Sol og Strand is a Danish vacation home rental company with a unique business model. In this interview, we’re talking to financial manager Jens Frandsen and eCommerce manager Jesper Kannegaard Pedersen about their priorities, payment solutions and vacation preferences from German customers.
Sol & Strand in a sentence (or two) #
Juliane: How would you pitch Sol & Strand in a sentence or two?
Jens: We are a company that offers rentals for holiday homes. Homeowners can apply their holiday homes, and we find them the right customers and connect them.
We have a lot of customers mainly from Germany but also from Denmark and some other countries.
Juliane: Yeah, we Germans love Denmark.
Jens: Yeah, and we love you. So that’s very good.
Juliane: So, in a way, you’re offering the marketplace for homeowners and vacationers to meet and connect.
Jens: Yes. Many people are convinced that we own the holiday homes, but we only make the connection between the two parties.
We are owned by a foundation that was established in 2019 by the founders of Sol & Strand who donated their ownership to this foundation. We donate money to local charities.
And that is our main objective. It is our guiding star as we call it. We make money, so we can donate it to people and organizations who need it. And that’s quite unique, especially in the holiday rental space.
Juliane: Which is also a good reason to book with you specifically. What other advantages do customers have that book with Sol & Strand?
Jens: We live for high quality and great service. We’ve recently sent out questionnaires to our homeowners, our customers and our employees to measure the CSI score (customer satisfaction index) and got the highest score rating.
We will go out of our way to help customers, and we have very high standards for the houses we rent out. We will even reject attractive houses, for example, if the location makes it impossible to provide the service our customers need.
The golden rule for collaboration: aligning on a common goal #
Juliane: So, Jesper has the marketing perspective and Jens has the financial perspective. Are there ever times when you have different goals? And how do you decide in these cases?
Jens: We collaborate very closely, since we’re not a big organization.
Jesper: Yes. I can have a stupid idea and then in a matter of minutes I can discuss it with Jens or the CEO.
Our main internal agreement with each other is simple: We must never compromise the operational side for a good idea. Because it might only be a good idea on paper.
How switching to SEPA solved a number of payment issues #
Juliane: Speaking of good ideas on paper and in practice. One of the reasons why we’re here is your decision to switch from traditional bank transfers to SEPA for German payments. Can you explain why you decided to switch? And did you entertain the thought of adding PayPal, since that is also a very popular payment method in Germany?
Jens: Yeah, we thought about it.
We always need to find a solution that works for the customers but also doesn’t cannibalize our profit. So, we did look at other payment options, but SEPA was the one with the best fit.
We have higher volumes for each house booking. Now, when you use PayPal, you have to pay a percentage of your booking amount, which works best for smaller sales.
SEPA, on the other hand, only charges us a set transaction fee per booking, so that makes more sense for fewer but bigger sales.
And we tested SEPA against manual bank transfers and bank-to-bank payments. And at first, we were unsure if our customers would maybe look for something else if they didn’t have bank transfer options anymore, but the switch did not deter them from booking with us.
So bottom line, SEPA costs less per transaction which is why we went with SEPA.
And Jesper and I did discuss PayPal. But I said that we’d need to make sure that we are not paying too much in fees.
Jesper: You know what, Juliane, this is actually quite an interesting case because it proves my former statement that even if I have a good marketing idea, the operation is always prioritized.
I’ve seen a lot of studies where PayPal was the preferred payment provider for a lot of Germans. I saw that around 40-44% preferred PayPal. So, with that in mind, I suggested PayPal and then Jens crunched the numbers and decided against it.
And that’s how we work together and how it should be. No matter the idea, we can’t compromise the business side.
Juliane: So, you tested the payment methods against each other, what were the findings?
Jesper: In general, we saw an increase for credit cards and for SEPA payments and even an increase for Apple Pay.
We were always told that Germans don’t pay with credit cards, and they will only pay in cash or via bank transfer. But when put into a situation where they have to choose credit cards, they will use them. It’s just a matter of nudging people to use the payment solution that you want them to use.
Juliane: Especially if the product or service is attractive. As a German myself, I don’t like paying with credit card, but if it’s something I really want, I will dig it out.
Jesper: Yeah. And in our case, our competitors don’t even offer any alternatives, they only offer credit card payments. And I think that’s a good learning, that you sometimes just need to make the decision and your customers will surprise you and adapt.
