This post is written by Wes Melton, Co-Founder and CTO of SmokyMountains.com, the fastest growing property management firm in the Great Smoky Mountains region. Wes' post designed to help VR owners and managers make more educated technology decisions.
“Computers themselves, and software yet to be developed, will revolutionize the way we learn.” – Steve Jobs
The vacation rental industry is finally getting some much needed attention and innovation from the technology space. Exciting for some – daunting for others. The defining moment for vacation rental business owners big and small will be the self-realization that technology enablement is not optional – it is now a requirement for future success.
But unfortunately, for those that feel they’re behind the 8-ball, the process of making the business overhaul towards technological health can be overwhelming.
When should I buy new software? Is this software salesman telling me the truth? When is the right time to switch? What’s wrong with how I’m doing things now? Will this really automate my entire operation and unlock huge chests of gold? Is investing in new technology worth the risk?
While the questions (and answers depending on who you ask) are nearly endless, I thought it would be helpful to provide a mental framework that will enable someone to successfully evaluate their current and future technology needs for their VR business even if they don’t feel particularly skilled in that arena.
1. How do I know if it’s time for new technology?
This is probably one of the hardest questions to answer because the needs are so varying from business to business. At a high-level here are six level setting points we should all be on the same page about:
- If you are not accepting credit card payments, it’s time to start. Less than 7% of all U.S. bank transactions happen on paper now and that trend is not reversing.
- If you are accepting credit card payments but not storing credit card numbers in a PCI compliant way, it’s time to start.
- If you have a website, guests need to be able to book online on your site.
- If you do not have a website, you should think critically about whether your business needs one.
- If you do not currently collect your guest's pertinent information (email addresses, phone numbers, personal addresses along with typical travel days, spend amounts per stay, party size) in a way that other software can get to easily then you’re leaving money on the table – it’s time to change.
- If you are a property management company and your software looks like this below, it’s time to get new software:
(Note: If you are not currently on the same page with the above items, my immediate recommendation would be to start with those and try to make technology choices for your brand that enable ‘yes’ answers to some of the high-level questions below.)
A High-Level Framework
Beyond the above, at a high-level it’s critical that you evaluate your current technology enablement through this high-level framework –
Do the majority (or growing majority) of my guests/customers desire to complete their buyer journey with a technological solution I do not currently offer?
For example – do the majority of your customers typically buy things or book travel on a brand’s website? We should all be nodding our head “yes” to this one.
Even if the final purchase is made via phone (<50% according to industry statistics), recent studies[1. 5 Game-Changing Hotel Industry Trends To Tackle in 2016, HospitalityNet.org] show that 51.8% of travelers who book via digital means will do so from a smart-phone – that’s not the important statistic though. 51.8% is up 43.8% over last year. That’s the data story we need to be considering – digitally enabled buyer experiences are as explosive as ever – the question is no longer “should I have a website?” but, “Now that I have a website, is it mobile device friendly?”.
If the answer isn’t yes – it needs to be yes very soon or you are putting your marketing dollars and bottom line at risk.
Does my current technology setup allow me to rescue hours through minimizing repetitive tasks? (sending arrival information emails one by one?)
It is painful to me when I consider how outdated most of the popular Property Management Systems are when it comes to routine and repetitive tasks. A large majority of existing software solutions still require you to manually send emails out – they’re not action triggered. Gah!
That being said – if you are manually cranking out emails every time your guests book or prior to their arrival – you are wasting valuable time that could be spent on other higher value items. Said another way – if you are the owner or property manager, you are literally the highest paid person doing the lowest value tasks possible.
If you’re looking at Property Management Software for the first time or looking to make the switch, please ask questions about automation. Most of the big players will say their solution is ‘automated’, but it’s really not.
Automation is when things happen while you’re asleep. Software enablement is when things happen after you still have to go do something in the system every time. There’s a difference there that’s important to understand.
Does my current technology setup allow me to integrate easily with other technology solutions that could provide value to the guests and/or the bottom line?
As I mentioned before, the Vacation Rental industry is finally starting to make the agonizing move towards becoming a first-class software industry.
The trade-off is that most existing/legacy software solutions (who still have booths at conferences) built their software stack with a very outdated mentality that didn’t play well with others.
Modern software is built on the core concepts of integration, APIs, webhooks, triggers, and more. If you’re not sure what I mean – take a look at IFTTT.com. While not specific to our industry vertical, IFTTT is the king of showing how powerful software can be when they all talk to each other in powerful ways. Check out this post and learn how to utilize IFTTT to your advantage.
When evaluating software, asking about integrations with other software and hardware providers is a good thing to educate yourself on. You will probably find most platforms aren’t super integrated with 3rd party systems right now, but you should be able to get a sense of whether they’re actively moving in that direction or not with a few questions.
