All posts by jamescsells

Buy More Time With These Three Features

 

 

 

 

 

Wish you could buy more time? Well, you can.

A critical component of any vacation rental software is the amount of time that it saves you in attending to the basic tasks of running your business. Particularly in the busy season things like processing credit cards, following up on rental agreements, sending payment reminders, and adjusting your rates to capture more business take up substantial hours each month.

The good news is that many vacation rental software solutions now have features that will handle these things for you. Here are three features that you will want to consider as you look at your options.

Automatic Payments:
This feature should reflect your Deposit Policy schedule and automatically contact the guest when a payment is due, is overdue, automatically charge their card or bank account, and send them a receipt when the payment is processed.

The credit card and account numbers are stored securely which also saves you the time of having to track down payment information. The guest can even update their payment info from a secure payment screen.

Rental Agreements:
Instead of having to audit which guests have been sent agreements, which have been signed and sent back, and which guests need reminders, the software should do this for you. A good vacation rental software solution will allow you to set up triggers that send out the agreements and reminders on a set schedule.

And with e-signature technology the guest doesn’t have to print out the contract and scan, fax, or mail it back to you. They type their name in a field and the software takes care of the rest.

Rates:
Most vacation rental companies will negotiate with a guest on price in order to get a reservation they might otherwise lose. But the back and forth with the guest can take quite a bit of time and it is always possible that you will lose them to a lower offer. With Dynamic Pricing capabilities you can set rate thresholds based on occupancy, time of year, day of the week, number of guests, etc. This helps you take advantage of supply and demand without having to send a custom quote to each guest.

Ex. If it’s the busy season and you are 80% booked, the Dynamic Pricing rules will automatically increase your rates 15% to take advantage of limited inventory. On the other hand if business is slow, the Dynamic Pricing rules can automatically lower the price 15% for a last minute mid-week stay.

While these are not the only features out there that will save you time, they are the three that I see vacation rental companies struggle with the most. Getting vacation rental software that can take these off your plate, without sacrificing the guest experience, can save you dozens of hours each month. Hours that you can spend helping your guests have the perfect vacation.

To get started you can compare vacation rental software at Software Advice.

Interview: Tom Leddy

Tom

I recently interviewed Tom Leddy, industry guru and one of the founders of First Resort Software about a number of topics and developments in our industry. Tom has some interesting thoughts on listing sites charging guest fees, Expedia, vacation rental technology, and where the industry is likely headed.

Tom, to say that you have been around awhile would be an understatement. You were one of the founders of First Resort and helped run that company for quite a few years. You then lead Instant Software for a while and you’ve worked with many of the other software companies like Escapia and then HomeAway. Now you have your own consulting company that helps vacation rental managers run their businesses more effectively. What do you love about this industry that has made it worth devoting so much of your time and energy to?

In the first place, the vacation rental industry stems from life-style decisions made by smart, interesting people. They love resort areas, which are clearly the nicest geography you can find. From there, they love helping people have great vacations. In the second place, I’ve had the opportunity to help these companies do what they do better. They feel good about that and that makes me feel good too. It’s a clear win-win opportunity.

Of all the things that you have contributed to the industry so far, what are you most proud of?

First Resort Software as a company set the bar pretty high for quality of product, service and relationships with clients and employees. The fact that there are still many rental companies using FRS is a clear indicator of that.

This past fall, Expedia purchased HomeAway. Some were expecting it, others were completely shocked. Were you surprised? What are the positives that you see and what, if anything, concerns you with the acquisition?

I was not shocked. Expedia has struggled with access to the vacation rental business, as have all of the GDS-type operations. There are really two aspects of this acquisition that deserve some attention. The distribution side is pretty obvious, and the acquisition should provide great additional exposure for a significantly larger audience to the opportunity that vacation rentals provide. This should make big strides in making the vacation rental market not a ‘zero sum’ game. This follows the ‘rising tide raises all ships’ premise.

The software side is another story, and I see two potential scenarios:

1. Someone in the upper offices of Expedia really gets the value of access to the ‘last mile’ of the automated calendars and rates that professional managers provide, recognizes the market share that HomeAway currently holds, and decides to invest heavily in magnifying the advantage.

