In this episode of How We Grow: The Vacation Rental Show, host Lynell Gordon is joined by Annie Holcombe, Director of Business Development for Marriott Homes & Villas (U.S. and Canada). Join them as they discuss why you should be wary of relying too much on third-party distribution channels and debate the age-old customer acquisition vs. customer retention argument.
Annie Holcombe is an expert in the vacation rental industry with over thirty years of experience. She is the Director of Business Development for the U.S. & Canada- Marriott Homes & Villas, and is also a co-host of the Alex & Annie Vacation Rental Podcast.
An Argument for Customer Retention
There is absolutely no doubt that customer retention, whether you’re in the vacation rental industry or not, is one of the most important parts of running a business. In fact, retention is the foundation of growth. If you retain your customers and ensure consistency in what you provide for them, then it will become far easier to grow and acquire new customers.
So, that leads us to the question: is customer retention the most important part of running a successful vacation rental business? After all, you want your customers to come back to you, right? You want them to go to their friends and suggest that they book with you. You want to provide a solid, fun, and unique experience.
Give your customers a reason to return to your properties. Take the time to get to know them and ask about who they are. One of the biggest mistakes businesses in all industries make is not getting to know their customers, instead viewing them as a hefty wad of cash. Or, they see customers as a set of data and numbers used solely to inform their analytics.
You don’t have to do that! You can find ways to personalize their vacation experience with you and give them plenty of reasons to visit again.
However, Annie Holcombe doesn’t doubt that retention is integral to the business, but she believes something else is far more important…
A Counter Argument for Customer Acquisition
“I think both of them are important,” says Annie when asked about whether acquisition or retention is more important. “If you went back ten years ago, customer retention was a lot easier. Travel wasn’t as easy as it is now. I look at my son and if he wanted to pick up and go to Vietnam tomorrow, he could do it. Ten or fifteen years ago, you didn’t make a trip like that without planning it out for months.”
And of course, she’s right. Retention was handed over to businesses on a silver platter because planning for a vacation used to be a massive, arduous hassle. If you knew where you were going, why would you ever change it up?
She goes on to say, “The ability to just book something at the last minute in almost any destination at any time means that people aren’t necessarily going to the same market every single year. They might come back in four or five years, so you certainly want to have them in your database, but I think your customer acquisition is as important, if not more important these days than it’s ever been because there are so many options out there.”
With so many people traveling now, it’s no surprise that there are multiple distribution channels and an overabundance of vacation rental businesses vying for the customer’s attention. Everyone is fighting for a spot in the customer’s field of view. How is that customer meant to keep up with it all?
Simple: they can’t. Usually, they’ll pick the first one they see that’s at an ideal price in an ideal location with ideal features. They might not even bother to look at the business running it.
So perhaps Annie’s right? Maybe putting your focus into customer acquisition is more beneficial than retention is.
Which side are you choosing?