We’ve had the opportunity work with many different types of activity companies at FareHarbor. From parasailing to flyboarding and trail riding to Segway tours, we have seen both an array of activities as well as employee and management structures. One of the most challenging aspects of running these businesses is determining employee pay. (Salary? Commission?) For activity guides, it’s fairly easy. There is a market rate for base pay and performance determines gratuity. For reservationists, it is significantly more difficult.
For many companies, reservationists serve as customer service, sales, and dispute management. More importantly, they are also a potential customer’s first point of contact. Having answered phones for North Shore Catamaran, I understand the importance of a customer phone call. I also realize that many owners don’t feel obligated to pay commissions given that 90% of calls are to make a reservation and need no “sales” talk to make payment.
But there is a much different way to think about those calls, and that is not the incremental value of a potential sale, but rather the cumulative value. For example, if your average total ticket price per booking is $100 and you are able to make one additional sale a day, you are looking at $30,000 more dollars in revenue annually (assuming 300 operating days) than you would have made otherwise. And if you expand that out to two additional parties per day, $60,000. Or if your average total ticket price is $250, $75,000!
Backing out of that math, it’s obvious that if you can incentivize your employees for less than the additional revenue, it’s a win-win. In fact, you could probably argue that breaking even or even a small loss would be a win (yes, even after operating costs), assuming increased exposure for you business and happier employees.
Lastly, with every company we bring online for the first time, we hear the following complaint to managers: “Who gets commission if the customer books online?” More often than not, the response is, “Nobody.” While this policy might make your employees close harder or even follow up more often with potential customers, it also might cause them to negate mentioning your online booking platform (Disclaimer: online bookings are in our best interest). Is this really the best solution? What happens when your customers get antsy in the middle of the night and decide to book with a competitor? You lose. My recommendation? Offer to pool all online bookings into one commission pool to be split by all employees. And if you have a webmaster on staff, maybe kick something to them, too. It’s always a great idea to have everybody’s interests aligned.
For my thoughts on why it’s a good idea to pay more than minimum wage, visit lawrencehester.com