QUESTION
Hello Eric, I just read your most recent blog about the Ramada Inn in Palm Springs being added to your list of new Hotel clients which is good news however I am concerned if that is the only new account added since the last update in December. In a previous blog you mentioned that the goal for 2012 was to get to 100 hotels and by my calculations we should be adding 8 or 9 a month to get there. Please tell me that there are others but you are not allowed to list the names yet. I was very encouraged when this initiative was announced but if the progress so far after a few months is that we only added two or three accounts then I have to wonder what that guy out is CA is doing all day and hope that he is only being paid on a comission basis. I work in the insurance business and if I do not sell, my family does not eat. Thats how it should work, but it appears that in your organization pay may not be tied to performance/sales like is should be. I have watched many new initiatives that are announced and then just fizzle out and never result in the goals stated at the beginning. Is this hotel plan going to end the same way or is there a clear plan on how that 100 client number is going to achieved? Thanks.
ANSWER
- I do not yet have formal permission to speak about the hotel that you mention, so strictly speaking, I will revert to describing that property as a prospect.
- There are two groups of hotels. The first consists of those that have formally incorporated our products into their routine. We call these committed. The second consists of those who are using our products on a provisional basis (ie experimenting, trying, comparing). We call these transitional. There are approximately 10 in the first group and 20 now in the second group.
- The rate of growth through the year is not likely to be linear, because of this vetting period. It will tend to come in batches. The second group of new prospects were all approached relatively recently based on the proven results in the first group. That second group now needs its evaluation period
- We supply this sector through a distributorship arrangement. Therefore, Winning Brands does not carry the overhead associated with the business development, but instead shares a portion of the end-user price to provide adequate margin to the distributor. There are significant associated technical costs for the distributor, including pumps associated with dispensing, training and customer service, etc. Also, the distributor has been determining what personnel to recruit and train for the implementation of Project 100. Bear in mind that the initial stage of the project was testing oriented. Operationalization is getting underway now. It required planning because our goal is to grow far beyond 100 hotels in years to come. California alone has approximately 26,000. 100 properties is only the next stage threshold. A sophisticated distribution concept needs to accommodate the nuts and bolts issues of growth beyond the territory where the activity is occuring currently.
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Even when we gain new hotel customers, there is reluctance by most of them for us to use their name publicly because of several factors:
- Some might have ties to other suppliers which they feel would be compromised
- The local hotel may be prohibited from providing public endorsements by contract with the franchisor
- The hotel is corporately owned and local management does not have the authority
- A new customer may not want to burn their bridges with a former supplier until that have more history with us, etc.
- If you have concerns about initiatives which you feel have “fizzled out”, feel free to bring them to my attention and I will be pleased to provide associated details if possible (ie in view of confidentiality undertakings that sometimes exist). As a general comment, I would say that we are always trying a number of things to find openings and move forward. There is no question that some things don’t work out, but we are resourceful and keep at it regardless in order to find the mix of factors that work well.
