April 15, 2016 — For simplicity purposes consider a timeshare sales center that is open for business 360 days a year with a sales staff numbering 35 and that each sales rep will meet and greet two qualified sales guests daily, working their little hearts out selling our unique and wonderful world of vacationing. Obviously that would be 25,200 presentations in the year and using the average reported sales prices by some developers of $20,000 and a low average net closing ratio reported by other developers of 15% that would represent 3,780 solid ‘deals’, a $3,000 VPG and $75,600,000 (million) in annual sales volume.
So Here’s The Scoop: That’s impressive but the real scoop is that regardless of the size of any sales staff that is balanced evenly to the number of sales guests, in my example each of those 35 reps could pick up a paycheck every Friday for $1,000 and, drum roll please, even though the majority of them will ‘blank’ each week, the developer would still make out like a bandit!
You see, if those 35 reps were each guaranteed a livable annual salary of $52,000 the developers payroll would be, basically, $1,820,000 for the year; and I don’t want to shock anyone but that equates to a direct sales (commission) cost of about 2.4075% of the annual net sales volume.
That is worth repeating: A mere two (decimal point) four zero seven five percent.
“Holy Crimeshare Batman – it’s like starting a land war in Asia – or going up against a Sicilian when death is on the line – INCONCEIVABLE!”
“Right you are Robin and we’ll have to get to the bottom of this sinister plot. Quickly Boy Wonder, to the Bat Mobile!”
But wait for it, good citizens of Gotham, as the devious ploy thickens — because if those same 35 sales reps each had a guaranteed annual livable salary of $75,000 ($1,442.30 a week) that would still come in at a low cost for sales (commissions) of about 3.47%!
Now, I’m a bit slow so check my math and if I’m missing something please let me know; but for the rest of my story and knowing the ‘Beast’ as well as most of us do I shall quickly conclude with a few more realities based on the least annual livable salary of $52,000 (that 2.4075% commission cost).
1. Show me a developer who would rather pay (e.g.) 10% upfront on each deal instead of 2.4075% and I’ll show you someone with one or both oars out of the water.
2. Show me a sales rep who wouldn’t want to know that each week they WORK they will be paid $1,000 guaranteeing they’ll bring home the bacon for themselves and/or their families and I’ll show you a born sucker?
3. And show me anyone in ‘the biz’ who doesn’t understand that every sale that happens in every sales center around the world has a direct correlation (aka: team effort) to all the other sales reps being in the sales center with their sales guests (aka: room-fill) and I’ll show you someone who is clueless.
4. While I’m asking and using my example, how many developers wouldn’t want to lower their upfront annual commission costs by $5,740,000 (million)?
5. And while still lowering costs don’t ya think developers could offer an attractive and very competitive SPIFF deal with a quarterly or annual bonus structure to reward their top producers (aka: Top Gun, Big Guns, Master Sales Reps, Master Closers and/or ACES) for being the crème de la crème?
I could list many reasons why this type of pay system is a WIN-WIN situation, such as how loyal reps would be to the ‘company’, how they’d go that extra mile and that their work ethic and attitude would reach new heights resulting in even more sales, etc.
However I’d have to also suggest a couple of other wee changes involving marketing tactics, sales guest qualifications, sales training, management policies etc. that would lower rescissions, reduce costs, improve recruiting, decrease excessive and costly rep turn-over ratios, etc. all of which are based on historically proven standard corporate business practices that require no re-inventing of the old wheel.
But I won’t go there today as I already receive more than my fair share of e-mails from some people who don’t take kindly to my constant peeling of the industry onion each week over the past 7 years and who also insist I’m clueless about such matters in The Land of Time.
An industry I might add that after three decades and having worn nearly all ‘hats’ I still find irresistible, that I truly appreciate including a handful of developers that I hold in the highest esteem – an industry that has provided me and many others the opportunity to earn decent money, to live, work, play and vacation around the world making new friends and hooking up from time to time with friends from days long since passed.
Oh well, NEXT!
Good Luck Out There
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