This Concept has 10X my Airbnb Business

Summary

In this video, Sean Rockyjeech, a serial entrepreneur and short-term rental expert, introduces the critical business concept of lifetime value. He illustrates its impact on decision-making with examples from his multi-million dollar businesses, newspaper subscription sales, and cell phone plans. Sean then applies this concept to short-term rentals, emphasizing the importance of rebooking strategies and the cost-effectiveness of hiring housekeepers by the hour. He concludes with advice on leveraging lifetime value to reduce costs and stay competitive, inviting viewers to join his Facebook group for further insights.

Takeaways

• 💡 The concept of lifetime value is crucial for making informed business decisions, focusing on long-term gains rather than short-term profits or losses.
• 🏢 Sean Rockyjeech, a serial business owner and short-term rental industry expert, shares his insights on applying lifetime value to various business models.
• 📈 Lifetime value can significantly impact sales strategies, as demonstrated by the newspaper subscription sales example, where the upfront cost is justified by the customer's long-term retention.
• 📱 The concept of lifetime value is prevalent in various industries, including telecommunications and mortgages, where long-term customer relationships are valued.
• 🔄 Rebooking strategies in the short-term rental space can leverage lifetime value by encouraging repeat customers, which can offset initial marketing costs.
• 📊 Direct bookings are essential for capturing customer data and offering incentives for future bookings, enhancing the lifetime value of a customer.
• 💼 Hiring practices can also benefit from considering lifetime value, as the long-term savings from hiring hourly staff can outweigh the initial costs of recruitment.
• 💰 The cost savings from hiring hourly staff can be substantial, particularly when considering the potential for long-term employment and reduced turnover rates.
• 📈 A hiring bonus can be a strategic investment to attract and retain quality staff, with the potential to pay off through long-term savings in housekeeping costs.
• 🔗 The lifetime value of a housekeeper can be calculated by considering the number of housekeepings they perform and the savings generated over their employment period.
• 📝 Sean invites viewers to join his Facebook group and follow him on social media for further learning and community engagement in the short-term rental industry.

Q & A

What is the main concept Sean Rockyjeech introduces in the video?

The main concept introduced is 'lifetime value,' which is a business strategy that focuses on the long-term value of a customer rather than short-term gains or losses.

How does Sean Rockyjeech define 'lifetime value' in the context of his businesses?

Sean defines 'lifetime value' as the total worth of a customer to a business over the entire duration of their relationship, emphasizing the importance of long-term decision-making.

What is Sean's background in the short-term rental industry?

Sean is a serial business owner and an expert in the short-term rental industry, having built a portfolio of 120 properties and running multiple multi-million dollar businesses.

How did Sean's experience in newspaper subscription sales influence his understanding of lifetime value?

Sean's experience in selling newspaper subscriptions taught him the importance of lifetime value, as he saw how businesses were willing to pay a high upfront cost to acquire customers based on the long-term revenue they would generate.

What is an example of lifetime value application in the cell phone industry?

In the cell phone industry, lifetime value is applied through long-term contracts where customers pay monthly for services, and providers aim to retain customers for years, making significant profits over the lifetime of the contract.

How does Sean suggest using lifetime value in the context of short-term rentals?

Sean suggests using lifetime value by focusing on rebooking strategies and direct bookings, encouraging customers to book repeatedly, thus increasing the overall value they bring to the business.

What is the significance of rebooking in the short-term rental business?

Rebooking is significant because it indicates a customer's loyalty and satisfaction, leading to repeated business and a higher lifetime value for the rental property owner.

How does Sean approach hiring housekeepers and what is the rationale behind it?

Sean approaches hiring housekeepers by considering the lifetime value of the savings from hiring by the hour, using hiring bonuses, and referral incentives to reduce the overall cost of housekeeping services.

What is the potential savings from hiring housekeepers by the hour instead of using third-party cleaning services?

The potential savings can be significant, with Sean estimating savings of $200 per housekeeping, which can accumulate to thousands of dollars per month for multiple properties.

How does Sean utilize the concept of lifetime value in hiring staff for his business?

Sean looks at the long-term savings from hiring staff by the hour, factoring in the initial costs of hiring and the potential for staff to stay with the company for an extended period, thus reducing the cost per housekeeping over time.

What is the 'Hosts of Airbnb Automated' Facebook group and how does it benefit its members?

