by Brenda Fields, May 15, 2006
Ensuring that the sales team is highly motivated and productive is an
ongoing process, regardless of the size or type of hotel property.
There are many ways to ensure success, one of which is incentive plans.
But, to achieve the desired results, it is important to know that when
it comes to incentive plans, one size does not fit all. Effective incentive
plans take on many shapes and sizes, depending on the needs of the property
and the business mix of the property. And as a note, an incentive plan
does not replace skilled sales managers working in an organized, professional,
and strategic manner. It should be the icing on the cake to ensure that
good sales people are going the extra distance and have added motivation
to prospect, overcome customer objections, and effectively handle product
or service deficiencies.
This article will address key components to consider in customizing
an effective plan which motivates and rewards the hotel sales manager and/or
sales team and at the same time, produces the optimal financial results
for the property.
Key Points to Consider and Questions to Address:
A hotel room is a perishable product.
Unlike other products, a hotel room has a very short shelf life. What
we don�t sell today is forever gone. Conversely, if demand exceeds our
inventory, we cannot produce more rooms to sell. Therefore, the key is
to sell effectively on a daily basis. Another factor is that hotel rooms
have varying values depending on demand patterns. The same room can sell
for widely different rates depending on the day of week and season. Selling
rooms in peak season usually is a function of �taking orders� rather than
excellent sales skills, which is required in persuading a group to book
your property over another one in a buyer�s market.
An effective plan is one which motivates and rewards the individual
and or sales team for great achievement and at the same time, produces
the best financial results for the hotel. Rewarding a team to book business
which actually displaces revenues happens when a basic understanding of
your business goals has not taken place or the strategic plan was not well
founded. So, before going forward with a plan, it is important to assess
the following for your hotel.
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What are your revenue objectives? If your rooms budget was zero-based
and if you have a firm understanding of your market conditions and competitive
set, you are in a great position to identify your needs and objectives.
Is the objective to obtain occupancy regardless of the rate or is it important
to achieve a high average rate at the expense of occupancy. Is it a priority
to sell banquet space along with rooms or is room sales the priority? These
answers will help lay the foundation for your sales incentive and help
determine if it is more effective to base the incentive plan on room revenues,
room nights, average rate, and catering revenues, or a combination. There
can even be several payouts, weighted based on the priorities.
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What is your mix of business and what are your booking patterns?
Understand the mix of business for your hotel. What are the natural markets
and what are additional markets to tap into? Transient and group
business have different travel trends as well as different booking patterns.
Transient business is usually booked 5-10 days out; corporate meetings
are booked approximately 1 month-3 months out; while association/convention
business is booked 1-5 years out. Each segment also has its own travel
trends, which many times coincides with peak seasons and peak days of the
week. Transient business is less quantifiable than meetings, as �potential�
is determined upon opening an account and may or may not actualize. Therefore,
transient goals could be established based on a combination of new accounts
opened with a specific room night potential and room night production.
Group goals can be established with a combination of monthly booking goals
and group production. Understanding these patterns will help establish
realistic goals for the sales incentive.
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Do your sales managers have sales call goals, entertainment goals, new
account goals, and client site inspection goals? An effective plan
incorporates the above goals. This insures that sales managers are prospecting
for new business and maintaining and developing existing business. An incentive
plan that is just based on booking goals can reward a sales manager for
only booking business that they inherited or business that was handed to
them. After awhile, this cycle stops and there is no new business. By establishing
sales activity goals and requirements and by making them part of the incentive
plan, the owner/manager is protecting his/her investment and long term
financial objectives.
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Group goals vs. individual goals? If it is important to remain flexible
with unpredictable market conditions or in a new property with no history,
it may be more effective to set up group goals as opposed to individual
goals, and tie the goals into overall rooms revenues as opposed to just
the sales segments. This allows a lot of give and take with all the segments
and focuses on what is ultimately best for the property. Or if the property
is stabilized, individual goals could be set to reward top producers to
focus on specific need periods.
Putting the sales incentive plan together:
The best plans have checks and balances to meet short term objectives
while ensuring that a foundation is laid to achieve long term objectives.
One way is to ensure that booking goals are tied into goals for business
consumed and that group cancellations and group pick-up are factored into
booking goals.
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After an analysis of your financial needs and objectives, you can then
determine:
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Incentive qualifiers (examples are meeting sales call goals, site inspections,
competitive updates, etc). Including qualifiers, places emphasis on sales
activities which will continually generate new business
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Incentive criteria/eligibility (For example, when is a new sales manager
eligible for incentive and what are the conditions of payout?)
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Booking goals
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Consumption goals
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Determine a payout schedule. Establish a schedule which will
keep the team motivated, while at the same time protects the overall financial
objectives. Quarterly payouts can motivate the team because of the frequency
of payouts. By tying it into an annual payout, the team will remain focused
on making up for revenues not met in order to achieve an additional payout.
With these tools, owners and managers are in a good position to create
and implement a sales incentive plan which motivates and rewards excellent
sales efforts while achieving short term financial objectives and providing
insurance for long term financial success.
This article was published with the permission of its author and Hotel
Executive.
About Brenda Fields
In
her more than 20 years as a marketing and sales pro in the hospitality
industry, Brenda G. Fields has emerged as the �go to� sales and marketing
consultant and for independent and/or privately owned hotels and resorts
seeking real-world solutions for today�s market challenges.
From small boutique hotels to large convention properties, Brenda has
created and implemented highly successful marketing and yield management
programs that enable owners to achieve target results despite market conditions.
With a �who�s who� roster of clients, Brenda has worked with a number
of industry leaders and real estate investment companies including Starwood
Lodging Corporation, Vornado Realty Trust and Planet Hollywood, John
Hancock Mutual Life Insurance Company, Olympus Real Estate Corporation,
and Apple Core Hotels, among others.
Brenda Fields can be contacted at [email protected];
or call 518 789 0117 or visit www.fieldsandcompany.net.t www.fieldsandcompany.net.
or phone 518 789 0117 or email [email protected]. |