Does my current technology setup present a buyer journey that is common in the majority of other hospitality experiences?
Self-evaluation is hard.
We’ve built a lot of software solutions in house to fill the gaps in existing technology. The hard part about self-evaluation is admitting that we still drop the ball sometimes, still miss things, and still have a ways to go to get where we are providing our customers with a level of customer service we can feel great about.
The fact of the matter is that whether you think your current setup is advanced, good-enough, or terrible really isn’t important...
What matters is whether your customer feels that your current setup is on-par with their expectations. If you’re behind the times (can’t book on your website, can’t sign contracts online, can’t view site from a mobile device, can’t click to call, can’t automate repetitive tasks, etc.) then you’re almost certainly not meeting expectations and losing valuable bookings.
Does my current technology setup enable intelligent customer segmentation and personalized marketing?
That’s a mouth-full. What does it mean though?
A simple example: Can you currently segment your email marketing based on the dates guests travel, or the type of property they typically booked (2 bedroom guests are in a different buyer persona than 12 bedroom guests), or the value of their last stay?
Targeted marketing is critical to squeezing profit out of every marketing dollar, keeping your email lists fresh, and getting your emails in to the inbox and out of the spam folder.
I’ve looked at a lot of PMS systems. None of them do this well – the biggest players don’t really do this at all.
It will take some work to massage your data and update it moving forward, but if your current solution doesn’t offer intelligent customer segmentation, then using some out of the box email providers like SendGrid or ConstantContact can get you a large part of the way there.
Does my current technology setup allow for innovation as a company and brand?
This last one is less clear-cut but important to think through.
If you had an epiphany moment tomorrow morning about a great new way to attract renters and garner attention for your brand, how difficult would your current software setup make it? Would you have to spend hours digging through data and massaging it in spreadsheets? Would it even be possible without significant hours from a talented developer?
You don’t have to be a techy to innovate – but you do have to have the right tools in place to let you iterate quickly over ideas if you want to stay not only relevant, but ahead of the curve.
None of the items in the high-level framework require an understanding of technology – they only require an understanding of current (and changing) customer needs, a general awareness of technological solutions that are available, and an objective comparison of how the buying journey with your brand is different than the last time you booked a hotel/flight/etc.
Granted saying ‘only’ doesn’t make it easier if you don’t actually have that information floating around in your brain already. So how do you educate yourself on technological options available if you don’t currently?
On to part two!
2. How do I learn about technological solutions that are currently available?
I travel to a lot of conferences each year.
Every time I’m preparing to attend a conference, without fail I look at the cost, the time away from the office and catch myself thinking that it’s not worth it or that the office is just ‘too busy’ for me to get away right now.
I always go anyway.
Historically when I look back on the time spent at conferences, there are only 1 or 2 conferences I can think of that I have any partial regret about. Even then, the regret is typically based on my own inability to focus and maximize the time there.
For those who want to learn about new technological solutions that are available in the Vacation Rental Industry my number one recommendation would be to start going to conferences. At least 2 -3 a year.
If you do not currently have a solid software solution in place, please be aware: growing software companies are starting to launch their own conferences that are primarily about their own software. If you are in the ‘evaluation’ stage of looking at software and trying to learn about what’s out there I would highly recommend NOT going to a conference put on by a major software provider – at least not as your first conference (though going to a conference put on by a software provider can be a great choice once you start strongly considering one solution over the others).
So what conferences that are Stateside would I recommend? The VRMA National Conference is a good first one to visit (they also have regional ones that are good – just not as many vendors but still worth it if close(ish) to where you are located). A large number of technology providers will have booths with demos and nice folks to answer questions you have. Since it’s not run by a software/technology provider, there’s very little bias (outside of paid sponsorships) at the conference and will allow you to have an objective exposure to a lot of technology solutions available.
Meet-ups Are Valuable
If you happen to live in or near a major market, going to meetups can be great ways to get introduced to new technologies and individuals who are thought leaders in the technology space. While you may not always walk away with a broader understanding of specific software solutions, you will/should walk away with a better understanding in general.
So let's fast-forward in time...
You’ve been researching online and you’re finally ready to go to a conference to investigate software solutions in person, see some demos, and ask some good questions.
Let me bring you up to speed on some things you should know about the software/technology space in the Vacation Rental Industry right now.
3. Key truths that are critical to the software buying process
Here are some things most people aren’t going to tell you (especially not the ones selling you software or technology solutions).
The software space inside the vacation rental industry is heating up FAST.