2. No one in the upper offices of Expedia sees the value of the software and either: a. Spins it off to someone else (I don’t see any great buyers at this time) b. Lets it eke out its own business with little or no involvement

Scenario #2 is sad, but not unlikely. Many companies have undermined great opportunities, so this wouldn’t be the first time. Scenario #1 would potentially put all other software competitors in a very difficult position.

Priceline has been talking about vacation rentals for quite a while, Airbnb is becoming a juggernaut to the point that even HomeAway is taking shots at them with their commercials now. How do you see them (Priceline and Airbnb) fitting into this new world of mainstream vacation rentals?

The fact that these companies are entering the market is more indicative of there not being a ‘mainstream’ in the industry. ‘Mainstream’ would imply standards and we don’t have much in the way of standards. Large companies will tend to ‘bully’ their way into a market, and then become sensitive to inventory and customers as necessary to increase or maintain their position. To the extent that customers (including owners who provide the inventory) demand standards, standards may begin to solidify, but they are not likely to be demanding in that way.

Is there anyone else that you think will become a major player in the next several years?

This is a tough one. We didn’t see AirBnB coming, for example. The industry has become more newsworthy in recent years, and that may bring any number of potential players into the mix.

On the technology side, there will be several new start-ups, one of which may have something really exciting. There will also be some consolidation and dropouts. The big unknown is Homeaway’s plans for their technology.

Another hot topic lately has been the listing sites charging guests commissions. Many owners and managers are upset as they see it as double-dipping, and are also worried that the increase will negatively impact their bookings. The listings sites are saying that it helps lower the barrier of entry for managers that can’t afford to pay a high commission (by charging the guest a fee, they can lower the commission that the owner/manager pays). Airbnb and TripAdvisor have been doing this for some time, and now HomeAway is doing it. Are owners and managers right to be concerned, or is this ultimately a win for everyone?

Chances are, it’s just an add to the cost and won’t probably reduce the managers’ commissions. It’s not really much different from managers charging fees as well as rent. In some respects, managers should be happy about it, as it makes the distribution partner bookings cost the guest more than the direct booking (that should help with follow-on repeat guest programs). In general, commerce will expand profit generating avenues until it finds resistance. We’ll see if there is any resistance.

Is there an area or practice that you consistently see managers missing or ignoring that would help them drive more direct bookings?

I would like to see all managers paying more attention to their accounting and general business health. I see some pretty bad balance sheets that prevent businesses from taking steps to really improve their businesses.

I think ‘revenue management’ is a big deal. I am intending to do a session at VRMA on the myths surrounding it. Companies either do nothing or take steps without clear direction. I believe a consistent, local-based analysis, combined with a couple of specific actions could significantly increase both bookings and revenue from those bookings.

I also believe that there is an acceptance of technology without financial analysis that is costing managers lots of money that they are not receiving appropriate benefits for. Managers tend to begin by resisting new technology, but then accept pieces of it based on promises or other beliefs. Once they accept it, they rarely focus on maximizing the benefits or defining the ROI of the investment.

Where do you see the industry in the next 5-10 years? What is just now on the horizon that will likely be mainstream in that time?

There is no question that the main theme is growth. What form it will take is not clear. I would guess that there will be a segment at the upper end of professionalism (not the upper end of price necessarily) that will involve continued consolidation, acquisitions, technology and centralized processes that will improve the general guests’ experience. The center of the market, the small to mid-sized management companies that are not very aggressive, will struggle. The least professional portion of the market, the rent-by-owner segment, will get some benefit from technology provided by Homeaway and others, but continue to weaken the general guests’ experience and expectations. While the VRMA and increased national exposure to vacation rentals will encourage and improve the notion of standards and best practices, the industry as a whole will continue to be very scattered and disorganized.

Any parting words of wisdom or anything that you want to share with people about yourself or your company?

Mostly, I find that everywhere I look in the industry there are problems that arise that no one else seems to address effectively. So, there continues to be work. I guess that the combination of skills that I bring to the table continue to be fairly unique.

Thanks Tom!

Interview with RentalPreneurs on Yield Management & Dynamic Pricing

www.rentalpreneurs.com
www.rentalpreneurs.com

Here is a recent interview that I did with RentalPreneurs about Yield Management & Dynamic Pricing. Give it a read and let me know what you think.

While you are there, check out the library of knowledge and resources that RentalPreneurs has put together. There is tons of great stuff on this site!