Jens: Another great thing about SEPA is that it goes through the Frisbii payment gateway and our bank. It’s very different from a manual bank transfer where the customers have to open their bank account, type in data manually and then wait 5-6 days before the payment is in our system and in our bank.
And this used to be an issue for us, because we have a rule not to hand out any vacation home keys before all payments have been processed.
Which means that you can’t book something on short notice with a manual bank transfer. If you book in the middle of the week, you will have to wait a full week – with the weekend included – until the payment is in our bank system. If your payment hasn’t gone through for one reason or the other, you won’t get the key code, and you will not be able to enter the house.
But with SEPA, it takes about 15 minutes until the payment is made, so you can get your code almost immediately.
Juliane: So, the switch had several advantages, not just the fees.
Jesper: Yes, the easy customer information input and the instant booking confirmation are big advantages because there could be quite a large gap in between the reservation and the payment in itself which would also decrease conversions.
We know that if you can pay immediately, the possibility of cancellation declines by almost 50%.
Jens: Because the booking flow is much easier and less interrupted. If you have to find the bank information, open your bank account, type in numbers and so on, you might take your time, consider alternatives, etc. But if everything can be booked immediately without much hassle, people will just go through with it. Everyone is happy.
Jesper: Yeah. And this streamlined approach also creates trust.
You get so many emails each day, so a long pause between payment and email confirmation might cause confusion and irritation. An immediate confirmation that looks official and sleek, on the other hand, feels professional and trustworthy.
By the way, something interesting we also saw during our own tests was that the conversion rate increased in general. And we don’t know why but it increased by 8,32% just because bank transfer wasn’t an option anymore.
Jens being a data man would say that doesn’t make any sense and it doesn’t, but I’ll take it (laughs).
The ideal payment gateway wishlist #
Juliane: When picking Frisbii for the SEPA switch, what was your wish list for a good payment solution?
Jesper: Be smooth, be operational, be stable, I would say.
Jens: Stable, cheap and compliant. That is the main objective in my opinion.
Juliane: Bottom line. It’s important.
Jesper: Yeah. it’s a very crucial thing. However, uptime is also very important, and it has to be trustworthy, so if the customer uses it, they feel secure, so they don’t cancel the payment half-way through.
Juliane: Absolutely.
Jens: It’s also very important that we can trust the payments that come through our system and that the API is trustworthy. I’d rather pay a bit more for a payment gateway if I can be sure that everything is correct because it saves me time and trouble.
Bonus round: Denmark vacation fun facts #
Juliane: I actually have a question that’s rather personal. Back when I was a child, my parents always got together with their friends and booked specifically Danish houses for New Year’s Eve. And I was wondering if that is still something that’s very German and if there are favorite seasons for German bookings?
Jesper: The German’s book all year round (laughter).
And then there’s, of course, peak seasons. Easter is a big thing, and then you have the holidays in the summer and autumn. And that covers a lot of weeks because German holidays are slightly different depending on the federal state.
We’ve noticed that Germans go primarily during the school holidays.
Juliane: Which actually answers my next question. And I don’t know if you can track this, but do you have more families, more couples or more groups of friends as customers?
Jesper: Oh, that depends. I have actually just done a presentation. The main segment in Germany is couples without small children and with dogs*. 62% of all bookings had at least one pet.
*But bear in mind, we define children as kids under 12, so teenagers are not counted as kids here.
Juliane: That’s a lot.
Jesper: Yeah, couples without kids had a booking total of 24%. And groups without kids 13%. Groups with kids are at 30% and couples with kids is at 12,5%.
Our next biggest segment is couples that choose luxury amenities such as swimming pools or maybe a jacuzzi.
Juliane: Is there a trendiest location for German customers?
Jesper: The most popular place is primarily the Danish West Coast.
Juliane: Do you have any idea why?
Jesper: We know from studies that the biggest motivation for Germans going to Denmark is the beaches. It’s the nature, the water, the coastline. The beaches are very wide, Denmark is a very reliable place, it’s not dangerous and you know what you get.
The weather is stable; the Danish local population is easy-going. And the beaches in Denmark are not as regulated as they are in Germany. That’s a major motivation and also why there’s so many guests with dogs. Many German beaches don’t allow dogs but here, our guests can bring their dogs to any beach they like.
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