New software solutions are popping up weekly, technology companies in the VR space are starting to take on funding, and most importantly, Venture Capitalists (VCs) are starting to invest in technology providers in the VR space aggressively for the first time. To learn about the leaders, check VR Start-ups Taking On New and Unexpected Job Titles.
So what does that mean for you? It means you should be aware of some key truths not always apparent to the newcomer:
For the most part, the latest and greatest vacation rental software is outdated
When you look at the current state of technology in the Vacation Rental industry against the broader technology space and parallel markets, what you will learn quickly is that very few new technology companies are actually delivering anything ‘advanced’ or ‘forward thinking’. That's important to understand because the VR industry IS heating up and new players are entering rapidly which inevitably means that great new things are coming: there is tons of room for growth. So if you're signing new software now to fill an immediate need, you're still making the right choice, but be cognizant that you may need to be ready for a switch when something better comes out in the next 1-2 years.
VC funding can result in conflicting motives for the sales guy
When startup software companies are in their early stages, and especially if they’re backed by a VC, they have exactly one goal and one goal only – sign as many new users as possible (gotta keep that churn rate down!). When VCs invest in startup software companies, the money comes with claws. Specifically, if the startup doesn’t achieve specific escape velocity metrics then the VC is going to likely ‘claw back’ the money and the startup will likely go under. Ouch. Keep this in mind when evaluating new solutions. Make sure you get your questions answered thoroughly and that you're comfortable with what you're buying before you sign on the dotted line
If a software company is new, it likely doesn’t do everything the sales guy is telling you it does (but they know it likely will at some point)
It’s an unfortunate reality, and you probably won’t find a software solution that actually does everything it’s advertised as doing right out of the box. Don’t sweat it - that’s true in 100% of software verticals and I’ve consulted on software solutions for billion dollar companies that had multi-million-dollar price tags. Just make sure you get a demo of the functionality you really care about and a good comfort level that your point of contact will be willing to help you later.
If a software company is a startup (less than 2 years old), you should do your homework before moving critical pieces of your operation
It’s not strictly related to software startups – most business fail in the first 2 years, and the majority that don’t fail in the first 2 years will fail in the first 5 years. If you’re looking to move a key piece of operations on to a new software solution that appears to simplify, automate, and improve many business processes, do your homework and make sure they’re likely going to be around for a while. It could be hugely destructive to your business to move your company on to a software solution that disappears 8 months later. A good rule of thumb is this: If it would take you more than 1 -2 days to ‘undo’ the integration and get operational again, I would not move that section of your business to a startup.
There is no perfect software solution – only software that does certain tasks better than others
When you’re evaluating software, it’s critical that you understand that no single software solution will likely solve all of your headaches. This is why it’s important to ask questions to better understand what other established and well known software products already have built in integrations to the software you’re researching. Asking good questions on the front end will help you make the better all-around choice for your brand while accepting the reality that there is not a one product fixes all solution.
When we were first starting out with SmokyMountains.com, we evaluated a lot of software providers to help us get off the ground. After being mislead at a software show about Credit Card processing being automatic we hopped on a call with our account rep.
After a very heated discussion, a person in management at one of the largest (maybe the largest?) property management systems in the industry told us they didn’t ever foresee rolling out automatic credit card payment processing. They said none of their customers identified it as a need. Somehow they all thought it made since to manually process them every day on their payment due date.
Our heads exploded.
We saw them launch that feature this year – we laughed.
That was our experience on most functionality that we wanted and have inevitably wound up programming solutions for in-house. It’s made us a better company and a better brand.
But not everyone has development talent in house, and I get that.
I share this story with you to communicate the following – if you see a feature that you know your customers (and everyone elses) are experiencing regularly with our buyer experiences – keep pushing the software provider to implement new features.
Sometimes the squeaky wheel gets the grease first.
4. Evaluate the people, not just the product
It’s painfully easy to get down in the weeds evaluating a software product and completely forget that this software is being programmed and supported by human, non-binary speaking, people.
So when you’re evaluating software, the mindset should be similar to any business relationship you enter in to – how competent is the person I’m talking to? Do they have good customer service skills? Are they likely to be patient and helpful when I have questions later?
My business partner David (@DavidAngotti) and I were at a VR conference a year or so ago evaluating software solutions.
While I was interested in learning about the software, I was also interested to get a feel for the folks running the software that I was considering handing my business's hard-earned money over to.
They had a slick booth with the hot back drops and live demos on a big flat screen TV, but the staffer I was speaking with needed help answering all 3 of the first 3 questions I asked. By question 5 or 6 they handed me off to someone else who couldn’t answer my questions either.
I share this experience with you because it's important to remember that these are the same people that are going to be answering your support calls after you’ve implemented the software at your business and have issues. If folks at the conferences don’t know the product well, they aren’t going to know it any better when they’re back at their desk answering your questions over the phone.Make sure you get a strong comfort level from the folks at the booth who are answering your questions.
