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By Holly Zoba, CHDM, Principal, Scout Simply, and member of HSMAI’s Marketing Advisory Board
Sales, revenue optimization, and digital marketing are in the middle of a revolution — thank goodness. Just a few years ago, when I introduced a digital sales-training class for hoteliers, I began ringing alarm bells because demand for the role of the salesperson was shrinking. The numbers were sobering: According to Forrester Research, 33 percent of “order-taker” salespeople roles would be replaced with automation, and even “relationship” sellers would decrease by about 15 percent. Yet in our hotel world, salespeople often resisted change.
Fast forward to 2020 and the rubber is now hitting the road via an accelerated pace of consolidation in the hotel sales/revenue/digital marketing arena. Who’s coming out on top? Let’s explore. Within a span of about an hour at HSMAI’s recent Marketing Strategy Conference, I was either told, or in one case overheard the following:
- From a corporate revenue director: “I was given responsibility for my management company’s sales, revenue management, and ecommerce departments about six months ago, but I just gave sales back.”
- From an ecommerce director: “It seems like revenue managers have more free time now that predictive analytics is taking over what they used to do, so they are trying to add value by getting involved with ecommerce. I don’t like it.”
- From a revenue manager: “We should really be the ones in charge of revenue because we are the most analytical. You need a strong business acumen to run revenue management, and salespeople don’t usually have that.”
- From a director of sales: “I am here to learn ecommerce, because they have been reporting to me for a year and I don’t know what they should be doing.”
As you can see, everyone is talking about mergers — at the functional, departmental, and company levels. This is exciting and necessary, but also scary. Companies with a total worth of more than $3 trillion participated in merger activity last year; according to the Harvard Business Review, the failure rate for all mergers is between 70 and 90 percent. The common theme of these failures is the inability to leverage talent property and integrate technology between organizations, resulting in a lack of value to shareholders.
Does that sound familiar? If extremely well compensated, senior, presumably smart executives merging two giant organizations have a 70- to 90-percent failure rate, perhaps we could use some help figuring how to successfully merge sales, revenue optimization, and digital marketing. I called three people who represent these various disciplines and asked how their organizations are handling the merging of the “revenue” departments [MEANING SALES + MARKETING + REVENUE?]. It turns out that they’re all taking different approaches but have already been working on this for more than a year.
In three separate articles, I’ll report what I learned from each of them, starting with Allison Handy, senior vice president of sales, marketing, and revenue optimization for Prism Hotels & Resorts. Prism manages more than 25 hotels for a variety of owners whom Prism’s website refers to as “entrepreneurial.” I bring this up because the approach that Allison is taking is exactly that: entrepreneurial.
A year ago, operations had oversight for revenue optimization — Prism called these team members “revenue optimizers” — and Allison had oversight of sales and marketing; each property had a revenue optimization strategy and a separate sales strategy. Then, in Q3 2019, the functions merged, with revenue optimizers joined the sales and marketing team, all under Allison’s direction as SVP.
With input from her VP of revenue optimization, Allison’s first move was to align strategies. Prism previously had shifted the focus of revenue optimizers away from top-line-only results to incorporate how well the business flowed to the bottom line. Sales, once only responsible for room revenue, now is tasked with looking at overall revenue, including catering, F&B, and ancillary. At the property level, both revenue optimizers and sales report to the GM, but both have a dotted line to their corporate VPs, with the ultimate direction being driven by Allison.
Changing reporting structures didn’t sound all that revolutionary to me, but as I dug a little deeper, I understood how transformational this approach really became. Allison was able to work with GMs, revenue, and sales to create a unified and uniform set of actual goals to outperform competitive sets, forecast accurately, and flow profitably — for everybody in revenue optimization, sales, and marketing.
Changing the measurement of how people are evaluated in their jobs changes behaviors and in this case started to make people look at business from a broader perspective. Just think for a minute about one of Prism’s goals: forecast accuracy. Historically, that fell on revenue optimization. Sales of course contributed to the forecast, but to be honest, they never had any real accountability for accuracy. Sales’ job was to meet their booking goals; however they arrived there wasn’t all that important. But now, they have to look at their own forecasting accuracy to find out what went wrong (or right), which has led them to discover insights about business trends they had never noticed. That is one for the win column and will continue to reap benefits.
And those revenue optimizers are now also accountable for overall sales performance. How much more helpful do you think they are at communicating soft and peak periods to sales and marketing now that they have some skin in the game? Communication has improved and friction has been reduced because they are working toward a common goal. Another giant win.
Allison also shared a curious cultural viewpoint at Prism. There are “knowers” and “learners,” and Prism favors learners. While the company values knowledge and experience, it places a premium on anyone who has some curiosity — who is willing to learn more, new, or different ways of growing revenue. This will be a particularly important skillset as Prism moves into the next phase of its evolution.
When I asked Allison what sort of skillset it takes to lead this new approach, I was expecting to hear about analytics, sales, or marketing savvy, but she surprised me by saying that you must have the trust of your owners. “If they don’t trust me, they can’t trust the hotels” is precisely what she said.
I asked how she had earned that trust, and her answer to this was also telling. Allison explained that being able to size up an operation quickly was key. Understanding the market and demand generators and where to focus the team was critical, but just as important: thoroughness in managing accountability. “You can’t just hope the field team will deliver,” Allison told me. “You have to have milestones in place and be quick to shift if the focus needs to change.”
And this is also why having a team of learners instead of knowers is critical.
In the next issue of Executive Insights, we’ll look at the commercial approach to convergence.