Jeff Toister — The Service Culture Guide

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Lessons from The Overlook: Don't Panic

Note: Lessons from The Overlook is a monthly update on lessons learned from owning a vacation rental property in the Southern California mountain town of Idyllwild. It's a hands-on opportunity to apply some of the techniques I advise my clients to use. You can find past updates here.

Things have changed dramatically at The Overlook in the past six weeks.

The cabin was booked every weekend from November through early April. This is the busy season in Idyllwild, though the results were still better than we expected.

The slow season is now upon us and we're feeling it. Half our weekends in May are open and we have only one booking for June.

It's times like these when it can be tempting to panic and make some knee-jerk decisions. Here's why we won't and why you shouldn't, either.

Panic at The Overlook?

You tend to make poor choices when you panic in business.

Revenue is down right now and it looks like we're in for several months of the same. There's definitely a gut instinct to do something dramatic. 

The challenge is every idea goes against advice I previously laid out in this column.

For example, we could slash pricing to lure in an extra guest or two. Perhaps we could convince people to upgrade from a three bedroom home to our four bedroom cabin if the price was right. The challenge with this ploy is it runs counter to our pricing strategy. And, like many retailers have discovered, extreme discounting can become a habit your customers come to expect.

Another idea is to switch property managers. We recently had one promise us an extra $5,000 in net profit in our first year. Of course, that runs counter to our warning to beware of easy money. Our current property manager, Idyllwild Vacation Cabins, is likely to outperform that competitor over the long-run, and it will definitely take much better care of both our guests and our cabin.

Deferring some maintenance is another idea on the table. We have a painting project about to start and perhaps we could wait another year on that one. The key lesson here is knowing when to cut corners. This minor paint job will include some necessary repairs that allow us to delay painting the entire house. That means we'll actually save money.

So far, a level-headed analysis of these ideas makes it easy to conclude they are based on panic, not on what's right for the longterm health of The Overlook.

 

Panic in Your Business

Perhaps you've seen other signs of panic in your business. Here are a few examples I've seen in other companies.

One customer service executive frantically asked for customer service training. There had been a few complaints and the company president had demanded swift action. 

The problem with rushing into customer service training is it's only responsible for about one percent of service performance. The complaints will likely persist if the other issues are not addressed. 

Retailers across the country are cutting staff. This provides a short-term reduction in expenses, but it can hurt revenue and service quality over the long-run. I recently conducted a mini-comparison of three drug store chains, and found that understaffing led to lost sales in two of three stores.

Other businesses cut corners in any way they can. I've worked with several companies that have hired temporary employees through a staffing agency and then given those employees inadequate training because they were "temps." The inevitable result was poor service quality and a lot of turnover that cost the company much more than it saved by not hiring and training properly.

 

Take a Deep Breath and Don't Panic

This advice is easier written than followed. Panic can still tempt you to make poor decisions. Here's how we avoided doing that at The Overlook.

First, we know our numbers. Putting our current slow period into context helps. Here are a few things we know about that:

  • The slow period is a normal part of the business cycle.

  • Occupancy is trending just one booking lower than last year's slow season.

  • Our booking window is 4-6 weeks out, which means we're still okay for June.

We also understand the role of time here. Last year was our first full year owning The Overlook. It was previously a vacation rental, but we opened up the master bedroom which the previous owners did not rent. That made the property a four bedroom, three bath cabin, which appeals to a different group of customers than before. 

Our target audience tends to stay in Idyllwild once per year. We're just now starting to see some repeat guests. The goal is to continue adding more regular, repeat guests over time. That will take patience.

Finally, we're using this opportunity to innovate a bit.

For example, our property manager is pitching The Overlook for month-long rentals during the summer. This could help us lock in slightly higher revenues than last year. We'll have to wait and see on that one.

We're also starting to put some effort into social media, such as posting on The Overlook's Facebook page. That's not been high on our list so far (we've been busy with those pesky day jobs of ours), but we think it can pay dividends.

Time will tell if things will turn out okay, but I think they will. We just have to avoid panicking!