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divided them into segments, and gured out which segments are winners and which are losers. That s what this book is all about doing a thorough job of creating a marketing database, and pro ling it to nd out important facts. Then you use those facts to draw valuable and important conclusions. Suppose Table 13-4 is a correct picture of the situation in your company. Your sales force is working hard, succeeding in bringing in a lot of worthless customers, and getting bonuses for it. What can you do about it You have to do your homework, determine the lifetime value of the various customer segments, and then put your ndings on the desk of top management. Convince management that the company may be acquiring the wrong people as customers. You will have a battle on your hands. It may get rough, but if you have done the job right and you stick to your guns, someone will recognize it. Then you have to work to change the situation. After all, the purpose of an enterprise is to make a pro t, not just to acquire customers. We all know that, but we don t act on it. In a previous book, I described the situation I found at a client that sold credit insurance for credit cards. A pro ling exercise was conducted that divided the U.S. population into seven sectors. Analysis showed that only three of the seven sectors ever bought credit insurance. Armed with this information, the company went to several banks (its customers) and suggested to them that they stop telemarketing to these unresponsive segments, since the sales did not justify the expense. What did each bank s vice president of insurance respond Nuts. Call them all. You see, these vice presidents were compensated on the basis of the number of customers acquired, not the cost per acquisition or the pro ts from the insurance. So the insurance company went on calling everybody.
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Timeshares have become very popular in the past 10 years. More than a million families own a week at some resort where they can go for a vacation. RCI, a part of Cendant, makes a market in these timeshares; owners can deposit their timeshare week with RCI and, in return, receive a week at some other resort somewhere else in the world.
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Because of RCI, some families rarely return to the timeshare that they originally purchased. The method whereby these timeshare owners are originally acquired has become quite scienti c and interesting. Most developers of timeshares sell tours as an acquisition method. A tour is a weekend vacation that is offered to a family at below market rates at prices as low as $50 for a 3-day family vacation at a hotel that is near a timeshare property. While they are at the hotel, as part of their payment for the weekend vacation, families are asked or required to take a tour of the timeshare and hear a pitch on the value of owning a timeshare. Most tour operators report that about 10 percent of the families that take a tour end up buying a timeshare, at prices ranging from $10,000 to $25,000 for 1 week. The process of acquiring timeshare owners, therefore, has become a process of selling tours. If you can get people to take a tour, you can be con dent that one in ten will make a purchase. The methods for tour selling have become very scienti c. Direct mail is used to offer households within 90 minutes driving distance of a timeshare resort a weekend at a nearby hotel at a xed below-market price. The response rate to such direct-mail solicitations is about 4 10 of 1 percent. Telemarketing then takes over to sign the respondents up for a tour. Here, again, scienti c methods are used. Those who refuse a tour in June will be called again about touring in July, or August, or some other month. Call until they tour or die is the basic philosophy. And it works. Timeshares are one of the most pro table industries in the United States. Some interesting lessons have been learned in the course of acquiring timeshare customers. These lessons can be useful in other industries. For example: Vacation packages can be sold with a hook (a requirement that the family listen to a pitch about the timeshare) or no hook (no pitch requirement). Statistics show that no-hook recipients are more likely to buy a timeshare than hook recipients. Why should this be so A hook family has steeled itself in advance against the timeshare pitch: OK, we will take their vacation, but we are certainly not going to plunk down money for a timeshare. The no-hook family s thinking is entirely different. Without the hook, the family members arrive
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