The 'Hosts of Airbnb Automated' Facebook group is a community where short-term rental operators can ask questions, share experiences, and learn from each other in a non-judgmental environment, offering support and insights for both new and seasoned hosts.

Outlines

00:00

🚀 Introduction to Lifetime Value in Business

Sean Rockyjeech introduces a business concept focused on the importance of understanding lifetime value in business decisions. He discusses how this concept can save or cost businesses thousands of dollars and emphasizes the shift from short-term to long-term thinking. Using his experience in the short-term rental industry and newspaper subscription sales, he illustrates how businesses can calculate and capitalize on the lifetime value of a customer. The summary includes the example of a newspaper subscription business model where the initial cost of acquiring a customer is offset by the long-term revenue from their subscription and potential advertising sales.

05:01

💰 Applying Lifetime Value to Short-Term Rentals and Hiring Practices

The speaker expands on the concept of lifetime value, providing examples from the short-term rental space and discussing its application in rebooking strategies and hiring practices. He explains how investing in advertising to encourage repeat bookings can be profitable in the long run and discusses the cost-effectiveness of hiring housekeepers directly versus using third-party cleaning services. The summary highlights the financial benefits of reducing housekeeping costs through direct hiring and the strategic use of hiring bonuses to attract and retain quality staff, ultimately saving thousands of dollars over time.

10:03

🌟 Harnessing Lifetime Value for Business Sustainability and Growth

In the final paragraph, Sean emphasizes the critical role of lifetime value in maintaining a competitive edge and ensuring business sustainability. He provides a detailed analysis of how reducing housekeeping costs can impact the ability to adjust rates during economic downturns and secure bookings. The summary underscores the importance of considering the long-term savings and the strategic investment in hiring and customer retention as key to staying ahead in the market. Additionally, Sean invites viewers to join his Facebook group for further learning and community engagement.

Keywords

💡Lifetime Value

Lifetime Value refers to the total worth of a customer to a business over the entire duration of their relationship. In the video, Sean Rockyjeech discusses how understanding and applying the concept of lifetime value can significantly impact business decisions, particularly in the context of short-term rentals and subscription sales. The script uses the example of newspaper subscriptions to illustrate how businesses are willing to invest heavily in acquiring a customer upfront because of the high lifetime value.

💡Short-term Rental Business

Short-term Rental Business is a type of accommodation rental service where properties are rented out for a short duration, often through platforms like Airbnb. The video script emphasizes the importance of this business model in applying the concept of lifetime value, as it helps in making strategic decisions that consider long-term gains rather than immediate profits.

💡Business Best Practices

Business Best Practices are the most effective methods that have evolved as standards for managing a business successfully. The video script mentions that the concept of lifetime value is a business best practice that can change how decisions are made, focusing on long-term benefits over short-term gains.

💡Rebooking Strategy

A Rebooking Strategy is a method used by businesses to encourage customers to book their services again. In the context of the video, Sean discusses how rebooking can be a powerful tool in the short-term rental industry, where getting customers to return can significantly increase the lifetime value of those customers.

💡Direct Bookings

Direct Bookings refer to reservations made directly with the service provider without going through an intermediary. The script explains that encouraging direct bookings can help build a relationship with customers, potentially increasing their lifetime value by making them more likely to rebook in the future.

💡Hiring Bonus

A Hiring Bonus is a financial incentive offered to attract new employees. In the video, Sean uses the hiring bonus as an example of a strategic investment in staff, such as cleaners, to reduce the long-term cost of housekeeping services and increase the lifetime value of the business's operational efficiency.

💡Housekeeping Cost

Housekeeping Cost is the expense associated with maintaining cleanliness and order in a rental property. The script discusses how reducing housekeeping costs by hiring housekeepers directly can lead to significant savings and a higher lifetime value for the business.

💡Cost of Acquisition

Cost of Acquisition is the expense incurred by a company to acquire a new customer. In the video, Sean explains how advertising campaigns can have a high initial cost of acquisition, but the lifetime value of a customer can justify these costs, especially when customers rebook.

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. The script mentions adjusting for inflation when considering the lifetime value of a mortgage, as it affects the real value of money over time.

💡Advertising Campaign

An Advertising Campaign is a series of promotional efforts to increase awareness and interest in a product or service. The video script uses advertising campaigns as an example of an investment that can increase the lifetime value of customers by encouraging repeat business.

