This Concept has 10X my Airbnb Business
Summary
TLDRIn 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
🚀 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.
💰 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.
🌟 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.
Mindmap
Keywords
💡Lifetime Value
💡Short-term Rental Business
💡Business Best Practices
💡Rebooking Strategy
💡Direct Bookings
💡Hiring Bonus
💡Housekeeping Cost
💡Cost of Acquisition
💡Inflation
💡Advertising Campaign
💡Economic Downturn
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
[Music]
[Music]
you
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