March 16, 2012 — Since I started this weekly series, and with (literally) thousands of readers returning to read each new installment, I have yet to receive one e-mail, one phone call or comment from anyone asserting that I’ve got it all wrong. Must be a reason for that and the silence is near deafening and yet quite telling!
So here’s the scoop. Of the many negative perspectives that plague the timeshare industry one long-standing view often revealed is that of timeshare sales and marketing reps (developers, too) who sometimes voice their disdain and/or look down on sales guests in terms of ‘them’ being foolish and/or not very sophisticated or bright when it comes to financial matters.
And by that I don’t mean whether or not acquiring a timeshare interest is a wise financial decision by comparing (e.g.) ‘rental’ accommodations to purchasing them, nor the TVM (time value of money) nor as an investment etc. What I am referring to as it pertains to sales and marketing personnel is purely a return on an investment as it relates to their ‘time’ and ‘labor’ for hire (pay).
So let’s take a moment to answer this question. If a person were offered an opportunity to invest (e.g.) $105,000 for a 24-month period but before doing so every certified financial planner or investment expert could absolutely guarantee, in writing, that said investor would lose nearly $5,000 on that investment would the would-be investor still be wise to invest?
The answer should be an unequivocal ‘no’, it’s a bad investment. Yet from an ‘income’ reality that is exactly what continues to occur in the timeshare industry to most sales and marketing personnel regardless if they are ‘commissioned’ only or have a very modest salary plus commissions. Allow me to illustrate via an example of a sales professional who just launched their TS Career in January of 2012.
For simplicity purposes this sales executive is a commission-only F/B (front to back) timeshare rep who is to be paid a 10% commission, ‘writes’ 70 deals their 1st 12 months at an average sales price per contract of $15,000, totaling (first year) an annual sales volume of $1,05,000.00. I.E. A ‘Million Dollar’ producer generating a first year income of $105,000.
As pointed out in Part 2 of this series, over the past 75 years the annual inflation rate in the USA has averaged 4.5% each year. Applying that factor, when this sales executive completes their second year on the job— and assuming he/she again matches the previous year’s sales volume— they will have lost in real dollars (‘income’; purchasing power) approximately $4,725; or, the bacon they take home in year #2 would be equal to a first year (real) income of $100,275.
As such, over the course of just this rep’s first 60 months on the job— all the while remaining that “Million Dollar” producer, on top of the sales line, and prancing around in the sales center in all their glory— said timeshare sales executive will lose approximately $20,215 in income (purchasing power); and yet, the loss is actually more.
Sales people, for example, need vacations, too, and for this rep who is writing that volume and only working 50 weeks per year (2 weeks off for that vacation) her/his weekly income would be valued at $2,100 in cold hard cash.
However, since in most cases the rep will not be remunerated any ‘paid-vacation time’ from the developer, when they do take those well deserved vacations they will lose another $4,200 (lost ‘wages’-income) in earnings per year and over the course of their first 60 months that will bring their total loss of income to $41,215.
Keeping with the $2,100 weekly earnings and using a five (5) day work week, this sales professional’s daily income is valued at $420 (per day); yet, during that first 60 months perhaps the rep needs a few days off due to the flu or one of the kids becomes ill and needs to visit the doctor’s office or maybe the rep has to take care of some other (real) personal business, etc.
Regardless of the reason(s) they’ll require, as all people do in the real world, some ‘extra’ time off from time to time in order to take care of personal business. And for every day they’re off the sales line that adds to their losses. When such situations occur, say just once per year, that now brings the sales executive’s total losses (+ -) to a whopping $43,315 over a brief 60 months.
Nobody likes being ‘gamed’ and/or marked as a sucker or being made the butt of jokes or made a fool of; yet from an income perspective that is exactly what is happening to most reps in our industry.
But it gets even worse and next week we’ll kick it up another notch or two and demonstrate more losses in real income and then we’ll start to explore what needs to be done to correct a very antiquated and broken pay system.
In the meantime let me leave you all with one indisputable truth:
“Sales Professionals are the Elite Athletes of the Business World”. ©Sales Gravy
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