Expedia’s Purchase of Orbitz Approved – What This Means for Vacation Rentals

Photo by Alexas_Fotos
Photo by Alexas_Fotos

Many have seen this coming, and the writing has been on the wall for quite a while now. With hotels firmly in place, it’s just a matter of time before one of these companies (Expedia or Priceline) dominates the vacation rental market.

I think this is likely to play out one of a few ways;

  • One of these companies buys AirBnb. My money is on Priceline given recent comments by their CEO. AirBnb is a cash cow and they are better suited to the hotel model. (Mostly RBO and willing to rent for a single night.)
  • Expedia doubles down on TripAdvisor (they essentially own it) and tries to crack the vacation rental nut. They definitely have the cash, though they have had plenty of time to do it without any significant results. TripAdvisor seems to be focusing more on hotels, and will likely decide that’s where the money is for now. Particularly given their less than stellar recent financial results, they will likely decide they can’t risk putting too many eggs in the vacation rental basket.
  • One of the companies make a strategic investment in HomeAway. I doubt an acquisition is on the horizon, though it could happen. My money is on Priceline given that Expedia already owns TripAdvisor and as mentioned above, Priceline is chomping at the bit to get into vacation rentals. (It’s also possible that HomeAway becomes a viable contender to Expedia and Priceline, but I think that’s unlikely at this point.)

Of the three, my money is on the first scenario, though I would not be surprised to see the third one happen.

What this means is that more and more bookings are going to be made through OTAs and the standard is going to be the “Book It Now” model. (I predict that by 2020 the majority of listings will be this way.)

What does this mean for vacation rental managers?

  • Diversify revenue streams – the majority of revenue for vr managers has historically come from rent. With OTAs and listing sites taking anywhere from 10%-30%, other revenue streams will become critical. This will include everything from additional charges to concierge services and damage waivers. (Companies like Discover Sunriver are doing some really innovative stuff with their loyalty programs. Check it out here.)
  • Yield Management – this is already an important part of revenue management, and it will become more and more critical as time goes on. The days of having two pricing structures (high season and low season) are almost gone. If you aren’t capitalizing on the nuances of supply and demand then you are falling farther and farther behind. (Read more on Yield Management strategies here.)
  • Direct marketing – Use the OTA’s and marketing sites to get new customers through the front door, then use direct marketing to past guests to keep them company back. This is going to become critical for survival. (Read here and here for more idea on this.)
  • Automate, automate, automate – Streamlined processes are going to be key to reducing costs. This doesn’t mean sacrificing that personal touch that differentiates vacation rentals from hotels. This means automating processes like check-in/out, keyless entry, auto-correspondence and credit card processing, etc. It won’t be cost effective to employ someone to manually send out guest correspondence and process credit cards for example.

The good news is that this is still just the beginning of the transition, so there is plenty of time to start making changes and gradually transition. You can start now upgrading units to keyless entry and remote climate control. Start now building a loyalty program and direct marketing campaigns. Explore new ways of driving revenue through additional services, referrals, and programs.

Smarter Marketing to Past Guests

Welcome back!
Photo Credit: Sarah Joy

One of the mistakes that I have seen many vacation rental companies make is assuming that anyone who has stayed with them before will stay with them again. Instead of regular communication to stay top of mind, they take a passive “If they had a good time they’ll come back” approach. The thing is, this doesn’t work. Not for the majority anyway. Maybe before online bookings and OTAs changed the game, but not now.

It’s just like dating. If you want to see them again you have to pursue the relationship. You can’t assume that because they had a good time the relationship is now defined. Customers are playing the field these days more than ever.

Not only are we constantly bombarded by tons of messages vying for our attention and dollars, OTA’s and listing sites spend millions of dollars a month to get those same guests to book through them. And they’re doing a really good job at it.

The good news is, you can take some of that ground back. While there are no hard and fast rules that ensure success, here are some guidelines on developing a successful strategy to bring your guests back to you.

1. Determine who your customer is. This may sound too obvious but it’s more nuanced than it appears. There is a particular demographic that tends to frequent vacation rentals in your area. Find out who they are and market to them.
Most reservations systems capture some kind of guest information that you can use to build out your customer profile. Is it mainly families? Outdoorsy types? Twenty-somethings? People with pets? Likely it’s a combination of several attributes.

