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Marriott's Gamble Keeps Paying Off
Business Journal

Marriott's Gamble Keeps Paying Off

How one of the lodging company's riskiest business decisions has become a remarkable success story

It was a risky gambit for Marriott International.

In 1984, the company entered the vacation ownership business -- at the time, a dubious industry at best. Marriott began this venture by conducting extensive research; purchasing American Resorts and its two properties in Hilton Head, South Carolina; and forming what would eventually become Marriott Vacation Club International (MVCI).

CHART

At the time, the public regarded the timeshare market as "generally negative, and what wasn't negative was neutral," says Ed Kinney, MVCI senior director, brand and public relations. Most timeshares were failed condominium projects or hotels. Among other things, developers offered odd gifts to potential buyers to lure them to "presentations" that sometimes amounted to inquisitions or arm-twisting events.

For more than five years, Marriott moved cautiously forward in the business while operating in relative obscurity. At that time, Marriott executives thought MVCI did a pretty good job of leveraging the brand and showing the product, but the division was underperforming.

Marriott believed that it could better leverage its trusted name and credibility to build a vacation ownership powerhouse. The company also conducted market research that strongly indicated that, if done correctly by the right organization, vacation ownership could be a viable and prosperous business.

In fact, its subsequent success in the vacation ownership industry offers an object lesson for companies in any business. Marriott Vacation Club's rejection of the status quo, insistence on an effective process, and hiring of the right people for the right roles has helped to drive sales, boost customer engagement, and even vindicate a risky business decision.

Unanswered questions

Marriott faced big, complex questions as it entered the 1990s. Could the company grow and continue to dispel the negative perception of timeshares? What type of sales process and what kind of sales executives should Marriott select to best interact with its existing, loyal customers, as well as customers who were not yet loyal? How could Marriott identify its best brand-building sales executives and find more like them? How would this venture affect Marriott's brand worldwide?

By 1993, for the most part, those questions remained unanswered. MVCI's parent company, Marriott International, believed that for MVCI to remain competitive and realize its potential, the sales process and salespeople would have to continue to evolve. Marriott's "customer for life" brand strategy left no room for overbearing salespeople or inconsistent processes.

MVCI began scouting for consulting companies that specialized in studying employees, among them Gallup. Gallup's then-chairman, Don Clifton, Ph.D., and then-vice president Joe Streur, Ph.D., spent a day at MVCI's headquarters in Orlando, Florida, discussing opportunities.

From the first meeting with Gallup, it became very clear to MVCI that the two companies had similar business philosophies and approaches. MVCI soon hired Gallup, and Drs. Clifton and Streur were asked to build selection tools that would help MVCI hire sales leaders and sales associates with traits similar to the company's best.

The relationship between Gallup and MVCI produced impressive results. Through the mid to late 1990s, MVCI's sales grew exponentially, moving rapidly from $104 million in 1990 to more than $1 billion in gross sales in 2001. This easily made MVCI the worldwide sales leader in its market. It had also become one of the largest contributors of profit for its parent company.

Through the years, MVCI's success story has even encouraged such well-heeled competitors as Disney, Starwood, and Hilton to enter the market. Many who were at MVCI during these times credit MVCI's rapid growth specifically to sales process and the focus on talent.

A new online tool

But MVCI wasn't complacent about its success. In early 2002, the company once again turned to Gallup for help. The challenge was to create an enhanced selection instrument for MVCI's sales/membership executives that was cost effective, provided reduced turnaround time, and was highly predictive of success. The objective of the new instrument was to increase sales productivity.

Gallup executed its scientifically tested approach, conducting both qualitative and quantitative research. The company conducted focus groups with MVCI's best performers and other stakeholders to identify the talents that were predictive of success.

Using an online assessment process, Gallup facilitated the participation of about 200 MVCI sales/membership executives in the validation of the new instrument. The results were very impressive. The study group consisted of 59 individuals selected by the Gallup instrument; the contrast group consisted of 60 individuals not selected by the Gallup instrument. The findings included:

  • The study group's sales-closing percentage was more than two times that of the contrast group (38.8% versus 17.4%).
  • Peer ratings for the study group were 51% higher than those of the contrast group.

The final instrument was delivered to the field on July 1, 2002. MVCI is continuing to track the performance of the sales/membership executives selected using the new instrument. Gallup will revalidate the instrument in the coming year.

Why is the right selection tool so critical? As previously reported in the Gallup Management Journal (see Related Items), in the absence of such a tool, 21% of those not selected may have the talent to do the job and excel at it, while as many as 35% of those who actually are selected may be miscast and lack the talents for success in a sales role.

Without a selection tool and a disciplined selection process, there is up to a 45-50% opportunity cost. With those kinds of odds, an organization can achieve the same results by flipping a coin: It's heads. Congratulations! You're hired.

Many organizations discount talent as merely the "price of admission," and the toll of this thinking on performance, turnover, morale, and customer loyalty is enormous. According to Gallup research, the bedrock American myth that "you can be anything you want to be" is at the root of this widespread and costly problem.

Gallup's research suggests a much different conclusion: People can be anything they have the talent to be. MVCI leadership intuitively understood back in 1990 what Gallup's extensive research has since revealed: It makes more sense to discover an individual's talents and cast him in the right role than to put him in a role that may not fit and hope to train him to excellence.

What's next?

Today within MVCI's Customer Relationship Management Organization, the focus on talent is intensifying. New selection instruments are being developed for four positions. The company is expanding and enhancing its communication and recognition programs and focusing more than ever on its internal leadership pipeline. Aligning associates with corporate strategy and streamlining customer processes have also become a key part of the Customer Relationship Management approach. StrengthsFinder, Gallup's development tool, has been made available to associates in the field sales organization.

Marriott's foray into timeshares was once a questionable venture, and now MVCI's business model has become a formula for success for Marriott International and the industry as a whole. And MVCI believes it will continue to increase its competitive advantage through investment in its associates.

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