(formerly "A Clue...to Internet Commerce")
by Dana Blankenhorn
Volume II, No. XXXV
For the Week of August 31, 1998

This Week's Clue: The TimeShare 

SSP (Shameless Self-Promotion)  

Free Clues For P&G 

New Horizons in Spam 

Surviving The Fall (Part Three) 

Clued-in, Clueless

This Week's Clue: The TimeShare  

On our Orlando vacation, we looked at a timeshare. A letter from "Hampton Inn Oak Plantation" arrived a week after we booked our Disney World trip through my wife's "employee club." (Coincidence? I think not.) It offered three nights with a kitchen and washing machine, plus tickets to Universal Studios and a water park, for just $199. Since our Disney package didn't include the home of the kids' favorite TV shows  we bit. The catch was a "short 90-minute sales presentation" on the resort. A small price to pay. 

The offer was tempting. Vistana  is a major timeshare developer, and Oak Plantation is its second Orlando resort. For $12-14,000 (1 or 2 bedrooms) you can guarantee your family a week's stay every year. RCI, the timesharing exchange program to which Vistana is attached, lists Oak Plantation as a "red" (high value) resort year-around, and since the place is brand-new it gets a "gold crown," meaning it can easily be exchanged with just about any other resort RCI offers for about $200. 

Our problem was in the presentation. The numbers were offered in conjunction with a finance plan (at 16.9% interest) aimed at objections to the monthly payment. The down payment was about $1,000. (They wanted a check on the spot.) But what really turned us off were the "incentives to act now" - a $1,000 travel allowance, free entry into the RCI network, and a waiver of some maintenance fees (they come to about $330/year). When we turned our first closer down, we got a second closer, who offered a half-interest (one vacation every two years) for half-price. Then came a third closer, offering a full week at the resort for just $600 "to really try it out." 

What's wrong with this picture? Not the resort, and not the offer -- certainly not the economics of the timeshare concept. A timeshare offers equity in a resort, and its market price could rise. (It could also fall. When we got back home my wife talked to friends in that employee club. She learned many owners are desperate to get out of timeshares, that the best way to get one is through a resale, and that some developers sell timeshares again-and-again as people anxious to stop their payments simply throw their equity back to get out from under.) Still, I figured, you buy into a high-value resort, with a name-brand exchange club, and you really can vacation anywhere for very little. Some people actually invest in timeshares, buying a week here or there, waiting for the price to rise, selling for the profit, and using what they want, when they want. 

No, we decided, what was wrong was the closing technique, the sales method. You may recognize it from your last car purchase - "what will it take to get you behind the wheel of this baby?" The check we'd write (whichever plan we took) would go into the salesman's pocket. While we might get our own financing later, we were also signing off on a 5-year note, at high interest, buying a property (and a concept) we'd just learned about. NOOOOOOOOOOOOOOOOOOOOO! I won't buy that way. I won't buy a car that way, I won't buy an insurance plan that way, and I definitely won't buy a timeshare that way. Chances are you won't either. 

Fortunately, as the Clued-in among you know, there's another way to sell. In the car market Saturn  found this truth first, and the Internet  confirmed it. (Saturn's now advertising its own ABT-like Web site.) Here's how the process can work with a timeshare resort. 

First, get your back-office straight. Vistana obviously can buy and deliver to mailing lists. They can collect data on-site, and handle transactions. What they need is a sophisticated RDBMS, a real data warehouse. Next, they need some sort of contest , whose entries will help populate the database. (The prize for playing the game? Try those Universal Studio passes.) Add all the demographic information you can safely collect from people who've bought timeshares from you in the past. As people play the game, collect data matching the profiles of your happiest customers. 

Next, send e-mails to some of your big winners (the folks who got the tickets and match the profiles) offering information on the timeshare concept and the resort in question. After these prospects respond, offer links to pages describing how timeshares work, how your business works, how your financing works, how the whole concept works. Once you've drawn a prospect through this information, ask if they're really, really interested in buying a timeshare at this resort. (Here, you might respond with a link to a "virtual tour" of your rooms and facilities  but if you're cheap you can skip this step.) Now you've winnowed down your list of prospects to someone who's ready to close. Send them the e-mail to invite them down. 

