Want to grow your franchise system in 2013? Pay attention to these changes in the industry:
By Joe Mathews and Thomas Scott
This year’s International Franchise Association Convention was the largest on record, with over 3,600 attendees. As usual, franchise systems are looking to each other and industry experts to figure out how to grow in 2013. Also, IFA broke a record with the number of suppliers attending the conference. More companies are counting on franchising to drive their business in whole or in part. Here are our key takeaways:
More certainty in the marketplace: franchisors appear to have more certainty surrounding the economy, the impact of Obamacare on small business, and small business credit markets. While the current direction of the economy might not be what business owners would choose, franchise companies are rolling sleeves up and figuring out how to work with the cards they are dealt and still drive results. The next several years may still be tough, franchisors are learning how to adapt, improvise and move their business forward..
Premium on operational excellence
5 years of slow economic growth and recession has forced the companies to run lean and efficiently.
When IFA talks, politicians listen
The IFA raised over $1 million in political contributions last year, with the vast majority going to republican politicians who champion the issues of small business. With franchising accounting for20% of new job growth, (and wheeling in wheel burrows full of PAC cash) decision-makers will listen more attentively to franchising’s concerns and grievances. As the IFA’s Hall of Fame inductee Sid Feltenstein said in his acceptance speech “franchise jobs don’t leave the country or get outsourced. They are the best type of jobs to create because they stay in your community.”
Franchisors slowly adopt digital marketing strategies for lead generation: Jessie Dwyer, the guest speaker from Facebook at the Technology summit explained that in 2005, Americans read more digital content than print content. It wasn’t until 2010, however, that companies and marketers began spending more on digital content than on print content, leaving a 5-year gap between changes in buying behavior and corresponding changes in marketing. Smart franchisors acknowledged transformational changes in buying behavior, adjusted their franchisee recruitment process and strategy, increased online storytelling exponentially, reinvented franchise opportunity websites, and retrained franchisee recruiters to reflect these changes. On balance franchisors have finally discovered that the old “tell and sell” and “all conversation” approach to recruiting franchisees is like “fiddling on the deck of the Titanic” and are starting to jump into the online content lifeboats and use content to create more conversations.
Selling franchises (or anything for that matter) is an old paradigm
Buyer-controlled buying processes have replaced salesman-controlled sales processes forever. However, many franchise salespeople seem slow to respond. During break-out sessions and roundtables we heard franchise salespeople harping, “You must control the sales process” seemingly oblivious to the fact that they have already lost control. These franchise salespeople are soon going to soon find that they are in complete and total control over empty sales pipelines. Then they will get it! Best-in-class franchise salespeople know that such control is an illusion and creates the exact opposite effect of driving buyers away. They have embraced and adapted to their new role of “buyer facilitator” which required a new way of thinking, acquiring new skills, and willingness to let go of the past and change with the times.
Your next franchisee is already within your reach
Franchisors have always known some of their best franchise owners come into their system either knowing someone affiliated with the brand or having a customer experience. Franchisors are already connected to these high probability franchise candidates and brand champions but rarely create a workable strategy to take advantage of what’s right in front of them. The next big breakthrough in lead generation strategy will be intersecting these potential franchisees with engaging franchise candidates with online content and directing them to the franchise opportunity websites where they can get the rest of the story. Menchie’s, the clear leader the fro-yo wars, with over 450 stores open or under development blew past other frozen dessert and fro-yo chains by engaging brand champions and directing them to their franchise opportunity website, and eventually into the capable hands of their highly skilled franchisee recruitment managers. Menchie’s recruited well over 100 franchisees before spending money on advertising or paying broker fees.
Healthy franchisors share three common characteristics
1: A good return on investment (according to the franchisees’ criteria of “good return”)
2: A collaborative corporate culture where franchisees have the experience of being heard, understood, and part of something bigger. For instance, Canadian home care franchise Nurse Next Door made inroads into the US this last year counting on their franchisee-friendly corporate culture to seal the deal.
3: Franchisors with an overarching purpose and inspiring reason for being which galvanizes entire organization behind a singular cause will continue to attract high quality franchisees. For instance, Firehouse Subs doesn’t just sell sandwiches, it celebrates the heroism of firemen who charge into fires when others are running out. Abrakadoodle celebrates creativity in children, giving every kid an opportunity to experience a moment of inspired creation. Menchie’s celebrates making people smile, and built a system for the purpose of leaving everyone happier than when they first came in. Jersey Mike’s celebrates community service however individual franchisees choose to express it. Robeks helps people gain control of their bodies through healthy eating. You won’t find the CEOs of these chains hovering around the coffee pot complaining about results.
In the eyes of the law every corporation is considered a “legal person,” which is why corporations pay taxes, sign leases, and can legally do things people do. Does your franchisor have a soul? Or is it a heartless, valueless robot programmed to make money? Customers are championing businesses with souls. So franchise candidates will naturally follow suit.
