project’s bottom line by helping you sell faster.  Look through our secure Corporate Presentation and let’s follow up with a conversation about your specific situation.

Eric Pierce

Yes, sales are harder to come by these days but there are ways to improve your odds at a lower cost.  Did you know that out of 100 new leads, your sales team will typically have a live conversation with less than 40 of them?  We can fix that - see the slide show below.

For a phone consultation and price quote Contact Us.

If you’ve been on the front lines during a typical fractional real estate sales process you will concur that there are any number of objections that are consistently fired at the sales team.  Without going through each and every concern, we can safely say they all have one underlying meaning:  “I am uncomfortable with this decision”.  Usually buyer discomfort is related to a lack of understanding and experience with the product which is another way of saying “I am worried about the risk”.  Heck, nervous buyers will find a way to communicate this trepidation through the thread count of the bed sheets if they have to.  So why does dropping the price remain the first knee-jerk reaction to closing prospects?

The answer is this:  price incentives are often a good urgency tool, and creating urgency is commonly confused with eliminating anxiety.   More often than not, if a fractional ownership prospect isn’t pulling the trigger it is not due to price, it’s something deeper than that - perceived risk.  Tackle the risk and price isn’t an issue.

So how do we provide comfort with perceived risk?  Look at developer buyback options; look at methods to provide customers the option to purchase “risk insurance” at closing and consider installing bonus interest opportunities for buying early.  These tools transfer some additional risk to the developer of course, but that’s the name of the game.  Show me a developer who isn’t comfortable taking risk and I’ll show you a future Starbucks barista.  Assuming that the product has been created properly with the essentials in place for a successful Private Residence Club, virtually eliminating buyer risk will drive stronger sales.  A project that sells is one that eliminates risk to the developer as well.

Now for the secret sauce:  use risk mitigation measures to effectively create urgency.  Let’s not forget that if you (the seller) are going to give something away (a buyback plan for example), you must get something in return; this is basic Integrity Selling and the buyer will appreciate it and respond to it.  Pierce Group has a buyback plan that can be used specifically for this instance.  Instead of offering a price discount, offer incentives centered on the buyback; but do it in return for signing the dotted line within a short period of time.  Set aside all of the money that you would have given away in discounts and use it as a personal insurance policy for your buyback plan.

Disclaimer: Don’t bring up risk!  Only use this strategy when it is an issue with the buyer. At this point in the process the sales executive should already have a strong understanding of the buyer’s objection and a good idea of the direction to take if there is hesitation in moving forward.

Create the right product, virtually eliminate the risk and make it easy to buy - As Yoda once said, “urgency these are not, for they create it”… or something like that.

For more on risk mitigation and the Clearview Sales Process^TM visit PierceGroupLLC.com

Foresight Costs Less Than Hindsight^SM

Last week I was working to bring on a new client, I do this often, but this one stands out because it brings a lot of potential.  The developer understands sales, is well funded and is building an unbelievable fractional ownership resort in an unbelievable location so it’s undoubtedly something that Pierce Group needs to be a part of.

I was faced with a problem however, I had assembled many valuable pieces to the fractional sales puzzle including knowledge, experience, expert sales training, and lead generation programs but frankly, developers are sick of hearing that.  They are looking for something quantifiable and a share in the risk, i.e. more than just a promise of sales success.  The former consulting model of large upfront “professional fees” and huge monthly “professional advances” is all but gone unless it can be backed up with a tangible deliverable - either additional revenue sources or a reduction in sales and marketing expenses.

But then it happened.  I stumbled across the key element that I so desperately needed - the tangible deliverable.  It’s the glue that holds all of our sales techniques and programs together while delivering a real, quantifiable deliverable.  It greatly reduces expenses via a shortened sales cycle and far fewer glossy “coffee table” brochures that need to be printed and delivered.  It will generate stronger referral business thus saving even more expenses.

What I am referring to is a long overdue sales accelerator technology that is absolutely ideal for the resort real estate sales business.  Of course it has to be used appropriately or the tangible deliverable will not reach its potential.  So I spent six solid days in my office with a gallon of coffee a day working on the whole puzzle.  This also helped me avoid the H1N1 that my kids came down with so it wasn’t all that bad.  Special shout out to my wife by the way… couldn’t have done it without you babe!

