The 300-Delegate Discount
Your 18,000 sq ft conference centre logged 1,140 enquiries last year and converted 38%, down from 52% two years ago. Attendee-days sold rose 4%, but average rate fell from $168 to $151 per attendee-day, and the sales manager - paid on total booked revenue - has approved nearly every discount request. A 300-delegate association offers three days at $140 per attendee-day against your published $180. Variable cost is $62 per attendee-day. That week is already 40% committed to two corporate groups at full rate, it is your second-strongest week of the year, and the association needs the entire main hall, so no other group can be booked alongside it.
1. Should you accept the $140 rate? Show the arithmetic and name what you still need to know.
Read the worked answer
Contribution per attendee-day: $180 - $62 = $118 at published rate; $140 - $62 = $78 on the offer. The deal is 300 x 3 = 900 attendee-days, worth $70,200 of contribution.
The only real question is what that week produces if you say no, because the deal fills the main hall and locks out everything else.
Break-even displacement: at your realised rate of $151 the contribution is $89, so you need 789 attendee-days of displaced business to match $70,200. At $168 ($106 contribution) you need 662. Decision rule: accept only if you are confident that week would otherwise sell fewer than roughly 650-780 attendee-days.
Three things to check before answering:
- What did that week actually produce last year, in attendee-days and net contribution? Without this number you are guessing at displacement.
- Is the association multi-year, repeat, or a reference account? Three years at $140 is a different calculation from one.
- Rate-fence risk: a $140 rate on your second-best week will be discovered by other clients. If it leaks you are not pricing a soft week, you are repricing the house.
2. Two years ago conversion was 52%. Diagnose what the numbers actually show and recommend a fix to the compensation plan.
Read the worked answer
Check the denominator first. 1,140 enquiries at 38% = 433 bookings. If two years ago the pipeline was 900 enquiries at 52% = 468, you lost 7.5% of bookings while attendee-days rose 4% - bigger groups bought with a 10% rate cut. But if today's 1,140 includes, say, 300 raw web enquiries that were never qualified, conversion on qualified leads is 433/840 = 51.5% - statistically unchanged, and the 'collapse' is a measurement artefact of a wider top of funnel. Either way, enquiries per booking rose from 1.92 to 2.63, so cost of sale is up.
What is unambiguously real: rate fell 10% while volume rose 4%, so revenue is down about 6%. The comp plan caused it. Paying on gross booked revenue makes a discount free to the sales manager and expensive to the house - she is rationally maximising the number she is measured on.
Fix:
- Define 'enquiry' in the CRM so the conversion metric means something.
- Publish a rate floor by season with a written approval matrix above it.
- Move commission to net contribution or revenue per available attendee-day, so a discount costs the rep personally.
- Add clawback on cancellations, which are currently invisible to her.
3. Name the reports you would pull before the Monday meeting and what each one tells you.
Read the worked answer
- Lost-business log, by reason and by competitor rate. Tells you whether you are losing on price, on dates, or on space - three problems with three different fixes.
- Rate and volume by segment, 24 months. Shows which segments traded rate for volume and whether the trade paid for itself.
- Enquiries by source and qualification stage. Separates a funnel problem from a conversion problem, which is the whole argument in task 2.
Any one of these alone will mislead you. The lost-business log without the segment history will tell you to chase price; the segment history without the funnel data will tell you to fire a sales manager who may be working a widened pipeline.