Helping You Book Vacation Rentals: FlipKey CEO T. J. Mahoney (Part 6)

SM: What percentage of property managers do you think understand your value proposition?

TM: Any property on our site with guest reviews understands. If you went to FlipKey.com right now and tried to leave a review of a random home, you could not do it. The only way you can leave a review of the room is if you have been invited by us because we have a booking record showing that you have stayed in the home.

With that perspective, any property on our site that shows customer reviews is there because the property manager realized our value proposition and provided those booking records for us to solicit those reviews. I would say that 70% of our 110,000 listings have guest reviews.

SM: It sounds like there are two steps to getting your business model to work. The first is to get property managers to understand your value proposition and use your service. The second is to move from the free model to the premium model.

TM: Correct. To be clear, when we started it was a freemium model. Anyone new to the site today has to pay. You can’t start off free anymore. We created initial growth that way, and we are past that stage. There are a few of our users who were in our initial population phase who only want to collect guest reviews. They can still do that free because we grandfathered them in.

SM: There is a lot of discussion in the Web community right now about how the consumer getting very spoiled because they get everything for free. Consumers are now reluctant to pay. What kind of conversion rates did you see in the freemium to premium conversion?

TM: We see a 75% conversion. We see that high of a rate because we offer such clear and distinctive benefits. The problem with many premium services is that many providers offer a core service, and their premium service is just a few bells and whistles. We do not charge for bells and whistles.

Property managers have a very clear goal, which is to put people in their homes. We separated our marketing services as a completely different service. Yes, we provided them with free reviews, but we also showed them just how powerful those reviews are if they are featured on a network like TripAdvisor. Instead of just having the content, we help them make that content ten times more powerful. That is not a hard sell. The connection is made very clearly.

SM: Have you been able to get metrics from your paying customers as to what kind of revenue impact you are having on their businesses?

TM: We have various testimonials. A company in Georgia has stated that one out of every two people who contacts them who has read a review collected by FlipKey converts to a booking. A 50% conversion rate is extremely high, and I would not expect that to be the norm.

We did recently conduct a user satisfaction survey. Out of 110 companies that responded, there were no negative responses. Good to Strong Satisfaction was in the 80% level. The system is working and we are comfortable with the value we are providing. However, we do not have a specific ROI metric. TripAdvisor has only offered vacation rentals since March, so we have not even been live for a year yet.

SM: I presumed that it would be worthwhile to provide those types of metrics for your marketing purposes.

TM: Agreed. Analytics and data is not the easiest thing to come by in the vacation rental industry. There are over 4,000 property managers and 1 million individual owners who own vacation homes. The data they have access to is sometimes just a small family business based on handshakes and phone calls. Measuring impact can be a challenge, but we do what we can to create data.

This segment is part 6 in the series : Helping You Book Vacation Rentals: FlipKey CEO T. J. Mahoney
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