It is well-known among businesses of all sizes and across all industries that it is far easier to get an existing customer to renew their business relationship with a company than it is to find and build new customers from scratch, the difference between customer retention and customer acquisition. For a campground, the existing customer base consists of seasonal campers and transient guests who have stayed at your park within the past one to three years and who enjoyed their stay. Statistics indicate that there is up to a 70% likelihood of getting an existing customer to return, while getting a new prospect to turn into an actual customer only occurs from 5% to 20% of the time. The rate of success is contingent upon the quality and volume of your marketing efforts, and acquiring those new customers can incur a cost of up to 7X more than the cost of getting an existing customer to stay with your business, according to research by Bain & Company published in Forbes. Considering those acquisition costs, it should be pretty clear that even a small increase in customer retention can increase overall profits by a substantial margin. Why is it then that most businesses spend more time and money on acquiring new business than focusing on retaining their existing customers? It just doesn’t make sense.
The loss of customers for various reasons is referred to as “churn” or attrition. The term originated with the process for making butter by agitating milk and cream. Without agitation, those ingredients will never turn to butter. It is easy to surmise the importance of preemptively knowing if there are any factors that are agitating your existing customer base, which I have noted consists of guests “who enjoyed their stay.” Your office and registration desk can be very busy at the time of your guests’ arrival, particularly on weekends; however, departures are usually far less hectic. Take advantage of that opportunity to avoid self-checkouts and to try to engage each guest with a brief exit interview. If a stop in your office is not required, catch those guests at your exit gate, asking them if they enjoyed their stay and if there is anything that could have been done to make their stay more enjoyable. If nothing else, they will appreciate that you took the time to ask. Keep track of this feedback, along with any comments that make their way onto online review sites, and take corrective measures if necessary.
Some businesses have notoriously high rates of churn, while others have high levels of customer loyalty. For example, with the exception of users of customer loyalty cards, most people have no loyalty to one brand of gasoline over another, generally accepting that 87 octane unleaded regular is the same just about everywhere, making buying decisions primarily based upon price and how close their tanks are to being empty. Even businesses with historically high rates of customer loyalty can see that situation change overnight when a monkey wrench gets thrown into the works.
Nobody Likes Change
In the outdoor hospitality industry today there is an unprecedented drop in customer loyalty that is accompanying changes in ownership. If a nearby campground has changed hands, particularly if it has evolved from family-owned to corporate ownership, customer dissatisfaction is almost a certainty. Rate increases, newly added fees, and indifferent management all present the milk and cream that you can churn into butter. In many instances, the new owners are obsessed with making infrastructure improvements that rationalize rate increases when the customers they inherited were quite satisfied with the status quo. In other instances, they will literally force out seasonal campers in favor of more profitable transient campsites. If you have the capacity to fill seasonal sites, turn on a “welcome” sign while your competitor is showing those customers the exit.
When management is separate from ownership, there is usually little incentive to work toward long-term success. Management is unlikely to be performing the exit interviews that you should be conducting, and it may be turning a blind eye to online reviews and complaints. Your knowledge of the specific dissatisfactions will allow you to significantly boost the new customer acquisition rate well above the 5% to 20% norm. Just because campers are unhappy with management and new policies down the road does not mean that they are ready to give up on camping. They simply need to know that you are better prepared to respond to their needs, while offering proximity to the same amenities and nearby attractions that they have grown to appreciate.
Although you will no doubt hear word of mouth, go online and search for “(name of campground) complaints” or “(name of campground) reviews” to get a snapshot of major points of dissatisfaction. Look for complaints on campground review sites but also on Yelp, TripAdvisor, and the Better Business Bureau. If there is a preponderance of negative reviews, you can easily identify your opportunities to expand your customer base. Here are excerpts of actual reviews of various parks that recently changed hands:
“Been coming here for 5 years, I used to think this place was the best for family fun but like all things usually do service and accommodations are getting worse and worse. To start with I reserved a premium pull through spot in February for this weekend. I had to pay $50 just to assure I have the spot I reserved. What’s the point of a reservation if you have to pay extra to reserve the spot you selected? Golf cart rentals are higher than average now and if you want to play mini golf you have to pay, when it used to be free.”
“We have been coming here for years, and never had the experience we did this last visit. The campground has gone downhill. Staff is no longer friendly and welcoming as they used to be. This place was once a great relaxing place to vacation but that it no longer the case. We spoke with some folks at the pool that live there, and was told they are also having issues with new management and was sad to hear it was happening to visitors also. Needless to say that was my last trip there!”
“I booked a reservation today, where during the process you pick your site. Once I booked it, the system came up with an extra $100 fee to lock your site. I did not think anything of it and continued. When I printed my reservation confirmation the number of my site was missing. I then called to find out and was informed that you get whatever site is available unless you pay the additional $100 fee. I then asked to cancel the reservation and got everything back except for a $20 cancellation fee. I asked for a supervisor, and the lady said she was a supervisor and would not refund me fully even though I just made the reservation less than 90 minutes earlier. This just left a horrible feeling. Makes me think all they are interested in is money and not good customer service. It is a shame because it was going to be a group of us, but I called the other 4 couples and told them not to book. We will go to another campground.”
“My husband (now deceased) and I purchased a park model at a campground that this company now owns in June of 2020. We paid a premium price (well over its value) for this particular park model because its location in the campground. The park was then bought out by the new owners at the end of last year. Yesterday we received a letter via email informing us that not only are they eliminating our site from even being a possible location for a park model/seasonal lease, but we would have to sell it through the park’s RV sales lot, will have to pay to move it to that lot, and any likely buyer will have no chance of being able to use it anywhere within the park. We will likely lose at least $20,000 when all is said and done.”
There are patterns in those complaints, mostly involving increased fees and indifferent management. Times are changing, but not necessarily for the better. As always, change can present opportunities for well-informed business owners. Now is perhaps the best time in years to churn some butter!
This post was written by Peter Pelland