August 13, 2010 — Be advised that your most recent recommendations to curtail costs in our sales departments by cutting back on specific expenses (such as replacing the 12-oz plastic cups used for serving beverages to sales guests with the 6-oz cups) has been implemented, along with disallowing representatives from consuming any refreshments, which are now reserved exclusively for said guests.
Additionally, the suggestion to increase each sales and marketing rep’s quarterly sales quota for the purpose of bonuses at the reduced rate, as well as the lowering of standard commissions and SPIFFS, will also go into effect immediately.
However, it has been brought to the Board’s attention that there may be another area that requires your department’s analytical perspective. And that is the hard costs associated with our representatives (administrative, marketing and sales) touring sales guests who are deemed “qualified” under the current income requirements (combined weekly pre-tax [gross income] for a family of 4 of $769.23) that has been the guideline since 1995.
First analyze and project the potential net weekly disposable income of these sales guests so that the Board can determine the likelihood of a family being able to afford a (e.g.) $20,000 Interval, including finance charges at the current 14% rate, annual maintenance fees (average $680 per week), exchange fees (average $190 per week exchanged), airline tickets (several hundred to thousands of dollars per year) and all other expenses associated with a family vacation either regionally or abroad, by air, sea or ground.
Secondly, analyze the net closing percentages of these sales guests, the average net contract price, and the actual default ratio of those who become owners, including the rescission percentages. Then compare those numbers in relationship to the actual fixed cost (administrative, marketing, sales, etc.) associated with these tours.
Thirdly, provide a cost of living breakdown of these sales guests including, but not limited to, all income tax liabilities, monthly mortgage (or rent) obligations, annual property tax liabilities, car payments (including insurance) and other related expenses such as food, clothing, medical, dental (insurance and/or out of pocket), household supplies, personal care products, child-care, school supplies, savings, investments and other miscellaneous expenses. Compare those factors in relationship to the sales guests’ domicile, specifically their region (e.g. S. West USA) in relationship to the current and projected economical outlook for those areas, regional income comparisons and/or variations and other financial factors that differentiate one region from another.
Lastly, the 1099 status of our marketing and sales reps is being challenged and we may soon have the additional cost of a guaranteed minimum wage and/or base salary. The associated hard costs that will be incurred with that process must be calculated and factored into the net profit potential of these minimum income tours as well.
Please crunch those numbers and get back to the Board ASAP!
That Is All!
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