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Measuring Effectiveness of 
Hotel Sales Departments
 
Carol Verret / June 2000
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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; 

  1. Defining the areas to be evaluated; 
  2. Monitoring sales performance in relation to the above areas and 
  3. Designing incentives to reflect Management’s goals for the property.
Defining the areas of evaluation.
  • 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. 
  • 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.
  • 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. 
  • 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. 
  • 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?
  • 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. 
  • 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.
  • 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. 
© 2000 all rights reserved 


 
Contact:
Carol Verret
  3140 S. Peoria St, PMB 436
  Aurora, CO 80014
Web Site: http://www.carolverret.com/
Email: carol.verret@worldnet.att.net
Also See Hotel Sales Training - The Need for Immediate Results / Carol Verret/ May 2000


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