By Doug Kennedy
It’s the time of year when hotel sales leaders are finalizing their budgets for the coming year, and 2022 is certainly a challenging one to set sales goals based on KPIs. First, let’s look at what has been done historically and then explore alternatives.
For approximately 10 years leading up to the recent pandemic era, budgets were increased each year, divvied up, and turned into individual sales goals that were then tied to bonuses. With the seemingly endless string of years of an up market, sales bonuses became an expected part of the compensation.
Were these sales bonuses truly justified based on performance? Or were they achieved mostly due to good fortune?
For years now KTN has offered our training clients an optional pre-training forensic style “sales process assessment” that has provided me with a behind-the-scenes peek at sales activities across a broad spectrum of properties. We sit with each salesperson, visit their lead intake source (often email folders) from about 60 days prior, randomly pull qualified inbound leads, then ask the salesperson to show documentation of related sales activities. This includes email exchanges, in-app correspondence on platforms such as CVENT, and notes from phone conversations (where they occurred), primarily looking at three things:
- Timely, tenacious, and proactive follow-up actions.
- Personalization of follow-up correspondence and messaging.
During this time we also ask about processes in place for outbound prospecting. Where are the leads sourced? Are these efforts tenacious and personalized as well?
Often, a sales director will say “Chris is our best salesperson. They killed their sales goals for the last three quarters.” Yet when I conduct the above process, I find out that in fact Chris did not typically follow up proactively, and when they did, the follow-up was generic, and Chris’ prospecting consisted of randomly sending generic emails or LinkedIn messages to randomly selected contacts.
Over time, after several years of conducting these assessments through February of 2020, it became obvious that too many times salespeople like “Chris” thrived mostly because of an up market.
When budging for 2021, some operators were more realistic than others and budgeted for lower demand, while others forecasted the most optimistic scenarios. Some decided to go ahead and bonus their sales staff for 2021 despite budget shortfalls, and where that did not happen, many salespeople were content just to receive their base salary while so many of their industry colleagues were furloughed or laid off.
Looking ahead at 2022, market conditions remain uncertain and the economy could swing wildly. Perhaps herd immunity is reached, new Coronavirus cases decline, and pent-up demand causes a huge rebound. Or perhaps new variants emerge that require time for vaccine updates, consumers and companies alike grow more cautious, and demand flattens or declines. The most likely scenario is somewhere in between.
I am imagining most hotel directors are feeling more than a little angst about budgeting for next year. What is a realistic number to ask? What is fair to ownership, yet also fair to our salespeople? Set goals too high and they will soon become unattainable; set them too low and the sales bonus will once again be an entitlement program.
But there is a third option for 2022 and beyond. Perhaps it’s an option that should have been used all along.
It is time to factor “sales process excellence” into the equation. Now, the “DOS textbook” says “results are everything” and “revenue in the bank” is the only way to measure sales. But if you ask me, this mentality created what I call the “decade of profitable mediocrity” in hotel sales. In other words, sales goals were easily met even with very poor sales process performance, and too many salespeople lived off of a generous flow of inbound leads.
Of course, sales KPIs should include a revenue component, especially for hotels that have more predictable market segments that tend to perform well regardless of the overall economy.
However, it is time that sales leaders also factor in KPIs related to excellence in sales process. If your hotel’s market segments are steady and predictable for 2022, compliance with pre-set KPIs might be around 20% of the bonus. In other words, if forensic audits show compliance, salespeople receive their full bonus; otherwise, they only get 80%. Or if your hotel is facing extreme uncertainly, admit that your sales goals are simply a best guess and factor in compliance with sales process KPIs as high as 50%.
It is easy to conduct your own forensic sales audit. Just randomly pull 10 or more leads each quarter, then ask each salesperson to show you their action steps as documented in your sales CRM and in-app message exchanges. (First though, you may have to mandate that your salespeople correctly use their sales CRM!)
What are the KPIs for sales process excellence? Here are some ideas:
- All “right-sized” inbound sales leads are responded to within one business day. If more time is needed to draft a proposal, an acknowledgment of the inquiry will go out promptly.
- For leads received in platforms that require an in-app response, if an external email is included, then a direct email response is also sent so you stand out from other respondents.
- Personally I believe that the initial response should also include a phone call. Some say that “If the prospect wanted to talk they would have called” or “Today’s planners don’t like talking on the phone.” Don’t believe it. Okay, some planners might sound busy or a bit cranky when first answering, but most will open up when they year something like “…I have read your RFP and just have a few brief questions that can help me provide a more personalized response.” Similarly, prospects will respond favorably to well-worded voicemails.
- All correspondence must be personalized and contextualized, not simply a generic proposal or copy/paste text. Did they paraphrase, summarize and restate needs? Did they address all specific details mentioned? Did they delete from the template used all text and images that were irrelevant?
- Did they send a full proposal or contract within 3 business days or less?
- Did they follow up at least two additional times, and by two different mediums (phone call, email, in-app message, and/or video email?)
- Where phone conversations or in-person meetings happened, are there notes to document what was discussed?
- Regarding prospecting, has it been done consistently over time and not just rushed to complete X number of cold calls by Y date? What types of research was conducted to identify sales suspects? Did the salesperson reach out to each qualified prospect at least three times? Did they use a blend of mediums, vs. just sending three emails? Was the correspondence personalized and not generic?
By factoring in KPIs relating to excellence in sales process, if 2022 turns out to be another tough year for demand you can still reward effort. Alternatively, if 2022 brings a windfall of revenue from pent-up demand you will ensure that salespeople go beyond meeting goals and instead maximize every opportunity.
