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Michael Gehrig Interview

We recently interviewed the President of Sales and Marketing of Welk Resorts, Michael Gehrig, to learn more about the company and the man behind it all. Background information on Michael Gehrig:

As the President of Sales and Marketing for the Welk Resort Group Michael has helped to create an identity relevant to today’s Vacation Ownership audience. Working with one of the most recognized brands in the U.S. Michael has helped the Welk Resort Group capture the equity of the Welk name and communicate the virtues of Welk hospitality – family, values, tradition and trust.

Michael has worked in the Vacation Ownership industry since 1985 where he began as a Developer Representative at the Ridge Tahoe. During his 16 year career Michael has enjoyed positions ranging from Business Development to Resort Operations to his current position in Sales and Marketing, where he has been since 1989.

As a Marketing and Sales executive in the Timeshare Industry Michael has managed employment opportunities inclusive of single and multi-site projects, both nationally and internationally. Although his experience is varied, Michael has worked for only four organizations since entering the industry and has found complete career satisfaction within the volatile fields of Vacation Ownership Marketing and Sales.

Michael’s business focus is founded on belief systems that act as platforms for the deployment of cost-effective Marketing strategies, targeting new distribution channels with direct accountability for VPG and cost as a percentage of sales.

Michael has been a contributing member of ARDA since 1989 as a speaker, moderator, and committee member and award winner. He is recognized for his high professional standards and commitment to excellence by the ARDA International Foundation’s Education Institute (AEI) and is accredited as a qualified Registered Resort Professional.

Can you tell me about some of major responsibilities as the President of Sales & Marketing at Welk Resorts?

Major responsibilities or core functions would include making sure that the overall profitability of the company- since sales and marketing are really tip of the sword for our company, in terms of profits are being maintained. And doing so in fashion that upholds the integrity of the Welk brand which involves wholesomeness, family values, honesty, and integrity and positioning our group for the future. Those are really my core responsibilities.

What do you like most about your work? Least?

It sounds tripe but it’s really the people. I really enjoy the collection of different techniques. The least part that I like about my job has more to do with me than my job. If I was a little younger I’d love it more. I wish, when I look across the table at you, and I see all of our young divisional managers that we brought in and that’s been by design, you know the bulk of our team is under forty, which is just a great group of people and sometimes it’s hard to me to stay ahead of them.

What separates Welk Resorts from its competitors?

The number one criteria of separation in competitive nature is that Welk aspires to and has secured consistently for years one of the highest ratings for customer satisfaction at the people that are here. I mean in the end all the fun stuff that we do, all the programs, all the details, really culminate, and watching a family relax on a Sunday afternoon, kids are scrambling over the beautiful golf course now the golfers are gone, and the parents, the dad sitting on the BBQ burning the heck out of something, and the wife is lounging in one of the chairs, relaxing with the cocktail thinking “God, I can finally take a break”. That’s what we do, that’s what’s important about all this silliness. At the end of the day we allow people to connect and rejuvenate, and I think that with our customer’s satisfaction and the fact that we really do provide that experience of memorable vacations. I think that’s what separates us the most.

During this time of year many companies are planning their marketing strategy for next year, can you give us some insight to your process? What information do you collect?

It used to be that this is the time of year. We’ve actually morphed into more of an immediate kind of operation. We are redefining our marketing strategies as we speak, and have that all year with new distinctions. I’ve come to the place where I’m more comfortable now tinkering on the engine while we are in flight because I don’t think that today’s business rule affords you a chance to land and bring everybody together, and go to all the process. You can do that on a macro basis but if are not constantly tweaking and adjusting while you’re in flight, you’ll land in some place different than where you’ve planned. So, yes we are going through the budget planning process from a macro stand point, earlier than any prior year. We used to start in late august and be done by November, now we are starting in late June, which is a little difficult because you don’t have as much history under your belt, so you are kind of forecasting where you’ll end up and using that as a benchmark for next year. But the most important distinction in the budget planning process is that we are refining our concepts daily. And with every one of those, like these reports that I used to manage the business from more of a statics basis, now I’m changing them constantly to mirror the exact representation of where we are in any given month in terms of performance. And I think what that’s done is helped us to realize that we can make some of these changes long before the budget planning process, and as you know, we’ve always prided ourselves on being nimble, so that element integrated into the budget planning process I think has been a great new distinction.