I have finally put together a decent corporate presentation of Pierce Group’s scope of services including our new and improved ClearView Sales System^TM.  The presentation uses the new technology so I’ve killed two birds with one stone, you’ll get a free demo.

ClearView Sales System

Simply put, fractional ownership real estate developers could save thousands… make that hundreds of thousands of dollars by implementing our process.  I welcome developers to reach out and have a conversation.  Whether your project is still on the drawing board or you’re in the middle of a campaign, the process provides real tangible value.   Contact Us to receive our corporate presentation.

Eric M. Pierce

President - Pierce Group, LLC

www.PierceGroupLLC.com

This is volume 1 of several upcoming posts where I will identify other expert opinions that back up my thoughts on fractional ownership and the overall opinion of the industry’s seemingly bright future.

These remarks are made by HVS author Andrew Cohen and included in Gerson Lehrman Group’s article entitled “Resort Real Estate & Recovery Speed: What Comes Back Quickest?”

“There will be resort real estate sales, Cohan says, but certain products in certain price points in certain locales will likely recover their selling strength quicker than the resort real estate market at large.”

“What will come back quicker, according to Cohan?

• Resort real estate markets in drive-to resort markets. (A point made after 9/11 as well, and perhaps true for a while, before life returned to excess normality.) The idea here is that people will seek resorts that don’t require expensive flights to reach and that can be reached more often, which connects to….
• Use: Resort real estate buyers will be more focused on value, especially value through use. Buyers will either want to use the resort property as often as possible or will only want to pay for what they believe will be their typical level of use by buying fractional real estate or by joining private residence clubs
• Preservation of service and amenities: Cohan makes an interesting point when he says that the household that was worth $10MM in the glory days became accustomed to the highest level of service and the highest quality amenities. Now that they’re worth “only” $5MM or $6MM they may not be able to afford a $4MM vacation home any more, but they want the service and amenities they used to know, if someone can deliver them a $2MM home that can somehow be packaged with that higher-level service and amenity package”

Please see the entire article here:   http://www.glgroup.com/News/Resort-Real-Estate–Recovery-Speed–What-Comes-Back-Quickest–43801.html

But first, allow me to expand a bit on Mr. Cohen’s points regarding drive-to resort markets and the demand for flexible second home usage.

If you are a developer of a residential resort community in a drive-to destination make sure you offer a usage plan that provides for the flexible usage that Mr. Cohen discusses.  Nobody wants to purchase a second home within two, three, four or even five hours of their primary residence and be told that they can only use it according to a rotating schedule or pre-assigned weeks.

Rotating schedules might have their place in a destination like Aruba, but not where the last minute getaway is so valuable.  This is especially true if the resort is upscale and the price is in excess of $100,000 for each fractional interest.  In this business, flexibility is synonymous with luxury.

In traditional fractional ownership and Private Residence Club sales, success depends on the creation and delivery of a far more complex product; one that goes well beyond marble countertops and stainless steel appliances.  A key component to the fractional offering is accessibility among other things.  Thus, the reservation system is critical to the success of the project as prospective buyers will not take the leap - especially in this economy - if they do not see an opportunity to use their second home in a flexible manner.

Warning: please don’t take this too far and create a “flexible” or “fair” reservation system that only an MIT grad can understand; you will certainly be creating a sales landmine.  Unfortunately this is way too common; in fact I just saw it last week in Mexico.  I was impressed by the project but for the life of me could not understand what appeared to be the most complex formula since the credit default swap debacle.  Folks, if yours truly can’t understand the reservation system… that’s bad.  I spend most of my day on this stuff, what is John Q. Public going to think?

For more on Pierce Group’s services and properly creating your own reservation system please click here:  http://www.piercegroupllc.com/core-services.html

Eric Pierce

Foresight Costs Less Than Hindsight^SM

10 Most Common Mistakes in Fractional Ownership Development

Multi-Use Resort Residential Sales - Worth Doing If Done Right

Selling Fractional Ownership – To Vomit or Not To Vomit

Fractional Ownership: Acceptable Conspicuous Consumption

Market conditions that were present during fractional real estate’s first major boom in 2004 and 2005 are long gone.  Not to say that those conditions won’t come back, in fact many believe they will with fractional ownership sales leading the way.