Content is king
Franchisee recruitment has moved permanently from a conversation-driven process to a content-driven process. A franchisor’s content earns a conversation and drives a candidate’s engagement level. If your company has a weak or no franchise opportunity website, little to no brand stories which can be found online, and a weak or nonexistent online reputation, even the most highly skilled salesperson you will fail. No amount of sales can overcome lack of visibility or engagement in the research stage. If franchisors have not updated websites within two years and greatly expanded content, giving buyers what they are searching for, they will lose qualified franchisees to more nimble and aggressive franchisor that do.
Each franchise opportunity website must answer these basic questions and concerns every franchise candidate has:
- Is the business profitable? If they don’t find content which indicates it is, the candidate may automatically assume it isn’t and stay under the radar screen. Smart franchisors are publishing item 19 information to bring this content out in the open early in the process.
- Is the business unique? What is the franchisor’s consumer value proposition? Why do customers shop this brand instead of others?
- Is the business sustainable? How will the brand continue to improve its market share in the face of competition? What is the brand’s plan to keep its brand and offerings relevant in the marketplace?
- What is the culture? Who is the franchisor? What do they stand for? What would they be like to work with?
- Can I see myself in the business? What is the role and responsibilities of a franchisee? How does the business play into the candidates strengths? Will they find the work meaningful and enjoyable?
What does SEO companies, mood rings, and disco music all have in common?
They are as dead as Elvis Presley. In the past year Google has released 27 updates to the search engine algorithms all designed around one goal: give people the relevant, detailed content they seek. Google now rewards companies which consistently publish detailed, well written, article-format content on their home page and internal web pages. Ask a college professor, “What does it take to succeed in academia?” They will respond, “Publish or perish.” In the standing-room-only session about transformations in lead generation, Thomas Scott, Franchise Performance Group’s lead generation expert detailed how Google is ranking sites with upwards of 2,000 words per page. Why? It is because that’s what YOU and your buyers prefer. Stop spending money with an SEO company and hire a skilled brand journalist to tell your story. And if you don’t….Burn baby burn, Disco Inferno….burn baby burn, burn the mama down! (lyrics and music by the Trammps for those of us who unfortunately are old enough to remember and pathetic enough to buy the album).
Franchise buyers are like Bigfoot
Matt Alden from Franchisesolutions.com made a bold statement is his session on lead generation: franchise buyers are sly and elusive like the legendary Bigfoot. They are hard to track and we spend resources to lure them out in the open and they go to great lengths to stay hidden in the trees. Alden mentioned that franchise sales is entering into its 3rd evolution in 30 years.
1990 was “the promotional stage” where buyers encountered cheesy slogans, vast trade show booths and expensive magazine ads saying call me to get information. “Turn your dirt into gold with some janitorial franchise” or “Sink your teeth into this mouth-watering opportunity” with some burger franchise. (The authors pause to take a shower in order to wash off the sleeze).
2000 was the “information age” which gave rise to franchise portals and franchisor’s franchise opportunity websites. Buyers in this phase expected more transparency and access to information while franchisors tried to control access to information by dangling carrot with small tidbits of a story but demanding the buyers speak to them to get the whole story.
2010 and beyond is the “engagement age.” Now, the franchise buyer demands information to help them shape their buying decision before they are ready to speak. The franchise buyer is in control of their franchise buying process. Franchisors must recruit franchisees consistent with how buyers buy. Franchise Performance Group has clearly measured their appetite for relevant franchise opportunity information be over 30 pages of content which they spend over 50 minutes reading. Put another way, they are interested enough to hear a franchisor’s story. They would rather read it like a book than hear it from the franchise salesperson like a bedtime story. The franchise salesperson has permanently been fired from their role as gatekeeper of the franchisor’s story. This leads us to our next insight:
The Rise of Brand Storytelling for Franchise Development
The big trend in the PR industry for 2012 was the rise of brand storytelling – the practice of using experienced business journalists to write journalistic-style copy for websites, email campaigns and other online content. Rather than bombard people with pithy marketing slogans and bullet points, brand storytelling ‘unpacks’ your franchise opportunity value proposition like a “brand story.” Franchise systems are beginning to look to brand storytelling firms to help get meaningful stories out and are moving away from using traditional advertising copywriters who use “sales speak.” A good brand story leaves franchise candidates engaged, intrigued, and desiring to hear more without giving them the negative experience of being sold or convinced.
Social marketing is now mainstream marketing
Social marketing determines the franchisor’s brand story. Once delegated to the new, unshaven 20-year old intern with the messy hair and the Ipad thingy working in the broom closet, smart franchisors have pushed the responsibility and oversight up to the VP level or equivalent level. More buying decisions are impacted at the social relationship level (by networking with friends, family, thought leaders, influencers, and experts who sway their buying decisions) and other media and content like what is found on a franchisor’s website. The message this year: time for your VP of Marketing to directly manage your social marketing. Stop outsourcing it. It’s the most important marketing you launch.
