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By Ed Skapinok, Chief Marketing Officer, Makr Hospitality, and Immediate Past Chair of HSMAI’s Sales Advisory Board
As the industry begins to stabilize, it has become increasingly clear how drastically priorities and strategies for sales leaders have changed over the past year. On a recent call, HSMAI’s Sales Advisory Board (SAB) members discussed performance measures, resource allocation, and goals/incentives — three areas of business planning that are important to consider when budgeting for 2022 and beyond.
Questions that sales leaders should ask when making budgeting decisions along with key takeaways from our discussion of these questions include:
PERFORMANCE MEASURES
Questions to ask yourself:
1. Will you measure performance differently next year?
2. How are you dealing with forecast accuracy and fluidity of demand?
3. Are you budgeting using a 12-month rolling forecast or quarterly targets versus annual goals?
4. Are you valuing new business versus repeat business differently than you have in the past?
5. What benchmark years are you using — 2019, 2021, or some other time period?
6. What leading metrics are you looking at?
What SAB members said:
- “We have been doing 12-month rolling forecasts. We wrote our budgets last year, projecting CBRE and Kalibri Labs’ projection for each of our markets, and then adjusted them as needed based on RevPAR index by hotel. I think that’s a practice we’re going to continue going forward, because it has been a successful process and it’ll minimize the amount of work in preparing for budgets.”
- “We are just focused on our forecast right now, and we haven’t gotten to any type of rolling 12, but we are starting to pay much more attention to budget because we’re actually overachieving our budget right now since we under-forecasted for this year.”
- “We haven’t even talked about budgeting for next year yet. I think we’ll probably wait until the end of summer to get as much data as we can. The remix of business is going to be at the heart of our decisions, but so much has changed as far as demand in just the last three weeks, we want to wait as long as possible.”
RESOURCE ALLOCATION
Questions to ask yourself:
1. Has your sales strategy changed, or are you planning to return to a similar business mix from before the pandemic started?
2. How do you expect your financial resource allocation will change? Will sales department expenses be higher, lower, or the same as a percentage of revenues as in the past?
3. Will you be modifying or introducing any new sales enablement systems or practices?
4. What are you most likely to reduce or eliminate from your budgets?
5. Will you be making any changes to your team’s physical sales activities like travel, FAM trips, trade shows, conferences, etc.?6. Are there any changes to your labor model or sales deployment?
7. Do you plan to outsource any work either externally or internally to other departments?
What SAB members said:
- “The hardest part for writing business plans for next year is not being sure if this leisure phenomenon will continue or if it’s just a result of tremendous pent-up demand and figuring out how much of the leisure pent-up demand is going to be replaced with the reemergence of business travel. I’m less worried about what the total numbers are going to be, because I think that’s a little bit easier to predict, but more concerned about where the segmentation is going to fall because that remains very much unknown.”
- “One thing that is already challenging me is that marketing funds are still going to be constrained. We’re trying to plan for 2022 in terms of all of the normal events that we participate in and everybody is very anxious to get back in front of customers, but trying to figure out what the relevant events with the highest ROI are going to be has us scratching our heads right now.”
- “We had a vibrant reopening last year, and we’re still looking at this as an opportunity to steal some share from other segments of the market that are just now starting to open up. We’re hosting a few customer events this fall. It’s a different strategy for us, but we’ll see how it works.”
GOALS AND INCENTIVES
Questions to ask yourself:
1. Are there any changes to incentive plans from the past?
2. Are you moving from individual to team incentives, vice versa, or some other combination?
3. Are you factoring in qualitative in addition to quantitative goals?
4. Will you introduce new gatekeepers on incentive payout (i.e., GOP)?
What SAB members said:
- “With unemployment so low, we’re considering if we need to change our incentive structure in general. With off-property sellers, we usually only paid yearly incentives. Do we need to move to quarterly? Do we need to move to an uncapped? Do we need to have a half-yearly check-in?”
- “I’ve always been a huge advocate for quarterly payouts with a year-end holdback. You don’t want people to blow it out one quarter and then coast for the rest of the year. And on the other side, you don’t want someone to fall behind early in the year and when they see that they’re not going to hit that year-end target, they don’t have the incentive to work hard.”
- “As an industry, we have to move to a different model, because we don’t retain talent. If you’re a really good hunter, you’re going to go sell pharmaceuticals or technology and make a larger percentage of the revenue that you derive. Unfortunately, what we’re finding as an industry is that we just can’t be competitive for top salespeople. The only route for them to earn more is to move up to a director position, but leading isn’t everybody’s skillset.”
- “My sales incentive plan has three components — individual performance, team performance, and market share. I slide the relative weights around on those based on your level in the organization. A component of my team goal has always been tied to GOP, but it’s not necessarily a gatekeeper to say you don’t get paid if we don’t hit GOP, because during bad times we need salespeople to be selling, even if they’re not hitting the targets from the beginning of the year — because we’d be worse off if they weren’t trying.”