But what are you, the developer, land owner or sales manager doing in the mean time?  Lots of consultants and advertising companies continue to gloat over past sales successes in the “Order Taking Era” of 2004 and 2005 and kudos to them for those accomplishments.  But how are they helping you today?  Your focus today should be on answering these questions:

1.  Have you adjusted your price matrix?

Typically it’s not a good idea to drop your price and I’m not recommending everybody go out and do that tomorrow, but we can all agree that today’s economic environment is atypical so discussions about atypical price adjustments shouldn’t be ignored either.

2.  Does your sales team have the fire power to sell “The Lifestyle”?

Put another way; what are your hiring criteria for the sales team?

Many licensed real estate agents can sell features and benefits, but are they equipped and trained to sell an experience?  Can they learn about their prospect and position the product based on their needs?  Can they move the prospect along efficiently through the sales process?  Fractional selling is solution selling and order taking is a thing of the past.

3.   What are you doing to shorten the sales cycle?

If sales are more difficult today then it seems logical that facilitating an easier process for those who do have interest would make sense.  What steps are you taking to simplify your message?  What technology is available to facilitate quicker delivery of information?  Are you still hanging on to the old school method of creating interest and following up with several different marketing pieces?

4.  What sales reports do you use?

The information assembled from your sales staff is priceless.  Why are buyers not buying?  “The economy” is an easy answer and is often times true but the right product at the right price can win a percentage of those deals.  Here is a good one that came from a qualified prospect:  ”We don’t want to rub our success in our friend’s faces” was the gist of their objection.  People are choosing to wait just because it might look bad if they make a $250,000 purchase right now - in their eyes, it’s not a very ‘responsible’ use of their money… even if it actually is.  Get my drift?  You can’t help someone over the goal line if you don’t know what their real objections are.  It’s too easy these days for a prospect to throw out this classic line:  “we’re just going to wait a while and see what the market does”.  Not knowing for sure what the true objections are will sink your ship.

5.  Have you thought about creating more products?

I’m not referring to adding a timeshare component or re-designing your floor plans.  But maybe there is some merit in today’s market with different levels of membership to help broaden your target market.  Maybe a corporate option isn’t a bad idea?  A more flexible option designed for corporate use that individuals can choose to upgrade to.

6.  Are you embracing new marketing techniques?

Social media is the big deal today and should be included into your marketing mix.  Notice how I say “should be included”; this does not mean pour all of your money into Facebook, Twitter and your blog, but they definitely need to be a slice of your pie.  These outlets are quite inexpensive as well and can help you get exposure for very little money if done right.  In other words, go easy on the $20 per piece marketing brochures for a while and get more information out there faster and cheaper.

7.  What suite of incentives are you offering?

Buyers are looking for a little something extra because they know they can get it.  What do you have planned for them?  Of course there is the popular ‘Charter Membership’ opportunity, but what else?  Have you looked at various referral incentives that can be used for the owners you have already closed?  What does your owner communication program consist of?

8.  What urgency tools are you going to use?

The sales process in this market can move at glacier speed.  There are methods to move your interested customers along.  For example, if you are in pre-construction, there are clever ways (outside of price increases) to provide more incentive to put down a deposit sooner.

The bottom line:  you have options and there are several clever ideas that you can implement today to boost your sales pace. We at Pierce Group spend most of our time answering the questions above and gathering valuable new ideas.

Learn more about our services here or contact us for a free phone consultation.

Eric Pierce

President - Pierce Group, LLC

Foresight Costs Less Than Hindsight^SM

Arguably the most valuable service provided by any reputable real estate consultant is the ability to prevent costly mistakes for their clients.  Not only does this apply to the fractional consulting industry, it’s magnified.  Our industry is still relatively young compared to its predecessor, the timeshare, and the majority of real estate developers have yet to embark on the development, sales and marketing of any type of fractional ownership real estate.

If I had a nickel for the number of times I’ve heard this: “We’re going to sell this project out through the local real estate community”, I could retire and buy fractional interests around the world!  This brings me to the list of most common mistakes made by new fractional real estate directors.

Mistake #10:  “We’re going to go with Super Duper Advertising Company because they have sold more than $10 Billion in luxury real estate.”