There's one more important point. Once this "information buyer" comes to the resort, there should be no pressure. They know the offer, they know the concept, they've seen the property, and they've brought their checkbook. Not only should there be no surprises, but the likelihood of a closing should be (if properly executed) 90%. So don't pay commissions based on sales dollars, but on the number of customers the salesperson pleases. Bring out the champagne, start the celebration. 

Now here's the best part. If you sell in the way I've described, your selling costs go down, not up. Fewer buyers suffer remorse and renege (or give back) signed contracts. Most of the process (except, perhaps, the closing, which may require a site visit under local law) is handled via e-mail and the Web. (If the law cooperates, you can use phone calls and mailings to get paperwork signed. I'm guessing half the prospects that follow this path may be quite willing to buy without a visit.) Not only that, these are prospects who (like my wife and I) WILL NOT buy in the old, high-pressure manner. We're educated, we're skeptical, but if value is proven we're the kinds of customers you want. 

Serve us the way we want to be served if you want your business to live long and prosper. 

SSP (Shameless Self-Promotion) 

I'm back from vacation, and ready to write. Besides A-Clue.Com, I contribute regularly to such publications as Net Marketing, Boardwatch, Datamation  and Atlanta Computer Currents . Your magazine can join the list - send me an e-mail and let's start the ball rolling. 

You can now subscribe (or cancel your subscription) to A-Clue.Com automatically by emailing us at a-clue@list.mmgco.com or (if you prefer the .txt version) aclue_textonly@list.mmgco.com. Just put the magic word "subscribe" (or join, if you prefer) in the body or header. If you don't get service, of course, feel free to drop me a note at dana.blankenhorn@att.net. And we want your feedback  as well, always. In time you'll also see an ad in this space (or very near it) to defray our higher costs. (You won't mind, will you?) 

Remember that it's Journalism -- checking the news, calling people, listening carefully, writing on deadline -- which keeps the Clues coming, although I also handle consulting and commercial writing (ask about those rates via email). If you're looking for excellent work, give me a call at 404-373-7634. 

And now back to our show... 

Free Clues For P&G  

One perk of our timeshare visit was a free copy of USA Today, as part of the continental breakfast. Inside, I learned of Proctor & Gamble's  "Internet Summit." The Cincinnati conglomerate spent a full day getting pitched by every baby mogul in the business, by claiming it might move 80% of its $2.4 billion ad budget to the Web in five years. (Yum, yum.) 

What P&G got for its money were a lot of self-serving claims by guys who'll likely be out of business in five years. We could have saved them the expense. So clip-and-save this item for e-mailing to your favorite P&G exec - here we go. 

  •  The Internet is not a mass medium. It's a one-to-one medium. Despite all the hooha about big numbers at news sites when news breaks, TV will remain the place to go for headlines and passive entertainment. 
  • The Internet is great for market research (even better than Peoria), for identifying brand-loyal customers, and for direct sales. 
  • All you need to sell toothpaste, detergent and other items direct is a distribution channel. Making that work will be more expensive than all your Internet advertising. 
  •  Banners work best for contests and branding. Web sites should offer tons of information (to students and consumers), while data warehouses maintain the relationships and tell your marketers what they need to know. 
  •  Most of your Internet "ad budget" won't go to Internet ad agencies, and most of the money you spend on the Internet won't come from your advertising budget. 
  •  The real potential for P&G on the Internet is in the b2b side - linking its supply chains and distribution channels - rather than in branding. The b2b investments will cost tens of millions but save billions. 
In other words, guys, you talked to the wrong people. Save yourself some trouble - just click here , here  or here

New Horizons in Spam  

The fears of anti-spam activists seem to be coming true in a big way. Despite the failure of Congress to complete work on any legislation covering this subject (too busy impeaching the President), many notes have come this way indicating beating the Afghans and Sudanese will be much easier than beating the spammers. 

