July 31, 2015 — You could say I love this industry that I have been an active part of for more than three decades but one of my big concerns, at least from an ‘employee’ perspective, is the shortsightedness of many reps, some developers and their management when it comes to understanding the value of the individual sales associate. I’m speaking specifically about those reps of the low-maintenance variety who will also generate a developer NLT $25 Million in sales, if given the opportunity. What do I mean by low-maintenance and $25 Million in sales you ask? Well, consider this short account of just one (1) new sales rep.
So Here’s The Scoop: By low-maintenance I’m referring to the many thousands of rock solid and talented reps over the decades who do not have personal problems that affect their work ethic or sales performance, etc. and who sell clean ‘deals’ (meaning no ‘heat’ – lies) resulting in minimal rescissions within the cancellation period. Oh, and for all practical purposes, and as much as is possible in the Land of Time – are team players, help others and are very loyal to the company (developer).
In fact there has never has been a shortage of those types of sales associates in our industry who have and continue to apply their trade at most of the sales centers around the world. But what really gets my goat is the threatening and narrow minded preaching from ‘upstairs’ that those reps are “only as good as your last deal”.
And that annoys me deeply because those who preach such rubbish rarely look beyond the next ‘wave’ or a few weeks, and they surely don’t look at or acknowledge the big picture as it pertains to the actual dollar value each rep is contributing to the company (developer) let alone the management overrides ‘they’ are earning from the long term sales volume those reps generate.
So, Dear Reps, Developers & Management: Did you know that if today were the first day on the job for a new ‘liner’, a ‘closer’ or front-to-backer and if that sales rep ‘sat’ on just two tables a day, worked 5 days a week and did so for the next 48 weeks that with a 25% net closing ratio and a minimal contract price of just $12,500 that rep would ‘write’ $1,500,000 (Million) in clean new business over the next 11 months?
Sure, ya all know that but do you also know that would equal 120 new owners/members (contracts) in less than one year and each of those ‘buyers’ will pay, usually within that first year, their annual maintenance fees (AMF) as well?
Yes, you know that, too, but do you acknowledge that if we use the new average AMF reported by ARDA recently (allegedly in the $800 neighborhood) that’s another $96,000 in the old kitty, so to speak, from this one (1) new team member who started ‘today’?
But I’m not done. Do you also know that if you could somehow manage to keep this one new rep on staff for just 60 months that rep would generate $7,500,000 in sales contracts (volume) and $480,000 more in AMF’s? That’s $7,980,000 and then there is all that interest on all those contracts financed.
I’m not done yet amigos y amigas. You see, at various levels a developer’s current management may not be around for the duration while the new sales rep I’m talking about may very well desire, God forbid, an actual career in Timeshareville – and maybe just with one developer throughout those years.
And if a developer could keep this one new rep on board for that (e.g.) 20-year ‘run’ did you know this one new rep, from their first day on the job, will generate NLT $31,920,000 in contracts and AMF’s? That’s $31.92 MILLION, Bubba!
And while I’m totaling things up I’m sure you would all agree with me that AMFs don’t usually go down each year. Indeed, every year or so they usually increase, on average, NLT 5% annually.
With that tidbit of information – the AMFs generated by this new career-seeking rep will total about $3,587,764.75 throughout their career. So that’s an extra $1,667,764.75 to be added to this rep’s total bringing the new value to your company to right around $33,587,764.75 (Million).
Of course over the ensuing years developers may increase their selling price for ‘time’, but I can’t calculate that because I just don’t know what that would be. However, I can calculate the probable interest a developer will earn from this career seeking rep on all those financed contracts (sales) – and that ain’t chump change to the developer.
Remember, in this example, I’m using a modest selling price of $12,500. Further, we’ll assume a down payment of 15% ($1,875), no closing costs and a 12% interest rate on 60 payments. Translated, each new owner/member for whom the developer (or whoever) is carrying the ‘paper’ will pay an additional $3,556.
As such, if this new rep sells 25% of their ‘buyers’ an all cash deal then the remaining 90 ‘clients’ each year will finance and over the course of this new rep’s career that will generate, in today’s dollars – an additional $6,400,800 (Million) to the developer.
Guess we better add that to the total this one new career-seeking rep will generate, which now brings said total to about $39.9 (Million) – and the way I see it that makes this rep a pretty darned good revenue and profit-generating source, an asset that should be treated accordingly.
To be fair I should calculate the default rates on those contracts, etc. but then I’d have to get into all sorts of other calculations that benefit any company that (e.g.) can write off losses, etc. so we’ll not bother with that today.
Instead – I’ll just say that the developer this rep is working for during his/her career will never raise the prices, will never increase the AMF’s, will ‘tote the notes’ at zero interest and will endure a post rescission period default ratio at some point in the future on all those ‘contracts’ of, say, 20%.
That still means this new rep, starting from day one, is worth and will generate about $25.5 Million for the developer (and their management) with the long view.
And for all you reps out there reading this today — especially those of you desiring a career with financial security and stability etc. — whatever your actual STATS are I highly recommend that you, too, stop being shortsighted.
So ‘crunch’ your own numbers so that you can determine, without any doubt, smoke or mirrors, what your actual real value and worth is to yourself and of course to any timeshare developer with whom you are associated.
I promise you this Reps; if you don’t do it, if you don’t understand it, if you don’t embrace it and acknowledge it – it’s a pretty safe bet your developer and management won’t either.
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’.