Not so fast.  It might sound logical at first, but selling out a project in 2004 was about as difficult as selling a cheeseburger at McDonalds.  Look for companies that have had some traction this year - yes they do exist.  The ability to defy the odds and sell real estate today indicates that the advertising company has the ability to adapt to different markets and reach out to buyers no matter how difficult.  This quality is very valuable so pursue these companies even if they have never heard of fractional ownership.  The fractional expertise is what you have Pierce Group for!

Mistake #9:  “It didn’t sell wholly so it will sell fractionally.”

Not Really.  Is there a chance that your stalled condo project could sell fractionally?  Of course.  Is it a lock?  Absolutely not.  Often times a traditional real estate development won’t sell because of traditional issues, or traditional errors.  If the project is a mile and a half from the beach and all you have is a tennis court then it probably won’t sell fractionally.  Before you convert it, seek out an expert opinion.

Mistake #8:  “We’ve set aside the traditional 5% for sales and marketing.”

Wrong.  A fractional real estate sale is a different animal.  No longer are we selling marble countertops and hand-crafted cabinetry.  This is a lifestyle message that requires more explanation around the effortless experience and practicality of ownership.  When was the last time you saw the explanation of a reservation system on the web site of a typical whole ownership gated community?  Your costs will be significantly higher for more advanced brochures and web content.  Additionally, more outreach is required.  The MLS (in most cases) won’t even bring 5% of your sales.  The real estate community won’t be your answer either - reference Mistake #2 - so a full on-site sales team is needed and there are plenty of extra costs associated with that.  Don’t worry developers; the difference will be made up in higher sales revenues.  We’ll leave that for a different article.

Mistake #7:  “We’ve decided to leave out the exchange program; it sounds too much like a timeshare.”

Incorrect.  The key difference between timeshare exchange and fractional exchange is that timeshare buyers more often make their purchase decision based on the exchange component.  The reverse is true for fractional buyers - they purchase because they love the location - the exchange is simply a bonus.  Your sales team understands this and never leads a conversation with an explanation of the exchange benefit.  The exchange affiliation is a tool that can add credibility to your project and help get your prospects over the goal line.

Mistake #6:  ”One sales team will be responsible for selling all of our residential products.”

Don’t do it.  One team should sell your fractional product; another should sell your whole ownership product and so on.  Each team should be masters of their own product and be able to handle product specific objections.  A little competition is healthy.  Of course, gun slinging and infighting among sales teams doesn’t do any good so set the ground rules from the start, put together a good internal referral program and it shouldn’t be an issue.

Mistake #5:  ”We are hiring local real estate agents to run the sales office.”

Not so fast.  While some local real estate agents might be well qualified, many are not - I’ve seen both.  The fractional sales position requires skills like… listening.  This is not an easy skill to learn and many sales people will simply never be able to grasp this concept.  Vomiting features and benefits all over prospective fractional buyers is as effective as a two for one special at a super-yacht dealer.  Reach out of the box when hiring your sales team and don’t concern yourself so much with whether or not the candidate has a real estate license.

Mistake #4:  ”We have rock solid legal documents that protect us no matter what!”

Go easy here.  Typically, legal documents are written by attorneys hired by you, the developer.  So it is your attorney’s job to protect you, their client.  This is completely understandable but at the same time it is to your advantage to make sure the documents are sales friendly - i.e. free of sales land mines.  In the case of fractional sales, the documents are lengthy and include things like Public Offering Statements and references to timeshare.  Our industry still falls under timeshare regulation; actually a good thing for the buyer but can look scary nonetheless.  Buyers will have their own attorney’s, accountants and/or financial advisors look through them.  So get those sales land mines out of there by having your trusty fractional consultant review them.

Mistake #3:  ”We already know our ratio is 8:1 and what our price will be, we don’t need a feasibility study.”

Never skip the feasibility.  Why did you choose 8:1 and not 6:1 or 10:1?  What criteria did you use in setting your price?  There are reasons why we come up with the appropriate owner to residence ratio as well as the reservation system.  These reasons come out of research performed during valuable feasibility studies.  Remember, a project cannot be sold by even the most skilled sales people if the product is structured incorrectly or priced incorrectly.  Spend a few bucks up front to ensure that you are starting off on the right foot; it will save you oodles in the long run.  We like to say it this way: “Foresight Costs Less Than Hindsight^SM“

Mistake #2:  “We’re going to sell this project out through the local real estate community.”

