By the HSMAI Sales Advisory Board
In 2015, ZS Associates and The HSMAI Foundation published its report on Sales Incentives Practices. As you begin the new year, here are five ways you can use the findings of that report to improve performance and engagement among your sales team in 2016.
1. Communicate the incentive plan carefully and directly with each member of the team.
Incentive plans are most effective when the sales people fully understand them. Yet only about 50% of hotels and brands hold specific meetings to communicate their plans. The rest simply email them. To encourage greater understanding and enthusiasm, consider a purposeful structure for rolling out the plan to the team. If you are a DOS, take it a step further and meet with each member of your sales team individually. In the meeting, discuss how the sales person’s individual goals connect to the incentive plan.
2. Tie individual sales goals directly to the hotel’s goal and strategy.
Show your sales team how their work relates to the overall strategy and success of the hotel. Explain where the goal number comes from, and that it’s not just last year’s production plus a certain percentage. For example, if your bonus plan is tied to RevPAR index goal attainment, make sure each member of the sales team is thoroughly versed on how to read a STR report and what the current results are. Explain how “share shifting” business from a competitor hotel can impact your RevPAR index results.
3. Have a plan to communicate ongoing performance.
Sales people want regular updates on how they are doing, so don’t just present goals and check on them each quarter. Have a performance tracking tool that’s easy for your salespeople to access and use, so they don’t have to try to track their performance manually. Salespeople with timely access to performance reporting tend to be more satisfied and more successful with their compensation plans.
Some of the problems with compensation plans are related to the plans themselves, not the administration of them. If you design your company’s incentive plans or have influence over the design, these next two are for you.
4. Reward Top Performers
You want your sales people to sell, but many hotels and hotel companies shackle their top sellers with incentive caps. In many industries, high performers can earn three times the average payout. In the hotel industry, top sellers earn only about 1.5 times the average. That’s because 56% of plans have a cap on payouts. The best practice is to uncap those incentives, while implementing appropriate payout rates and rules to limit risk and unfair windfall payouts.
5. Limit metric components to three.
A sales person whose performance is measured based on room nights, total room revenue, total hotel revenue, and food & beverage revenue may have a difficult time focusing on all of those goals. More than three components can send mixed messages and dilute incentive impact as the available payout gets distributed across many individual buckets. When incentive plans become overly complex, the reaction from many salespeople is to ignore the plan and ‘hope for the best’.
In conclusion, we recommend logical sales goals and incentive plans, communicated clearly, along with timely performance reporting and increased pay for top sellers.
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