Hit the target with bonuses
One of the questions I am asked most frequently on behalf of independent or small group hotels is how they should reward their sales and marketing people with a meaningful bonus scheme.
There are three important principles to be resolved before a bonus plan can be formed. First, what do they believe needs to be rewarded? Second, who do they understand to be part of the sales process? Third, can they measure everything they do?
By measurement, I mean to include such basic sales information as denied business and conversion of enquiries. This is because what gets measured gets done. I have seen too many business plans with plenty of grand objectives and tons of activity, but little actual measurement.
So, once we agree on some meaningful, stretching but achievable measurements, what do we reward? Well, new business, either volume or revenue, accountable to an individual or a team.
If fighting off new competitors forms part of your measured plan, then retention of identified existing business should also be a consideration.
But keep it simple. In the first instance, decide on an acceptable range of targets. If the scheme is to be successful, it needs to be credible.
External sales people should have a bonus plan against identified market sectors, achieving new accounts or growing key accounts. These should be agreed before the beginning of the financial year, or understood if someone is joining a team within that year. You do not pay a bonus simply for staff doing their job.
Depending on your strategy, a bonus may be volume- or revenue-based. It should be paid on actual business achieved, not merely contracted. Sadly, I have found one firm paying large bonus cheques on contracted group business when the eventual reality was that less than 40% of business actually booked.
It is crucial that the business is tracked properly and that bonuses are paid promptly (at least quarterly) and with good grace. A discredited bonus system is worse than none.
Internally, those people who convert enquiries into revenue need their own bonus scheme - reservationists, receptionists and revenue managers.
Your people need better environments, time, space and tools to make a difference to your revenue. Look at follow-up, conversion and upsell, and reward them accordingly, weekly, or certainly monthly.
In the light of recent revelations about our industry leaders' salaries and bonuses, rewarding true measurable sales achievements is not only sensible but honourable.
Stuart Harrison is the principal of the Profitable Hotel Company and a Visiting Fellow of Oxford Brookes University School of Hotel and Restaurant Management. He is a Fellow of both the Tourism Society and the Chartered Institute of Marketing