No you’re not.  Don’t confuse this with Mistake #5; here we are referring to spending very little on traditional marketing avenues and re-directing those resources towards educating the local real estate community to sell for us.  Sounds decent in theory but never works.  To go this route assumes that the real estate community is willing to spend their valuable time and energy learning a new product with a sale price equivalent to a “fraction” of a traditional whole ownership sale.  Commissions are lower so an agent’s interest and excitement is usually lower as well.  This is not to say that there are not local agents that will understand the product and embrace the opportunity to offer a practical alternative to their trusted client list.  It is simply not a strategy that can be used to sell an entire project.

Mistake #1:  “We’ve read this article, bought a couple fractional books and have now gathered all of the information we need.  We no longer need a professional consultant.”

Not so fast.  First of all, we have just scraped the surface in this article.  You will be faced with hundreds of decisions that can prove costly if not handled correctly.  The majority of what you will face throughout the project development, sales and marketing lifecycles cannot be found on the internet.  Second, selling this product requires extensive training, followed by more training and then additional reinforcement training.  Explaining the fractional concept to buyers is an art and must be done at the right pace as to not confuse them and send them away without completely understanding what you have to offer.  See To Vomit or Not to Vomit.  Third,   every project is different and you should not be expected to understand the intricacies of how each reservation system is designed and why.  Stick with what you do best, find attractive properties and put together the right team that can work interdependently to create something special.

In summary, eliminate mistakes and save money by reducing costly expenses associated with errors that could have been prevented at the start.  Fractional ownership is not only a practical decision for your buyers but for you as well.  Learn it, love it, embrace it; do it right the first time and watch your profits grow!

More information here:  Pierce Group Feasibility Study and Pierce Group Project Development Services

Finally an upscale fractional development has arrived in Chicago!  James Place Private Residence Club has launched sales of 1/12th interests in very upscale two bedroom and two bath residences.  Now future owners have the opportunity to make a more responsible second home purchase decision and still enjoy what they love the most, Chicago.

Owners will enjoy all of the services and amenities one would expect from the finest Chicago hotels but own the added bonus of virtually unlimited access.   We installed the Personal Choice Reservation System at James Place.  This flexible system allows for abundant usage of all of the Club’s 40 residences and eliminates the issues of reduced availability born from restrictive systems common in other fractional developments.  All of the residences are available to all owners and are identical in size and decor, designed to provide owners with a comfortable and quiet living space - exactly what is needed in a bustling city!

Charter price is now set at $140,000.  Interested parties are encouraged to inquire soon, the club is priced to sell now.

In addition to an inflated commission structure, Real Estate agents around the world are encouraged to sign up for a landmark referral program at EarnAMill.com

For more information contact Rick Mendoza, Sales Director at Rick@BellaGRP.com

The dissemination of information at the early stages of the sales process has long been debated and there are believers in both sides - holding back information and throwing it all out there.  Let it be heard (read) here, times have changed and the process in which we provide information to interested prospects is a crucial element of the sales process.  Fractional sellers need to provide a wealth of information so buyers can educate themselves.

The typical perception is that the information might be too complex and too confusing, or the reader might directly relate the project to timeshare and thus lose interest before completely understanding it.  So marketers will throw a little bit of information out there with the hope that enough interest is created resulting in more inquiries.  Therefore, the sales process is often extended into months rather than weeks.  We all know that this industry is nothing like timeshare and these fears must be conquered.  The prospect must be provided the information needed to make an educated and informed decision in a reasonable amount of time, a 90 day forecast to contract is nonsense.

The debate is this: if we present too much information too fast then the vomit effect comes into play and the sale is lost.  Most sales people who have been subjected to any type of basic sales training course have likely been introduced to something similar to what I like to call the “Vomit Crevice”.  It’s not pretty, but “Vomit Crack” was even worse.

