July 10, 2015 — In 1983 I worked for one of the first Timeshare companies that paid their sales reps a flat monthly salary of $1,800 ($21,600 annually). We had full benefits and earned an extra $100 bonus on each week we sold. Each rep was required to make 2-3 sales each week so on an annual basis we’d earn about $40,000. Today, adjusted for inflation the annual salary would now be $52,422.00. The $100 bonus would now be $243.00 and the $40,000 potential annual total would now reflect a gross yearly income of $97,078.00 (plus full benefits).
So Here’s The Scoop: Interestingly, back then we worked a 40-hour work week with two days off each week as well as paid vacation time and that flat salary back in 1983 worked out to be about $11.00 per hour. Today, adjusting for inflation that ‘hourly’ would now be about $27.00. Of course the other developers during that era thought the company was nuts for providing a livable salary, the bonuses, the benefits and paid vacation time because most of them didn’t and sadly, 32 years later, most still don’t.
Anyone in our industry who pays attention to the news is keenly aware of “income inequality” and/or “the erosion of the middle class” in the USA and around the world. Well, it is true – and some of us have seen it happen year after year – and within our industry as well.
I’m not blasting timeshare developers but do want to point out that many successful and well-managed sales-driven Fortune 100, 500 and 1000 companies in other industries do pay their reps a livable salary with bonus and benefits, etc. And they do so not because of a law or because they are ‘nice’ or are overly ‘soft, warm hearted, fuzzy and caring’, etc. They do so because it profits them quite well.
At the same time those entities also have rigid hiring standards as well as a professional training curriculum. Some, indeed, train their new ‘reps’ 40 hours a week for one, two, three or more weeks before they allow their new sales people to meet with their first prospect and the reps are paid that livable salary throughout the training.
The end result is not only increased sales but these companies have a low sales rep turn over ratio and because their reps are fully trained they are positive, upbeat, professional and 100% confident, etc. representing their company, their products and/or services. And because they have a livable salary they are not inclined to be less than truthful during each sales presentation in order to have a paycheck each payday to feed their families.
And that ‘payless’ payday that has plagued our industry for the last 50 + years is likely the number one cause and effect regarding the often costly lies that have been told on those magical little round tables from time to time because most reps have bills to pay, kids to feed and other such realities that require immediate, ongoing, never ending, recurring and/or periodic payment.
And speaking on being less than truthful in Timeshareville, another issue that has affected unknown scores of thousands of reps in our industry over the past couple of generations is that they have absolutely no control over the quality or quantity of the prospects (sales guests) they attempt to sell.
That, too, being true and with the cut off to the next paycheck being (e.g.) two days away and with nothing on the ‘books’ during the pay period and those pesky pending bills – well, if a rep doesn’t have a bunch of money in savings they’d be inclined to say anything to make a sale in order to generate some cash flow (income) they know they must have, at the latest, by the next payday.
The primary argument against providing a livable salary plus bonus, etc. for timeshare sales reps in our industry is, in part, deeply rooted in that continued 50-year + notion that ‘you’re only as good as your last deal’ – that ‘An Up Is An Up’ – and ‘either you sell them or they sell you’ nonsense. Sink or swim ‘baby’!
The other argument against paying a livable salary plus bonus, etc. is the ‘cost’ to the developer but that, too, is not quite the total story.
Today, for example, if 38 sales people working for a developer reported to the ‘office’ (sales center) and earned a livable hourly salary of $27.00 for a 6 hour work day that would mean the developers’ obligation for the day would be $6,156. Yes, that seems to be a pretty hefty daily debt until you consider the following (taken directly from all developers’ play books).
Using those 38 reps with each rep having two (2) selling opportunities today the developer will provide them 76 sales guests. If these 38 sales reps collectively closed (e.g.) 20% net then the developer would gain about 15 new owners/members today and if the average contract price was $15,000 the volume for the day would be about $225,000; representing a $2,960 VPG.
Now, for the kicker: In order to pay that whopping $6,156 daily livable salary – the developer would only have to increase the selling price on each of those 15 contracts from $15,000 – now brace yourself, to $15,410.00 (about 2.73%).
A modest $410 is all it would take to pay these 38 reps a livable daily salary of $27 per hour and guess what else? As most closers know, often they will be able to collect that $410 at the POS (point of sale) along with the other down payment requirements.
And so there you have ‘it’ developers, but don’t shoot the messenger. Instead just imagine the outcome if you simply tightened up your hiring practices a notch or two as well as your sales training, your sales quest qualifications, etc. and paid your reps a livable salary, benefits and a decent bonus structure.
And as for that bonus? Funny thing about those because if each payday a rep knows they can count on ‘X’ dollars to meet their financial needs that bonus structure can be modified to benefit ‘the developer’ and be paid out monthly, quarterly, every six months or annually – as long as it’s paid – and most reps won’t mind.
Of course on the down side is that sales, revenue and profits will soar; your employees would remain loyal, rep turnover would be much lower – and those costly rescission percentages would plummet like a ‘nose-bleed drop’, so to speak!
Good Luck Out There!
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Contributing sometimes extravagant, bombastic, emotional, pompous or even pretentious writings about the timeshare industry (but always spot on!), Scoop covers an array of industry related subjects each week including inside information, tips, scandals, interviews, forecasts as well as new (good or bad) products and services — and, of course, all the ‘Good’, the ‘Bad’ and the ‘Ugly’.