Make sure the people you’re talking to at the conferences can answer your questions or find you someone who can. You do not need to be an expert at this: but if the representative doesn’t seem super knowledgeable and confident, I would recommend moving on to the next vendor regardless of what great technology they’re supposedly offering; the headaches and heartburn in my experience tend to outweigh the promised benefits.
A lot of folks I meet are intimidated to ask questions to reps at conferences, afraid they may sound stupid or that the question may be too obvious. In fact, this describes me. Technology makes me anxious and when it comes to certain types of software, I don't even know the right things to ask.
But what I have learned, reinforcing Wes' point above, is that the good vendors LOVE individuals like us who genuinely want to better understand our own needs. Specifically, here's what I like to do when approaching a new software solution I don't fully understand:
- Approach in off-peak hours or away from the floor, otherwise they'll be rushed
- Be super honest and share the current state of my business
- Tell them to speak in layman's terms and every time they use an acronym or a word I don't understand, interrupt them mid-sentence and ask them to start again
- Ask them to repeat concepts that are new to me a second and third time
- Repeat these things back to them so that I internalize the concepts (otherwise, I'm just nodding my head to avoid looking stupid)
- Don't be afraid to ask awkward questions like "what makes you different from [most obvious competitor]? or "Is this type of software really made for someone with my budget?"
5. LSI is about more than listing sites
In the Inner Circle we value the phrase “Listing Site Independence” because we know that it means reduced risk to our brands future success by not having our revenue sources tied to any single listing site (or lead source).
When evaluating your marketing portfolio, it's helpful to ask, "What happens if your listing site disappears tomorrow?" When evaluating software for your company, it’s crucial that you also understand the implications of a very important phrase: Intellectual Property Rights.
Example: There are a growing number of software platforms that offer you a ‘free’ (or cheap) website that integrates with their platform and lets you take bookings right on ‘your’ site.
What you probably don’t get told is that you have to host your site on their servers, and that if they shut down shop overnight, you’re probably left with nothing. All of your great blog posts, content pages, listing copy, etc. – gone.
When evaluating software partners to service your website needs, make sure you ask questions about who owns your content, who owns your photos, what happens if they decide to shut down, what happens if they get acquired by a bigger company, will they help you get your content on to another server?
The good news is that there are some good companies out there with in-house talent that can help you integrate with most major software providers and host your own site that you own.
6. Risk and Reward
With every major business decision there is inherent risk versus reward – understanding the changing business and technology environment that your business exists inside of is crucial to making those decisions effectively.
That said, if your vacation rental business is not tending towards providing technologically enabled experiences that the typical buyer expects, then you are likely taking a bigger risk than not updating your technology – you’re potentially risking your entire business.
In our market there are over 22,000 vacation rentals. There are also 400+ companies that manage these properties.
When we evaluate the competitive landscape, the companies we see in the leaders quadrant are the ones with the best grasp of technology trends that effect the buyer experience and are taking the risks of adopting these new technological norms.
The companies we see shrinking and shutting down shop are the ones who don’t see the need to make the forward moving changes or are too afraid of the perceived risk involved in the change to make their business better and more sustainable over the long haul.
I’ve written elsewhere, “One thing we can all say for certain though – is when you’re at that cross-roads, if you don’t roll the dice – if you don’t take the risk and make a decision you’re unsure about – you’re risking the business anyway. So breath that in. Let it set deep and firm – if you don’t intentionally make a decision when you’re at a crossroads – you’re unintentionally making a decision to not move forward, which could be the biggest risk of all.”
It’s important that your business continues to enable itself technologically, but that you do so with as much self-education as possible.
So where do you stand with your vacation rental business? Are you moving towards utilizing modern technological advances to wow your guests and reap new profits, or are you paralyzed in indecision while your business plateaus with its profitability?
VRMB Technology Evaluation Checklist
- How long have you been in business? (<5 years – ask lots of questions)
- How large is your organization in terms of staff? (1-2 guys? Ask lots of questions)
- Do you have customers that would be willing to share their experience with me?
- Who owns my data if we decide to switch later? Do you have tools that make exporting my data easy?
- What other existing software providers do you integrate with?
- Is your software cloud based? (if the answer is no, run.)
- Do you share my company's data with others or use it for your own marketing purposes?
- What specifically does your software do better than your competitors? (If the answer is primarily about how much the competition sucks, not their own benefits, then theirs isn’t that good).
- How quickly do enhancement requests typically get developed and deployed? (Ask for specific numbers in the past 12 months. If features are rolling out slowly, they likely aren’t a great long term choice).