The premise is that sales people stand on the edge of an empty crevice which lies between them and their prospective buyer.  This crevice represents the buyer’s lack of understanding of the product or service they are considering.  The only way to facilitate a connection between the buyer and seller is to fill up that void with valuable and relevant information that is important to the buyer.  Each valuable and relevant question answered represents a large boulder that is tossed into the crevice.  The result is a crevice that has been filled with a solid foundation of boulders (information) thus giving the prospect the means to walk across and shake hands - a closed sale.

However, many young sales people are hell bent on spewing as much information as humanly possible regardless of whether or not the buyer actually cares about any of it.  This is a classic rookie move.  The default for freshly-trained sales people is to vomit every bit of detail about their product or service that they have just learned in their product training classes.  (This is where it gets really gross.)  A crevice full of vomit is nothing but a disgusting pool that the prospect will sink into when attempting to walk across and therefore results in a lost sale for the sales person.  Needless to say, no buyer is going to shake the hand of someone who just led them into a pool of vomit.

How does all of this apply to fractional ownership sales?  Easy; fractional sales people have a more challenging task than a typical real estate agent.  Fractional folks don’t play in a world of just granite countertops, cherry wood floors and 5,000 square feet.  That stuff is easy.  In the fractional world the prospective buyer must completely understand everything from why it is a logical real estate purchase, to the unmatched experience provided in residence, to the fair and flexible reservation system and why it’s not a timeshare.  You can see why it becomes very easy for a fractional sales person to become completely immersed in all of this information and commence vomiting all over the place.  Information starts flowing about the Residence Club’s logarithmic tie-break system when the prospect simply wanted to know if they could go skiing next year.

So, you’re thinking the clear lesson here is to make sure that your sales people do not spew all of their information up front and take it one step at a time, easing the prospect into those nitty-gritty details.  Not so fast.  There is another factor at play here; closing the deal while the iron is hot.  This is a major rebuttal to the vomit crevice.  After all, in similar fashion to the “first 48″ that cops have to catch their criminal, sales people have a limited window to reel in their interested buyer as interest can fade almost immediately.

This is basically a catch 22.  It seems as though the answer is to proceed with information overload to try and bring in the sale while the prospect is hot.  Actually, this is correct.  The way to do it is with coordinated messaging between your sales team and your sales materials.  When I refer to sales materials I mean marketing brochures, FAQ’s and the website.  A second document entitled Advanced FAQ’s should also be considered for those hot leads in the final stages of the sales process.

Too many times I look through web sites of Private Residence Clubs that have literally no information except the beautiful mountain surroundings and granite countertops.  This is the “tease strategy” and the idea is to get the buyer interested enough to make the phone call so the sales person can take over.  The result…  vomit.  The poor prospect has now been completely overwhelmed with (deep breath) planned vacations, space available vacations, the flexible tie-breaker system, pricing, supply and demand, HOA dues, consumer financing, the daily tidy vs. the mid-week clean, the reservation deposit, no pets but your brother can use it but only on planned vacations, and I almost forgot - the upcoming price increase.

Next will surely come those famous words: “I’m not interested in a timeshare”.

Don’t go this route.  Give the prospect more information before they call.  An informed prospect is a valuable prospect.  Put the price on your website!  Yes, I’ll say it again.  Put the price on your website! If the price is surrounded by valuable information regarding how the club works along with the unmatched experience that is provided then the price will look great and the phone will ring.  What you don’t want to do is vomit all over your website, there is a happy-medium here.  Simply put, there is stuff that can go on the site and there is stuff that can’t.  For example, explaining how the “rotating priority tie-breaker to be fair to everybody” policy works should NEVER be explained in any detail on the web site.

The sales team should work in concert with the marketing team on the dissemination of information to the buyer.  The sales person should hang up with an excited buyer, not confused.  They should be anxious to read more detail on the website or in the e-brochure that has just been sent to their inbox.

In summary, we must vomit to a point; a point that creates excitement and moves the sales process forward in an efficient manner.  However, the spewing should be done by the marketing materials and the web site in addition to valuable information from the sales team.  As the sales process moves along the questions and answers will become more advanced and cover more detail.  It’s much easier to explain the “rotating priority tie-breaker to be fair to everybody” policy when the buyer is already excited for their first trip.

Now start spewing.

FORESIGHT COSTS LESS THAN HINDSIGHT^SM