In sales there are a number of ways to impact success. Choosing to leverage several or all of them creates a multiplier effect that will ultimately result in increased financial success for the business.
So, what are the critical areas of focus for the hotel sales team and where should their efforts lie? The basic leverage calculation to improve sales success has five components:
Lead/prospects x Conversion rate = Customers
Customers x Transactions (return rate) x Average $$$ sale (average spend) = Turnover
Turnover x Margin = Profit
Let’s look at the impacts of each one.
1. Increasing the number of leads/prospects
Everyone in the hotel has a role to play here – the experience that a past guest has enjoyed will have an impact on how they act as an advocate for the hotel and therefore create new business opportunities.
However the Sales Team has a specific role in the way they manage their relationships. I have written before about the importance of being “front of mind” and this is just one way that will definitely have a positive impact on passive leads.
And following up on active leads is also the role of Sales – for example, if the Sales team knows that a business is organising conferences in a competitor hotel, they also know that the business has a need for conference facilities, and they have budget for such events. Why are they not choosing my hotel?
Active listening and questioning techniques will also help. If an existing client uses the word “regular” (for example “I am interested in booking a function room for one of our regular monthly board meetings”) it would be irresponsible to not question what other opportunities for business may exist.
2. Improving conversion rates
Simple sales skills are the answer here. This requires such things as good communication, the establishment of trust and the ability to overcome objections.
It also requires tenacity – according to the Marketing Donut 80% of non-routine sales occur after at least five follow-up contacts. They also say that only 2% of sales occur in the first meeting – and these are usually by people who have done significant research prior to that meeting.
The simple clue is follow-up, and maintaining the initial relationship through regular, meaningful contact.
3. Increasing transactions (return rate)
Once again, every single staff member of the hotel has a role to play in whether a guest returns or not. But in Sales, it is important to not leave this solely to chance. In other words, be pro-active!
The importance of being “front of mind” is once again relevant to this. We cannot expect our loyal clients to book with us 100% of the time. However, by being “front of mind” and becoming a trusted advisor we can at least increase the chances of them giving us the opportunity to quote. In order to achieve this we have to create meaningful opportunities to stay in touch every 3 months. And that does not mean just sending out a quarterly newsletter – the contact points have to vary, and have to add value for the client.
In addition, we want to make sure that our clients do not live in “the zone of indifference”. These are clients who continue to do business with us purely because it is too hard to change, or they stay only because it is corporate policy and not because they are passionate about the relationship they have with our hotel. People who live in the “zone of indifference” will change loyalty very quickly and easily when a viable alternative turns up. Sales can here by making sure they do not just develop relationships with the bookers, but also with the guests.
4. Increasing average $$$ sale (average spend)
Once again the sales skills of the team come into play. Looking for opportunities to cross sell and up sell is a must, and encouraging the team to focus on selling on value rather than selling on rate.
In sales it is important to recognise that as the perception of value increases, the perception of dollar decreases.
Ask yourself – what will you pay extra for? The answer to this question is as personal as it is varied. Some people will pay extra for convenience, others for brand. Yet other people will pay extra for relationship. Or for speed. Or “hassle free”.
Our guests and clients will buy when they see the value in doing so. It is the role of the salesperson to identify the needs and wants of the client so that they can deliver on value expectations in order to increase their sales success.
5. Improving margin
One of the first things to do to improve margin is to improve the negotiation skills of the Sales Team. Things like not starting a discussion on rate with phrases like “Our standard package is $X…but I can do better than that”! Concessions should not be given away right at the beginning. This applies in reservations as well – don’t automatically quote the cheapest rate, as so often happens. And don’t just sell suites because there is nothing left to sell.
It is also important that everyone who should know does actually know what the real cost of an upgrade is; or how much a complimentary breakfast actually costs; or a complimentary shuttle. There are some variables that cost the hotel and have a negative impact on the margin. Yet there are some variables that have little or no cost for the hotel, but a high perceived value for the guest. These are things like late check out on days with low arrivals, or even a welcome from a member of Exco on arrival of a group.
Sales people and others involved in making these discretionary decisions should be armed with all the facts to know how what they are doing is impacting the margin and therefore the bottom line.
Success in sales should not be left to chance. A targeted, strategic approach is required in order to achieve the sort of results that will deliver the sort of long term, sustainable success each hotel is striving for. By working on each of these 5 critical functions of leverage this success becomes more achievable.
About the author
A graduate of the Ecole Hôtelière de Lausanne, Switzerland, his hospitality career spans management and director positions in Front Office, Guest Relations, Public Relations, Food & Beverage and Training with organisations including the Regent of Melbourne, The Mandarin Oriental Hotel Group and Mövenpick Gastronomy. He was also a founding staff member of the internationally renowned Blue Mountains International Hotel Management School in Australia.
Tim is currently the Director of Training and Development at iperform, an organisation that specialises in Sales and Service, Leadership and Effective Personal Organisation programs.