💡Economic Downturn

An Economic Downturn is a period of negative economic growth that lasts for more than a few months. The script suggests that during an economic downturn, businesses with high operational costs, such as housekeeping, may struggle to remain competitive, highlighting the importance of considering lifetime value in business planning.

Highlights

Introduction to a business concept that can save or cost businesses thousands of dollars by focusing on long-term decision making and lifetime value.

The speaker, Sean Rockyjeech, introduces himself as a serial business owner and expert in the short-term rental industry, with four multi-million dollar businesses.

Explanation of the lifetime value concept using newspaper subscription sales as an example, where the initial cost is offset by long-term customer retention.

The importance of understanding lifetime value in business, from cell phone plans to mortgages, to make informed decisions and maximize profits.

Application of lifetime value in short-term rental businesses, focusing on rebooking strategies to encourage repeat customers.

The potential for local businesses, such as event planners, to repeatedly book spaces like a penthouse on Peerspace, emphasizing the value of direct bookings.

Discussion on the cost-effectiveness of hiring housekeepers by the hour versus using third-party cleaning services, and the significant savings possible with in-house staff.

The concept of a hiring bonus to attract and retain quality housekeeping staff, and the financial calculations supporting this strategy.

The impact of housekeeping costs on the ability to adjust rental rates during economic downturns, and the competitive advantage of lower costs.

The use of referral bonuses to encourage existing staff to bring in new, quality housekeepers, reducing hiring costs over time.

Calculating the lifetime value of a housekeeper to determine the appropriate investment in hiring and training.

The importance of considering lifetime value in all aspects of business operations, not just sales, to ensure long-term sustainability.

Invitation to join the Facebook group 'Hosts of Airbnb Automated' for community, learning, and support in the short-term rental industry.

The significance of ongoing learning and community engagement for short-term rental business owners to stay ahead in a competitive market.

Final thoughts on the importance of not underestimating the lifetime value concept and its role in business success.

Closing with a reminder to follow Sean Rockyjeech on social media for more insights into the short-term rental business.

