News for the Hospitality Executive |
Open Sales Positions: Can You Afford Them?
June 2012 There is an old adage that states: "You have to spend money to make money." Never will truer words be spoken than over the next several years. Virtually every industry and every operation has been cut to facilitate shareholder value, operating capital conservation, or owner return. So where, you may ask, is revenue coming from? Your sales channels and your sales teams — the same teams that have seen their leadership eliminated, their FTE's reduced, their travel curtailed, their customer centric funding lost, their training eliminated over the last three to four years, and who have struggled to become proactive after our "fun run" of 2002-2008. With demand beginning to show signs of life, and occupancy still the driving factor in REVPAR growth, you are likely having to fill more rooms at nominal rate growth with a smaller staff who are more than likely underfunded, under trained, and probably not as efficient or productive. Simple math in today's dollars tells us that the cost of an open / unfilled sales position is nearly $2,300 a day or $1,300 in profit (See table 1). Annually, that could represent $850,000 in top line revenue and almost $500,000 in profit. Who can afford that? Table 1 Sales Manager annual goal of 5000 room nights Conversely, should you opt to keep that position open for an entire year (See table 2) your savings will equal a mere $81,400.00 providing you with a net profit impact of ($411,600). Table 2 Sales salary of $55,000 per annum For every month you leave that position open you are losing $34,000 in profit. Naturally there is a point of diminishing returns in sales staffing but as you re-energize your capital spending you should also be reevaluating your sales productivity and return versus loss. With new supply filing the pipeline, a shrinking labor pool as our population ages, more specialization within our industry, a sales environment where many people came of age in an "order taking" economy (and who stumbled in a proactive selling environment) the questions are: who will lead, who can sell, how good are they, and do I have enough of them? We have all seen the impact of discounting as our sole means of demand/revenue generation. Now with demand growing how will you shift your mix to become more profitable by bringing back the higher paying customers? Correct sales staffing and deployment are the keys. Utilization of interim solution partners such as Strategic Solution Partners allows you to address the dynamic environment of change we face with aggressive and experienced personnel. So as you look to improve you future revenue performance, assess the following:
"You have to spend money to make money"
Reprinted with permission from Cayuga Hospitality Review. All rights reserved. |
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Cayuga Hospitality Advisors |