Has the information changed that you collect?

Yet again, it’s a little bit of a combination, we have some core reports but we’re constantly dissecting, and sometimes we get a little too far out in left field, I mean you can get into an analysis and paralysis if you go too far and we’ve been known and that’s why therapeutically once a year, I’ll take all of the reports and sit everybody down, and just start hacking and cutting, because they tend to grow like the backyard. And if you’re not constantly monitoring, we got reports, on reports, on reports and people sitting around studying all day, and the business isn’t working. Having said that, we still have our fundamental reports, we are evolving as we go. We have new distinctions, for instance, we never used to pay as much attention to the portfolio because we had a low default rate in the past. Well now that the economy has been hit so hard the default rates for everyone are rising so now when I’m doing front-end sales and marketing calculations, I’ll look to the back end portfolio, just to make sure. And if we have some slippage, there I will factor that in to my up-front calculations so we’ll determine not just up-front whether or not it makes sense from a sales and marketing standpoint, but also from an ongoing loan satisfaction standpoint.

A lot of similar businesses are facing cash flow issues right now, what would be your suggestion to them?

Well unfortunately I think everyone has been affected. When the economy takes as big a bump as it does virtually everybody is impacted to some degree. That doesn’t mean that people that had money still don’t have money, and some of them still do, but they may be more judicious about how they spend it. What it really means is that we still target people that fit the profile for our product, you have to start there. You can’t with a crystal ball determine their credit-worthiness before they show up, believe me, I’ve tried. I’m talking to all these credit companies trying to get their FICO scores and I want to make sure that everyone that shows up first and foremost can buy, and then I will rely on our exceptional team to sell them into the concept. Unfortunately there’s no perfect filter, so we continue to refine those mechanisms to get the best possible customer up there, but once we do we have become much more proactive in keeping them in the portfolio. For instance, John and his wife bought, they love it, they’ve been owners for 3 years, John lost his job, and before he got his other one, and “Honey we can’t afford all these bills, well the one thing we absolutely should walk away from is the time share thing because I mean, we need the car, we need the house, we need the groceries, we don’t necessarily need the vacation.” Well when John is late on a payment, what used to happen is you would get a notice, and another notice, and a final notice and then collections. Not anymore, now we contact John and like the banks, we try and work out a scenario that helps John and his family, and keeps him in the relationship, because our belief is that people are going through tough times, it doesn’t mean that they’ve lost interest in our product, it just means right now they’re struggling to make everything fit. So if we can help them find a way to make it fit and stay a happy Welk family owner, this crisis will pass, we’re going to have a stronger family owner because they’ll look back and “you know, we almost lost this, but Welk, they were good folks, they called us, worked out a payment schedule.” So that is one distinction we didn’t do in the past but now we are aggressively pursuing it.

How is Welk leveraging the web for lead generation?

You know the only thing about that I still feel that we are behind. And part of that is my job to learn about everything, and don’t take it personally, and I know you didn’t when you were here, you did a great job and so did the rest of the team, but we haven’t figured it out yet. Now the good news is we are continuing to invest time and energy to get there, so I know eventually we will find “the cure” but today I am not disappointed, I am just not satisfied yet with our efforts. And I am looking for some of those winds to really start to culminate and trackable and measurable results from our web efforts. From the team: Lead generation on the web is one of the more successful programs we have through our Alliance Partner relationships (their websites using a sweepstakes offer. Most currently it is a Hawaii offer). Our own web lead generation (our website) produces well however our conversion on both the booking and the sale are disappointing.

We have not leveraged Facebook or Twitter just yet. I have been doing some research believe it could be something to think about however the resources to maintain this type of effort are questionable at this point.

The way we measure success on our internet campaigns is much the same way as any other program – cost per tour and VPG (volume per guest).

We have recently started an email campaign for both Soleil and Owner Referrals – this too has taken a back seat to other web priorities and reduced staff. The campaigns we did send out saw very little in the way of results.

What are some key factors you look at when exploring a new online advertising opportunity?