Transcripts

hey everybody i've got a business

concept that's gonna help you run your

short-term rental business or any other

business actually for that matter and if

you don't run a business yet you're so

lucky to figure this out before you

start because this can cost you or save

you thousands and thousands of dollars

it's not a gimmick it's just how it

works it's business best practices and

it will change how you make decisions

what you choose to do based on how much

you stand to gain or lose long term

instead of thinking so short term when

making your business decisions this is a

concept of lifetime value i'm going to

give you a huge example in the

short-term rental space but also a

couple other ones that apply to regular

businesses so that way you can apply the

concept of lifetime value to your

business let's jump in welcome back

family my name is sean rockyjeech i'm a

serial business owner i'm the expert in

the short-term rental industry but this

happens to be my fourth multi-million

dollar business so i wanted to do a

video that's not only largely applicable

to short-term rentals but also a

hard-hitting piece of advice for all of

your businesses and that way maybe you

can like and subscribe finally because

it's not just short-term rental content

lesson that i learned in business came

from the very first business that i

owned and the very first industry that i

worked in and was largely successful in

which was sales more specifically

membership sales or newspaper

subscription sales i owned a company

that sold thousands of people a week

newspaper subscriptions and even though

that membership was either ten dollars

or twenty dollars per month we would

build a newspaper for that customer up

to a hundred dollars per customer so we

were charging them five to eight months

of the value of that customer on the

front end because we obtained that

customer for that newspaper the

newspaper had data on the back end that

said for every person that we sold they

would retain that customer maybe nine

months 10 months a year 12 months and it

was their goal to retain those customers

for longer because they would continue

to make that 10 or 20 a month on that

membership so their lifetime value of

the customer 20 times 12 was 240 or more

plus advertising revenue so they were

willing to pay us a hundred dollars on

the customer because their lifetime

value was 240. if the commissions on

that deal were only based on the 10 or

20 we collected the sales industry for

newspapers would not have been

sustainable and they would have gotten

no new customers in order for them to

get new customers they had to dig deeper

into the lifetime value of that sale to

pay us something worthwhile and that's

how for 12 years i sold newspaper

subscriptions while also at part of that

time moonlighting doing airbnb by the

end of this video i'm going to show you

exactly how to use this in short-term

rental space it's really the secret to

how i was able to build a portfolio of

120 properties and most people don't get

it but by the end you will and let's

expand on this topic the concept of

lifetime value exists almost everywhere

that you look you have a cell phone plan

either verizon t-mobile 18t sprint

someone like that i've had my line with

verizon for 20 years for 20 and i've

gone from a residential to a business

account my business account pays roughly

a thousand dollars a month for all of

our cell phones tablets other products

that we pay to verizon now if sprint

looked at my like back data they would

go wow we can make a hundred thousand

dollars off this one person so i'll get

a phone call from a business

representative at sprint or t-mobile

because they know i have a verizon

business account and they'll offer me

all sorts of fantastic stuff to try to

get me to switch because of the lifetime

value of that membership of that cell

phone plan mortgages are the same way

even a five or six percent mortgage over

30 years you could pay double the cost

of your mortgage so the lifetime value

of a mortgage at five or six percent is

the actual literal amount of debt that

they gave you and of course you have to

adjust for inflation because inflation's

a loss in the middle but that business

still is able to print money on your

mortgage for 30 years so they will give

a commission to whoever originated that

loan much larger than your initial

mortgage payments much larger than maybe

even the first 10 mortgage payments that

you make somebody could be making like a

big chunk of that value because of the

lifetime value of that debt there are a

couple ways that you can apply this to

the short-term rental space one is your

rebooking strategy now this is largely

applicable to websites like peerspace or

gigster because your relationship with

the customer is slightly different i'll

explain rebooking or direct bookings

getting somebody to habitually book your

place more than once is a way to get a

customer to return and spend with you

over and over again in most cases

travelers to vacation destinations won't

do this unless they have like an annual

trip with their kids that they always go

to your part of the world which is

possible so there are direct booking

strategies to capture that data and then

to reach out to them and give them

incentives to book with you direct or

book with you far in advance for future

events now the money that you spent on

that campaign could be recuperated or in

part recuperated you might even break

even on that second booking but your

goal is to try to create a habit with

that person where they book with you

over and over and over again i would say

if somebody books with you at least

three times it's very likely possible to

think that they'll book with you a

fourth fifth or sixth time with airbnb

or vrvo but with peerspace the people

that you service with peer space are

actually local to your area my penthouse

has been rented on peer space quite a

bunch lately and it's because production

companies or photographers or event

planners are using myspace multiple

times because they trust the look and

they are changing their customer but

they're still using the same event venue

so by doing some form of advertising

campaign locally to artists creators

event planners photographers like even

having an ad spent for peer space style

bookings you can get people to become

aware of your space and the fact they

will book it over and over and over

again could allow you to spend 200 or

300 in ad revenue for bookings that only

book for 200 or 300 at a time that means

that if any of them book a second time

you are now making money on that person

who booked a second time so with ad

spend your cost of acquisition is really

easy to track because you look at

conversion my students and i are

starting to talk about ad spend and ad

campaigns at the surface level but

eventually i'll be doing a deeper dive

with my students on how to run ad

campaigns there are plenty of different

sources who are experts on running

facebook ads that you can find online if

