| Often management does not closely
monitor sales effectiveness when things are going reasonably well.
Market share is respectable, REVPAR shows improvement over the previous
year, a perfunctory skim of the weekly sales reports reveals an acceptable
level of activity, they always appear to be busy going out on calls and
doing site inspections. Life is good! Or is it?
When demand is high and the issue is one of managing the yield, sales
departments can become confused as to the goals (“Do you want the business
or not?”) and management is often less than clear on tying yield management
goals to sales production goals and incentives. Sales people, sensitive
as they are, become discouraged by what they perceive as mixed messages
on rate versus occupancy.
Let me just say at the outset that what follows is not meant to impugn
the integrity of sales people. Sales people are my favorite people
in the whole world next to Ops people who keep the guest happy and count
the beans that sales brings in. However, the fact of the matter
is that nobody does what nobody checks and employees only understand what
is important to management by the questions that are asked. It is
only human nature not to care about a part of the job that management never
monitors which is consequently perceived as unimportant.
There are three distinct areas that can assist management in measuring
sales effectiveness;
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Defining the areas to be evaluated;
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Monitoring sales performance in relation to the above areas and
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Designing incentives to reflect Management’s goals for the property.
Defining the areas of evaluation.
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How do you set sales goals? Do you establish call quotas or revenue
quotas based on the success of top line room revenue in relation to budget
and last year? The fatal flaw with call quotas is that they are easy
to fudge (not that anyone on your staff would ever do that) and a lot of
calls made without enthusiasm or with poor sales skills fulfills the quota
but does nothing for the property’s revenue.
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What reports are you requesting from your sales people? The reports
that you request communicate to them what is important to you. If
you are asking for raw numbers of calls without any information on who
was called and why, you are not getting the whole picture.
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The next one is tricky but evaluating sales activity in relation to potential
revenue is critical to maximize productivity. For example, is too
much time being spent on developing low-rated contract or SMERF business
when the denials reflect higher rated demand is being lost? Have
you targeted the market segments most likely to give you business at the
higher rate and restructured the department’s market segments and time
allocations accordingly?
Monitoring areas of sales performance.
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When a sales person comes victoriously into the office or calls to announce
a great piece of business that has been booked, do you ask how this lead
was generated – did we develop it or was it an inquiry? One reflects
skill, the other order taking.
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Are you assessing the mix of calls? How many are calls to new prospects,
how many are routine traces, how many are outside calls? Of those that
are traces, where in the sales ‘pipeline’ are they – at the qualifying
stage, negotiating the contract or closing?
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Do you spot-check weekly reports? There is story about Curt Carlson, founder
of Carlson companies (if I need to mention Carlson Travel and Radisson,
then go back to hotel 101), that may be apocryphal but is a shrewd lesson
for all managers to learn. It is said that when he held meetings
with his division heads, he asked them to bring their P&Ls on overheads.
He would then project them on a screen and pick several line items at random
on each sheet and inquire as to what that number represented. His
logic was that if a division head could explain everything that was in
that number, they knew what was in the rest of their P&L. Do
you routinely pick items at random on the sales reports and inquire as
to how we got that prospect, what went on during that call and where we
stand with that prospect?
Designing incentives to reflect Management goals.
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Is your sales department responsible for total room revenue of the property
including transient and group? If not, they may overbook group blocks
at the expense of transient to fulfill their group goals.
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Does your sales incentive program reflect your fluctuating seasonal goals,
higher rates when demand warrants and higher volume in the off seasons?
I have clients, Patrick Henderson, Vice President and Vicki Sare, GM at
the Holiday Inn in Sheridan Wyoming who were looking for a way to increase
the group rate and lower group volume in the busy summer season.
Sales was booking a large volume of group business in summer at significantly
less than rack rate. An examination of the incentive program revealed
that the sales incentive plan was based on annualized group revenue and
the demand for group rooms was significantly higher in the summer than
in the winter. Therefore, if the sales department was going to make bonus
they had to ‘make hay’ while the sun shone in the summer. By re-weighting
the sales incentive program so that group rooms booked for the summer months
account for a smaller percentage of their annual bonus with a much higher
percentage for group business booked in the winter, they are able to re-direct
their efforts and benefit both themselves and the property’s goals.
The urgency for measuring sales effectiveness when demand is high may seem
to be misplaced but is your hotel doing as well as it could be doing?
Remember, a rising tide floats all boats and when the tide begins to go
out (winter is coming and so perhaps, are new hotels in your market), it
is those properties with sharp sales efforts and the methods for measuring
that performance that will thrive.
Carol Verret and Associates, Consulting and Training specializes
in results training for sales, front desk and customer service and consulting
for the hospitality industry.
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