Three years ago, my wife and I went to a pitch for a timeshare. The project was awful, and we would not recommend the company to others. I should say that we would actively recommend people not deal with that company.
Yet, at the same time, last year we booked a cruise that cost more than we expected; but we couldn’t wait to rebook for this year! In fact, we had an emergency and had to cancel our plans for this year. This year’s cruise also cost us more than we initially expected; but , thanks to trip insurance, we’ll get the money back. Yet we immediately re-booked for next month, even though the short-term rebook meant prices went up again.
It would appear, at least to me, that there is something very different about these business models, and that, if you are in the business of software, it would be better to behave more like a cruise line than a timeshare. So I’d like to explore that theme a little.
The Timeshare Experience
At a local county fair, you run into some friendly people with a booth, talking about a water park up north, about three hours away. They tell you they represent a timeshare company affiliated with the waterpark and can offer you a deal of two free nights at a hotel; perhaps they offer you waterpark passes or $25 gas card on arrival. All you have to do is provide a $25 deposit and offer to sit through a 90-minute sales presentation and tour of the timeshare facilities. Now you’d likely be willing to pay full price for the waterpark, so this is a great deal. You fill out of some paperwork and sign right up.
Two months later, you go up north and have a relaxing vacation. You end up staying three nights at the hotel and paying an extra pittance for the extra night. You enjoy the waterpark, and go to the sales pitch.
The sales pitch is nice. There are coloring books for the kids, video games, hot dogs, soda and popcorn. The sales guy explains that the resort is one of dozens; yes, you’ll get a week — or four — here offered by law as deeded real estate, but you can trade those in for points to vacation anywhere. He’ll take you for a tour, and, after a couple of hours, ask you for just $30,000 to sign up and get started. Why, the company will even offer you terms of credit! You’re not just renting a vacation, you are buying a vacation experience you can hand down to your children. And if $30K is too much, you can always buy less points for less money; how about a fourth as many points for $8K?
This actually happened to us. My wife was ready to sign, but I wanted to think about it. The amazing thing was the company wouldn’t let me think about it; the deal was for today only. Walk away and my next opportunity would be in eighteen months, and we would never get the chance for bonus points ever again.
We said, “Not today.” The salesman’s face hardened. He slowly closed his book, stopped talking to us and walked us down a spartan, blank hallway to the exit to collect our gift card and sign out. Clearly, we were ungrateful jerks.
Fifteen minutes later, we “work up” and realize the dollar amounts that had been thrown around. Two hours later, we did a google search for the company name and “Scam.”
On the other hand, I had an arguably similar experience with Royal Carribean, and I would recommend them to anyone. Let me tell you why.
Planning a cruise
On initial glance, our cruise experience wasn’t all that different. Why, it looks like you can get a seven-night Caribbean cruise for a mere $729 per person. And the cruise is all inclusive it’ll fund your whole vacation, including all your meals and drinks. Sweet.
Now the price could go up by $10 a person if the price of oil goes up. And don’t forget to tip the staff. The suggested tip is just $5.75 per day for the suite attendant, $3.50 per day for the stateroom attendant, $3.50 per day for the dining room waiter, $2.00 per day for the assistant waiter and 75 cents per day for the head waiter. Why, that’s only $124 all put together.
Of course, we’ll be landing in our different island ports, and you’ll likely want to get off and go on a tour. We have a list of approved tour operators, called “excursions“. Their tours average a few hours, take care of everything and cost around fifty dollars each. We can do the booking for you and make sure you get back to the ship on time; or you can just explore the city. Of course, you’ll need to pay for your own shopping and food in the city.
Now those interior cabins are so tiny; for just $200 more you could have a balcony room.
Now those free drinks are milk, water andlemonade. You’ll pay a little more for juice and a couple dollars for a soda, but you can always buy an all you can drink soda pass for $50. And when we said meals were all-inclusive, we meant the dining room or the buffet; if you want to eat at the 50’s diner, Johnny Rockets, why, there is a $4.95 cover plus extra for malts and milkshakes. Likewise, our specialty restaurants have a fee, and you’ll pay for your alcoholic beverages.
Gambling? Sure. We’ve got slots, 21, and roulette. Of course you’ll have to pay for that; we can’t give that away can we? And you’ll be on your own dime to get to the ship – you’ll likely have to purchase airfare, a shuttle, and likely you’ll want a hotel night before or after. And you’ll want to get a T-shirt or hat to remember the trip, right?
So let me add that up: Our total actual expenses for the trip are around $1,250 per person — make it $1,450 if we went for that balcony room — $1,600 if you include airfare, hotel and shuttle. And if you go to the Island of St. Maarten and shop for Jewelry? Forget it.
That’s right, the trip ended up costing us twice as much as the low number first hinted at.
But we rave about Royal Carribean and dislike…those timeshare guys. What’s that about?
Putting it all together
The cruise line is selling a complete experience, not a piece of property. They have several suggested additional charges, but are completely up-front, and, for the most part, the charges are optional. Yes, they have things like airfare; but, again, you’ll know about that from the beginning. The optional charges are small, segmented and each individually adds value. Yes, they add up.
Contrast that to the pitch for the timeshare, where you are offered a better-than-average deal to start, and the company creates a sense of obligation, lets you check out the facilities. Then, the sales person drops a massive, immediate threat; “Pay us tens of thousands of dollars, or you’re cut.” And if you are cut, why, you’re an ungrateful little jerk.
In other words, the cruise line puts you in control and invites you to spend more incrementally, while the timeshare manipulates you into writing a large check.
Now think for just a moment about software business models. Some companies offer a 30-day trial; others 90. Some offer limited software that can not save files — but perhaps can open or read. Socialtext and Quickbooks both offer “freemium” Web-based that can be free forever,as long as your use does not exceed a certain amount.
When users hit that amount, do they get an invitation to buy a little more, a little at a time, perhaps $5 per month, in a Software As a Service Model? Or do we slap them with a $499 fee to buy the software right now or else you can’t even get to the files you’ve been working on?
Which one of these sounds like a better model to you?
Now, is this a quality issue? You betcha. I suggest we forget all those fancy definitions about quality as the sum of a set of attributes and Ignore ‘quality systems’ like ISO 9000 and TQM. Think about what people actually mean when they say Quality. As Jerry Weinberg put it, quality is “value to some person.” It’s the reason someone might value Royal Caribbean over a timeshare condo in Florida, and part of the reason you might come back, over and over, again and again.
Next time, I’ll talk about other reasons we keep coming back: Excellent service, inclusion, depth and meaningful experience and brand loyalty.
For now, though one word of advice: Check to see if your sales model is holding people back from referring to your product as a “quality product.”
That might just be a very, very, big deal after all.