You can cast a wider net but spend the majority of your efforts on your key demographic.

2. Target your offerings. With maybe the exception of holidays like Valentine’s Day and Christmas, a one size fits all approach doesn’t work all that well. Instead, cater offerings to different segments of your customer base. You can promote a relaxing or romantic “Weekend Getaway” for couples. A “Family Fun Week” for guests that have kids, or an “Adventure Weekend” for people without kids that includes kayaking, jet skiing, or rock climbing. 

Your reservation system likely won’t capture all of the data that you need, but you can make some educated guesses based on other demographics. For example, a younger (late 20s-early 30s) person that has never brought kids with them, and only stayed in a 1 bedroom condo/home is probably going to be more interested in an Adventure Weekend than say, the mid-40s couple that brought their kids and stayed in the 3 bedroom home with the pool last summer.

3. Cultivate a relationship with your customers throughout the year. Don’t just blast them with a generic “We’re still here!” message a couple times a year. Instead, focus on things like:

  • What information can you share about your area to get them thinking about the upcoming travel season?
  • What do they need to know in order to plan their stay and make the most of it?
  • Are there new attractions or events that would interest them? A restaurant that’s been getting national attention?
  • Are there things that they need to take into consideration when they travel? (Construction at the airport? Road work? An event that’s drawing tons of people? A new resort that’s causing congestion?) 

Become the expert on your area and share the important stuff with them.

Why would they be better off coming to your area and staying with you? Help them connect the dots. Blogs and social media can be great for this as well.

4. Play your booking curve. You’ll want to send out your ideas and offerings right before and right after the peak of your booking curve. The peak is that period of time that the highest percentage of bookings are made.

Let’s say for instance that July is your busiest time of year, and that the majority of those bookings are made 30-60 days out, in April and May. You’ll want to send your communication pieces in March, June, and August. This will spike interest during those slower times when you are less likely to get passive bookings (passive booking = when the guest takes the initiative) and can net you some additional dollars.

5. Have a compelling offer and call to action. Reminding guests that you exist isn’t enough. You need to prompt them to take action. Usually that means dangling some kind carrot in front of their nose. Maybe that’s a discounted rate. Perhaps it’s reducing the minimum night stay. Or a free night. Or two tickets to a local event. Maybe one free canoe rental. Or a round of golf. Whatever it is, make sure that it’s enticing to the audience it’s aimed at, and put a deadline on it. “Book by 6/20/15” or even “Hurry, space is limited and going fast!”

I realize that “discount” is a dirty word to many rental companies. Like it or not, the internet has taught us all to expect discounts. That’s just the way the game is played now. If you don’t have a compelling offer then chances are they’re going to take their business down the street. Whatever it ends by being, figure out what compels guests to book, and then offer that.

The other thing to consider is that, while you may end up discounting a bit to get the booking, you aren’t paying that % to an OTA or website that is going to do their best to make sure the guest comes back to them instead of you. Look at it as an investment in the relationship with the guest instead of a fee to the OTA. Plus you don’t end up eating the commission, you’ll split the rent with the owner.

One final thought regarding unit descriptions. Make sure that you write your descriptions to your target audience. Or at least the audience best suited for that unit. If it’s a house that’s outside the city, but guests like to go into the city for the day, then highlight the fact that it’s close to public transit and is only a 20 minute bus ride to downtown. If your guests rent cars make sure to call out that the unit has a garage, or that there is plenty of street parking. Highlight that it’s in walking distance to a grocery store, restaurants, or entertainment. Provide reasons to stay before they think of reasons not to.

All of these things take a little extra time and energy but they pay off down the road in a stronger relationship with your guests because you’re getting the right message to the right audience at the right time.

What are other ways that you have found build strong relationships with your guests? Put your thoughts in the Comments section. I would love to hear from you.

3 Powerful Ways Vacation Rental Companies Can Adapt to Changes in the Marketplace

Be prepared for change.
Be prepared for change.

If you don’t like change, you’re going to like irrelevance even less.” – Gen. Eric Shinseki

There is massive change underway concerning how vacation rentals are marketed, booked, and paid for online. We’re just in the beginning stages, but make no mistake, the industry is going through a massive shift again.