Younger franchise owners grow in number
The number of systems now recruiting franchise owners in their 20s, often right out of college, is growing. It’s often said, “there are entry level jobs, but no entry-level businesses.” Smart franchisors are challenging this. A weak job market is forcing many aggressive young entrepreneurs to consider franchise ownership over a corporate career. Franchisors are looking hard at what they can do to reduce their overall investment and simplify operations to accommodate and compensate for youth and inexperience.
Income trumps equity
More franchisees are looking to franchisors to help them replacing lost primary income or creating a strong secondary income. This group is more concerned about long-term sustainable earnings than equity build. Show them how to turn their business into an ATM machine where they can withdraw cash rather than asset they can put on the auction blocks.
Promoted Facebook Posts Worth a Look
Want to generate leads from social media? Promote posts and quality content in the news feed, not in ads. Jessie Dwyer, Facebook’s speaker at the IFA, explained that earning or paying your way into news feeds is 8 times as effective for getting in front of your customers. To be successful, content marketing on social media channels does not have to be free.
Mystery shopping surveys have turned up appalling results: as many as 50% of franchise leads are never called. Franchise Update reports this every single year without fail. Each year I am surprised.
When we asked, “What can you do to create a breakthrough in franchise sales results,” franchisors often responded with “More leads,” “better process,” and “stronger franchise opportunity website.” During one roundtable a consultant asked, “How many of you invested in skill development for your franchise salespeople, about 10% of the franchisors responded in the affirmative. When we asked, “What is the variation in productivity from your top recruiter to your bottom recruiter?,” franchisors typically answered that the top outperformed the bottom by 100-200%. One of the greatest, quickest, cost effective and most overlooked opportunities for a breakthrough is to increase the effectiveness of the recruiters running point. Franchisors have effectively used the Franchise Performance Group’s Franchise Sales Mastery program to create breakthroughs.
Response time for franchise sales leads shorter than ever:
In other industries, research data also shows that if a company calls an internet lead back within 5 minutes of receipt, they are 100 times more likely to contact the lead than those who didn’t. Emails do not replace a call back. Smart franchisors using “powerdialer” software, experienced call screeners (who have actual franchise sales experience) and call scheduling services to contact leads as they come in. Relying on your recruiters to make these contacts on that timely of a basis may not be a realistic or workable solution. The lesson this year: franchise portal leads submit and average of four inquiries to different companies. Only the company that calls first gets to work the lead. If you can’t create a team that calls within 5 minutes of the lead, you won’t get good results.
In with website content, out with flashy graphics
A franchise website today is more about content and less about design so make sure you work with a vendor who has a track record of creating and authoring content as well as making sites that look good. In the SEO world, content trumps design 100% of the time. Your website isn’t an online brochure – it is an online newspaper about your brand. Change your copy constantly. Consistently add new and compelling brand stories and news items in a blog format.
Shorter franchise information forms now the norm
Inexperienced or unsophisticated franchisee recruiters often want their companies to force franchise candidates requesting information to fill out long detailed forms before being able to download or be emailed content. They say, “I am busy. I only want to work with serious leads.” That’s like saying, ”I only want to buy winning lottery tickets.” The harder franchisors make it for franchise candidates to get what they want, the more franchise candidates will find what they want elsewhere. There is NO CORRELATION between the amount of detail a candidate leaves and their level of engagement EARLY IN THE PROCESS. Furthermore, John Henning published a study of long form franchise leads and determined that over 70% of the information companies required leads to complete was FALSE, so why force the issue? Long forms do not work.
Franchise portals evolve
Franchise Performance Group is happy to see more closes come from franchise portals this year for its client franchisors than in any recent year. Smart franchise portals have begun listening to what franchisors wanted and needed and have adapted their business practices accordingly. Changes and opportunities include email campaigns, longer ad pages, better search optimization for categories and direct links to franchisor websites. Immediate response time for portal leads is essential – portals indicate that franchise candidates often work with the first company to reach them and table the other concepts.
Paid search and retargeting rise in results: pay-per-click advertising with Google has a bad name in the franchise lead generation space. PPC advertising, often handled by SEO firms with little understanding of franchise development, spend large amounts of money on campaigns often with very poor results. The trend we see is companies using content marketers to manage PPC campaigns so they align with what the franchise website ranks for organically. A PPC visitor is the same person who clicks on an organic link so this makes sense. The strategy of using landing pages for PPC is weak at best. If you really want to engage buyers, use your website or segments of your website for PPC ads. Retargeting, the practice of collecting IP addresses and displaying ads to people who have already visited your site when they visit other, popular sites, is an inexpensive and highly effective tool that can increase return visitors and lead flow.
What were your takeaways? What did you learn at this year’s IFA Conference?