Managing relationships with customers is absolutely crucial, which is why leisure operators and retailers are increasingly turning to loyalty programmes to give them greater relevance to their customers.
One area of the leisure industry that does not rely on such technology-led initiatives to help drive its business, but provides a great example of skilful managing of the crucial customer relationship, is rather surprisingly – static caravan parks.
Agreed, they may not be perceived as exactly cutting-edge or exciting. But although they are more likely to throw up connotations of wet weekends than sunny breaks in the Mediterranean they have a much more interesting story to tell than you’d imagine.
If you don’t believe me then please stick with it. What they have is that dream ingredient for all businesses: predictable incomes. For this they partly rely on churning their customer base, which sounds rather counter-intuitive when we are talking about generating stronger relationships.
For industry leaders like Bourne Leisure the trick is to maintain the relationship for 14 years and during this time pro-actively ensure each customer upgrades their caravan (or ‘pitch’) twice, following their initial purchase.
The operators are likely to make over 40% profit on the sale of the first caravan to new customers, who might spend around £20,000, and then at opportune times they’ll convince the customer to buy a better pitch at maybe £35,000 and this will then be followed some time later by another proposed move to an even more preferential spot in the park. Each upgrade represents a 40+% profit banked.
Their ability to time the recommendations is based on their in-depth knowledge of their customers’ incomes and financial situations as the purchase of most caravans is financed by loans from the park operators.
Meanwhile, the caravan owners will also be contributing a rental charge of between £4,000 and £6,000 per year for their pitch and if they want to rent them out to other holidaymakers at any point then the operator can handle this – for a fee of course.
On top of this the operators also make a decent return from food and beverages sold on their parks. At the parks of 34-site strong Bourne the Burger King’s are among the best franchises in the country with queues snaking around the block during the peak season.
By the time you’ve totted this lot up the bigger parks – with up to 2,000 static caravans – can be turning over between £20 million and £30 million each year.
The reason for the divorce after 14 years is that often the family involved will by that point consist of only the parents – since the children will have left home. It’s unlikely they will need any further upgrades to bigger and better pitches and without their kids demanding burgers constantly their expenditure on food and beverages falls dramatically.
The caravan operators recognise this and proactively suggest selling-up – ‘we can offer you a nice price on your lovely van sir’. Managing this 14-year relationship are the sales managers at the caravan parks who are revered as they own this crucial link to the customer.
It all adds up to an interesting business model and although caravan parks will never have the sexiness of Disneyland or Center Parcs their owners certainly know how to maximise their relationship with customers.
Nigel Sapsed is director of executive search specialist Sapsed Stevens