The fact is, like it or not, the genie isn’t going back into the bottle. Gone are the days when guests shopped out of a catalogue or brochure and booked their vacations several months, if not a year, in advance, and never tried to haggle over price.

Now guests compare prices, book at the last minute, and think they deserve a discount simply for shopping online. To complicate things even further, companies spend millions of dollars a month to convince guests to book their vacations through them, instead of picking up the phone and calling you. What’s more, the move is being made to allow guests to book your units without having to send an inquiry first.

The good news is, all is not lost. But it’s going to take some adaptation and that word no one likes, “change”.

Here are some things that you can do today to help ensure that your vacation rental business will be around for years to come.

Market to your past guests – I can’t encourage this enough. You are sitting on a goldmine in the form of your past guests and yet most vacation rental companies do not actively market to their past guests. This is the most important thing you can do that will offset people going to an OTA or listing site in order to book their next stay with you.

Contact them regularly (bi-monthly is fine) with compelling calls to action and offers. Just getting in front of them isn’t enough. Tell them why they should stay with you again instead of going somewhere else.

Target communications to specific segments of your customer base. Do you have homes that are perfect for families? Send an e-mail highlighting those units to past guests with kids and talk about all of the family friendly things that your area offers.

Have units that don’t seem to rent as well as the rest? Put together a “bargain” offering. Lower the minimum night stay for those units. Offer up to two tickets for a local event or show if they book one of the units by a certain date. There is a ton that you can do to keep your company top of mind with your past guests. Be creative and leverage your uniqueness.

Yield Management – If you don’t know what this is, you need to. In a nutshell, Yield Management is taking advantage of supply and demand. You can raise or lower your rates and minimum night stay in order to capture more revenue. More revenue = longevity and greater freedom.

Here’s one example of how you can leverage this. The majority of guests book holiday vacations (Christmas, New Year’s Eve, etc.) several months or more in advance. Determine how far in advance you get the majority of those bookings and charge a premium for booking during that period. Say you get the majority of your holiday bookings 8 months prior to arrival. Increase your rates 10%-15% for bookings that are made 8 months or more in advance.

On the flipside, determine the time period in which you get virtually no bookings for the holidays (usually a week or two before the date) and offer a reduced rate and/or reduced min night stay to capture additional revenue. The goal is to leave as little money on the table as possible.

Distribution – This has become the “necessary evil” for many vacation rental companies. Distribution channels like HomeAway, Airbnb, and TripAdvisor are here to stay. Like it or not, most travelers are going to start at these websites to book their next vacation. So having your units on these sites gets them in front of eyeballs that otherwise wouldn’t see them. The thing is, you don’t have to love this fact in order to benefit from it. Get the guest through distribution, and keep them coming back through direct marketing.

Here are a couple of guidelines for distribution:

  • Use what works. You don’t have to be on every site out there. Focus your inventory on the sites that drive the most bookings and ignore the rest. Even if what works is a little more expensive than what you’d prefer.
  • Make sure your units stand out. Take the time to get great photos. Write descriptions that help the guests see themselves in the unit and enjoying all that the location has to offer. Don’t assume that guests are going to connect the dots on why they should stay with you. Write photo captions. Highlight positive guest reviews and respond to negative ones. Don’t try to hide the fact that you got less than a 5 star review. The negative reviews give legitimacy to the positive.
  • Split the marketing costs with your owners. More and more sites are moving towards a commission based pricing structure and many vacation rental companies can’t afford to swallow the entire commission. It’s worth suggesting to your owners that in order to continue to participate on a particular website (which delivers $X a year for them) you can’t continue to eat the entire commission. All of the companies that I know that have done this haven’t regretted it. Some of their owners said “no”, but they’ve been surprised at the number that have said “yes”. Most people tend to be pretty reasonable and fair if you frame your request in a thoughtful, “win-win” sort of way.

Putting it all Together

Each one of these things is good to do but the key is to combine all of them into a cohesive strategy. What works best for you will depend on your location, type of guests, booking trends, and individual economics. It takes a little bit of time to find what works for you, but it is absolutely worth it in the long run.

If you need help getting started or aren’t sure how to figure out what will work best, I can help. Contact me and we’ll get started.

Vacation Rental & Travel News & Trends – May 15th 2015

Travel & Tech News
Travel & Tech News

Amazon is getting into the travel business. Right now it’s limited to the same type of offerings that Groupon and Living Social offer, but could a day be coming where you can book flights, lodging, activities, and rent a car all on Amazon? You can get everything else there, why not a vacation package?