First, there has been a marked increase in queries regarding the buying and selling of e-mail lists in places like I-Sales HelpDesk , indicating renewed interest in spam's little handmaiden. Outi Close at Parenthub  warned of one operator who claimed his spam came from a bogus opt-in list, and an opt-in list author  added that technique is becoming common. (NOTE - A-Clue.Com is an opt-in list, and we never share your name with anyone.) 

Far more alarming is the growing use of outright spam by otherwise-legitimate businesses. I've previously mentioned a spam sent off my registration for Microsoft Office (offering free add-ons) and I got one this week from the ever-clueless AT&T Worldnet , regarding three sweepstakes they're running. Sean Cafferky sent one he got from Micro Warehouse, and I got one from U.S. Search . I even received a spam "e-letter" (I never asked for it, so it's spam, sorry guys) from Direct Coupons . These are just the tip of the spam-berg here -just this month I've gotten spam from people offering golf clubs, satellite TV dishes, and credit card processing services, among other things. While references to Congress' actions on spam were common early this summer, most spammers are now skipping the legal references. 

This last spam, however, is most deadly of all. It's a program called Avalanche 98 claiming its "DNS Cloaking Technology" lets you bypass ISP mail servers, manage several ISP accounts at once (for when you get shut down), and send up to 100,000 messages per hour from an ordinary PC. (Of course it supports HTML.) This spammer left a phone number in Rhode Island. If you want it I'll pass it along, but I hope you don't want it. 

Surviving The Fall (Part Three)  

No one knows precisely when bear markets or recessions will occur. They're not inevitable, but their causes aren't acknowledged until after-the-fact, so they seem that way. U.S. markets are overdue for such a correction, and in this case a recession is certain to follow, since consumer spending is driven in large part by high stock prices. 

The question is what will this mean to e-commerce? In the real world, a lot of good things will result, because the cost savings of e-commerce will drive a high percentage of total sales online. In the unreal world, it's bad - Internet stocks will be among the hardest-hit in the fall. (How hard the fall? My own guess is the Dow is fairly valued at 6000, so look for a low of 5000-5500. Wider averages have already corrected somewhat, so their falls will be more modest. Bill Gates will be worth $40 billion, not $57 billion.) 

The impact on labor markets from this fall will be huge. The value of programmers, project managers, even writers (gulp) will fall sharply, partly due to competition from non-English speakers. Millions of people will become food for get-rich-quick sharks, and real incomes could fall by 30-50%, as oil prices go through the roof (in dollar terms). These kinds of impacts have already been felt in Asia and Latin America - I'm not just pulling these numbers out of a hat. 

Cash is king, but the dollar isn't its only form. You want to be liquid, mobile, and patient to take advantage of all this. Mainly, you'd better have a squeaky-clean reputation, because those you screwed on the way up will do it to you on the way down. Markets will bounce along the bottom for a few years, even if policymakers do all the right things (and that's not guaranteed). Keep your expenses to the minimum, as well as your risk exposure. Don't wait until the walls fall down to look for an exit. Good luck - hope to see you on the other side. 

Clued-in, Clueless 

Clued-in is Stefan Bechtold , for his page tracking legal controversies involving links, and legal actions against them. I think the site proves fears that links are illegal are overblown, but you be the judge, and the next time someone claims you have some legal liability in this area, check the page again. Also remember - there's a difference between framing links (appropriating ad space around them) and simple linking

Clueless, for the second time, is BarnesandNoble.com . This time the meat-space bookstore leader is trying to spin out (and take public) its online affiliate, looking for quick cash with which to challenge Amazon.Com. First, cash isn't the problem. Design and merchandising brainpower are the problems. Second, they're arriving at the Internet IPO party after the caterers have packed up and the guests have all gone. (The new owners of B&N can be found passed out on the couch.) 

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