We really haven’t too much because again, we’ve defaulted to what is easiest. We’ve been somewhat parasitical about alliance partners and we’ve been jumping on their coat tails and generating some leads, and that’s all good but I’ve been looking at San Diego as a massive destination and there are millions of people that come here every year. There are millions of ways to get here. We haven’t figured out how to piggy back onto some of those distribution channels to get the name Welk in front of them and provide them with a “discount of their hotel or rental car or flight, or theme park passes when they get here. We are trying that with the CAT program but the challenge there John is that everybody seems to have a full day job, so we come up with the concept of CAT and then we ride that poor thing until it just goes right into the ground. I guess an answer to the question, no, I think there are huge opportunities that lay untapped and we just haven’t figured it out yet.

As the President of Sales & Marketing, what’s your biggest challenge right now?

The biggest challenge has been maintaining the moral and the motivation of our team. We have for years prided ourselves, on quote, being the best, always winning, having huge successes, and over this past year, nine months, it’s been very difficult. Even though I’m very proud of the team, and we’ve been exceeding our revised budget expectations, it’s not quite the same, so deploying the right amount the motivation and connectivity with the team to keep them believing that they are the best is to me one of the fundamental challenges this whole experience has brought about, but then again, it’s a blessing cause it got me off my butt and kept me focused on the most important element of our organization which, of course, is the people.

That and financing, I won’t kid you, when the banks stop lending and we are not different than anybody else, even though we are a beautiful company, a lot of them were saying just “no mas” which means our business which really just creates paper, notes or receivable, if we don’t have lending it doesn’t matter how great we are, how beautiful the product is, how many great vendors we have working for us. We’re going to be out of business. The good news is that we have very solid financial background and our success during this 2009 period exemplifies our strengths, so I’m more than cautiously and optimistic that we’ll secure all the funding we need to continue to grow.

For most companies, new customers are hard to come by. How does Welk remarket to existing customers to extend their customer retention?

Well, we haven’t done a superior job in the past because we’ve been specialists at generating new customers. However, this crisis has caused us to become more introspective and we have come up with a brand new campaign that we never had before, we call it member services. It essentially does just that, it remarkets to our existing owner base. Now we are close to deploying four different pronged approaches towards upgrading memberships for existing owners. Some of them are very small, they don’t generate a lot of revenue, but if there’s a lot of them, it adds up, some of them are more aggressive, sometimes we capture people here, we’re talking about going out into the marketplace and dealing with people in their homes, and setting up offsite parties, and gathering all the Welk owners and hosting big functions and doing business through that so we’ve become very proactive in recognizing the importance of mining that existing owner base.

How are you targeting these customers? Is it specific or broad?

No I think if you want to be more effective, you’ve got to be more targeted. We’ve taken our first step as really to provide more of a customer service position. So it’s more generic and more broad-based. If I go golf, I only hit the golfers, if I go theater, I only hit the theaters, I want to hit everybody. So from a macro standpoint my first approach is to talk to them about how we can enhance their existing ownership and explain how to use it and to help them with some of the new things we are bringing on. That’s helps to get us together. From they’re owner status and what they bought and how old they are and how much they make and now you try to fit them into an upgraded level.

What technologies are you using to get this information across?

We still use rocks and sticks and a number of parts of our operation. We also have other sophisticated software and sales force that enables our representatives in a moment to know exactly what an owner owns and to be able to calculate on the fly if they’re interested in different levels of ownership and what that means to their principal and how that affects their payments. We do reach them through telephone calls, mail, email, onsite parties, newsletters, and website.

Do you see yourself leveraging a social website like Facebook in the future?

I sure hope so. I’m smart enough to know there is a tremendous amount of energy there when it comes to marketing. I wouldn’t know the first thing about it. I’ve got a little experience with facebook and some of the others but that is where we really need to investigate to see if there is way that this social networking can contribute to Welk. Someone is going to figure it out and some people probably already have. Our situation is a little bit different in that ours is not a sought good, which makes it a little less desirable for the average person that stumbles across it. I think it’s all how it’s positioned. If it has more to do with a fun little get away or brief introduction, it doesn’t have to do with ownership. It should have to do with something much more simplistic, much easier, and much more enjoyable. I think we can really enhance our ability to market once we start to delve into these areas, but today, no. We are not scratching the surface.