One of the ways you can help your guests have a great vacation, and also stay top of mind with them, is to send them tips like these prior to their stay, and in your monthly/quarterly newsletter to them. Part of your brand should be that you’re looking out for your guests to ensure that they have a fantastic stay. (If you are not currently marketing to your past guests, contact me via the Contact tab and I can help you put a plan in place.)

Concierge via txt messaging is already here. This is something that I think will be commonplace in the next 5 years or so. The cool thing about this app is that it starts the guest experience 72 hours before they arrive. If they need fresh towels, they can just touch the “Towels” button and it will send a txt to the housekeeping staff to replace towels for their room.

You can already start doing this for your guests, and you don’t need a fancy app to do it. Buy a smartphone that guests can text day or night if they have a request or issue, and pass it around to different staff members each week to be the one “on call”. Give them $50 for each week they are on call as an added incentive. Your guests will love you for it.

Here’s an interesting article from Tripping.com about the amenities in your homes that add the most value. These are the amenities that should be front and center in your unit descriptions, pictures, and marketing material.

Until next week…

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How to Install New Vacation Rental Software in 30 Days

Changing Priorities
Changing Priorities

Alight, you have chosen your new software package, your staff is on board, and you are ready to go. So let’s talk about priorities.

The number one thing that will drag out a software installation, is not making it the top priority for your company. (Read that again.)

I have seen this happen time and time again. What should be a 30 day project (or less) is stretched out to 3-4 months or more because the vacation rental company treats their software installation like a “if we have the time” kind of project. And they usually don’t have the time. (The longest installation that I was involved with took nearly 2 years because the company put it at the bottom of their list of things to do.)

I get it, you have a business to run. Guests to call back, staff to help, issues to deal with, owners to keep happy, e-mail to respond to, lunch to eat (if you’re lucky). Not to mention a new software system to learn, a website to design, data to enter, choices to make, and a never ending project list. There aren’t enough hours in the day. Maybe if you had a larger staff you could make it a priority, but being a small company it just isn’t possible, right? Or is it?

I’ve seen small (3 person) vacation rental companies get completely up and running, staff trained, new website designed and launched, and all data entered into cloud based vacation rental software in under 30 days. They did it because they made it their #1 priority. Everything else came second.

They didn’t ignore the rest of their business. They just made sure that they got done whatever it was they needed to on their installation that day first, before they tackled anything else. They also put in a few extra hours here and there if it called for it. And they were happy they did it because it was all behind them before they knew it.

There’s an old saying that goes “What’s urgent isn’t always important, and what’s important isn’t always urgent.” Use this as a guide when approaching your software installation. There are a ton of things competing for your attention every day, but they aren’t all important, and they aren’t all urgent. Some of them, in fact most of them, can wait. At least for a few hours. What is important are the things that are going to help you reach your goals.

I recommend to clients that they make their software installation the focus of the first couple hours of their day. Come in, get your coffee, and get to work on the installation. Come in a little early if you need to. Don’t listen to voicemail, don’t check e-mail, or Facebook, or read the paper, or talk around the water cooler. That can all come later. Focus on your installation.

Watch videos, enter data, and follow up with your vendor, whatever needs to be done that day. (A good software vendor will provide you with at least a loose outline of steps that you need to take to complete the installation. If they don’t, or you need help in this area, contact me via the Contact tab and I can help you.)

Once you’ve completed your installation tasks for the day, then move on to e-mail, phone calls, voicemail, staff meetings, etc.

Now, there are some things like reservation inquiries and angry owners that can’t always be put off. But you can develop a plan to deal with these if/when they pop up.

  • Designate one member of your staff to follow up with inquiries while the rest of you focus on the installation. You made need to rotate who this person is on a daily/weekly basis.
  • If you get an e-mail or a call from an angry guest or owner and it just can’t wait, step away and deal with it and then come back to the installation. If it can wait, tell them that you need a bit of time to look into what is going on and that you will get back to them by the end of the day. Then get back to your installation tasks.

The truth is, we accomplish what we prioritize. So make sure that you are prioritizing the right things and your installation will run a lot more smoothly and be completed in a much shorter timeframe.

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