you wanted to do something like that for

pure space or gigster because of the

little traffic that those websites still

produce if you are using your place by

the hour i recommend that you probably

do some form of launch campaign for

awareness that will actually pick up the

amount of bookings that you get by the

hour and you can book them direct and

not need to use peer space or gigster to

get your place booked by photographers

where i find this largely valuable the

concept of lifetime value is in hiring

and hiring staff either cleaners or

managers maintenance people and the

reason why is especially with cleaners

there is a clear difference in the cost

of a housekeeping if you pay people by

the hour or if you hire a third-party

contracting company in most cities

third-party cleaners that you find on

like turnover bnb or taskrabbit or call

direct because you did a google search

they're going to charge you a lot of

money usually 45 to 60 an hour on

average but they put that into a per

cleaning rate you might find that your

studio apartment is 55 65 70 to clean

your three-bedroom house could be

anywhere between 130 and 250 dollars to

clean i've even seen cleaning invoices

where people are being billed 400 for

housekeeping now if you hired your own

housekeepers by the hour in this market

we used to pay 12 an hour enlarged for

housekeepers where you've initially

hired but now we're doing more 13 14 15

an hour because of the nature of the job

market an hourly rate alone isn't what's

going to get us a lot of applicants and

we don't want to pay 25 or 27 in our

lifetime so we're not going to advertise

to 25 or 27 an hour we want the savings

that comes with paying people 15 an hour

or less because their lifestyles and

what they actually want to make and the

jobs that they're willing to take are

still at that rate 14 or 15 an hour

people have been so comfortable with not

working that we need a little extra kick

to get them back in the job market so

we're doing something called a hiring

bonus and let me help you calculate why

paying maybe even a two thousand dollar

hiring bonus to a new cleaner isn't that

insane if your cost per housekeeping is

four hundred dollars for your house

let's say you have a four bedroom house

and the amount of time it takes to clean

that house is ten hours ten labor hours

so two persons could clean it in five

hours total if you paid fifteen dollars

an hour you would then be paying a

hundred and fifty dollars per clean but

you're paying 400 because you're paying

a third-party company even if it was a

little higher let's use 200 to clean in

labor 15 per hour that's still a 200 per

housekeeping difference now if you hired

two housekeepers i'd say 15 an hour to

clean and they did eight turnovers for

you per month eight times 200 is sixteen

hundred dollars per month in the cost

that you're saving just on that one

house if you owned two houses you'd be

saving thirty two hundred dollars per

month on sixteen cleans if you had three

you'd be saving forty eight hundred

dollars per month on 24 cleans per month

so your break even point here is about

40 housekeepings if you did 40 turnovers

with housekeepers that you paid by the

hour you would then make four thousand

dollars in savings from 40 housekeepings

or maybe use 20 because you're saving

200 20 housekeepings with the 200

savings is 4 000 in savings that would

pay two separate two thousand dollar

hiring bonuses just in 20 housekeeping

if you look at this larger picture if

you have like us 100 houses or 100

properties and you're doing 40 or so

housekeepings a week if you could save

even on just apartments if you're saving

30 or 40 per housekeeping on 50

housekeepings a week again you're saving

2 000 a week or more on housekeeping and

so by hiring by the hour and looking at

the lifetime value which is now how long

a housekeeper works for you you can

start to extrapolate what kind of

creative hiring methods you can use

because there's a cost to hiring beyond

this hiring bonus that is really kind of

the catch here you will have an ad that

you'll run on facebook you could run for

free or you could pay to boost it you

could pay a recruiter to find you

applicants and you'll pay them per head

per person who shows up for an interview

all these are costs of hiring it is much

harder to hire somebody that doesn't

know you like a cold applicant but once

you have those cold applicants working

for you and you have ones doing a good

job it becomes much more cheap to have

them refer you people and in our

organization we have these little

business cards that have 500 hiring

bonuses and our housekeepers can give

those business cards to people and

they'll get a 500

hiring bonus if that person gets hired

and then the person who gave away the

business card gets a bonus as well so

now we've got a near thousand dollar

cost of onboarding for our internal team

to refer people but if our housekeepers

stick with us for four or six months or

nine months which they tend to do some

even two years or three years then the

lifetime value of the savings of a

housekeeper we pay by the hour is five

or ten thousand dollars or more in

savings so if every three housekeepers

we hire one lasts more than two months

we average that in and we've got an

average savings of maybe fifteen hundred

dollars per housekeeper even including

the two that didn't stick around so by

averaging out our lifetime value over

housekeepers we then decide how much

money we're going to spend on hiring

housekeepers by the hour this is a huge

concept and i don't want you to let it

go don't take it for granted because

when you're staring at your costs per

month and you notice that your

housekeeping is 150 or 200 more per

clean than me and you think that there's

going to be an economic downturn and you

wonder how you're going to keep up with

my business you're gonna have to drop

your rates sometimes and if your

housekeeping fees too expensive you

won't be able to drop your rate enough

to get the bookings that i can get and i

will get all the bookings and you will

get none that is why lowering your

housekeeping cost is so important and if

you're having a hard time hiring you

might have to dip into lifetime value to

get it done i just gave you the secret

to keep up with me don't take it for

granted that's how serious it is before

i go let me invite you to my facebook

group the hosts of airbnb automated i

have a free course for brand new newbies

there and a group of 40 or 50 000

professional seasoned operators for

those of you who have properties and

would like a little community and like

to ask some questions it's probably one

of the best groups on facebook to ask

questions where people don't get judgy

about what you want to know the hosts of

airbnb automated on facebook follow me

on instagram tick tock's okay too but

this is where you do all the learning

the best coach in the short-term rental

game sean rocky jeez thank you so much

for watching and i'll see you on the

other side

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