Franchise Attorney’s conventional thinking about item 19 earnings claims has been relatively stagnant over the last 20 years. Thinking has evolved, but slooooowly. It went something like this:

1990: Franchise Sales Person: “Can we do an earnings claim?”

Attorney: “No. We will get sued.  Now get out.”

1995: Franchise Sales Person: “Can we do an earnings claim?”

Attorney, “What part of ‘No’ don’t you understand? We will get sued.  Take a hike.”

2000: Franchise Salesperson: “Can we do an earnings claim?”

Attorney: “Let me think about it. No. We will get sued.  Beat it.”

2005: Franchise Salesperson: “Can we do an earnings claim?”

Attorney: “Yes. The average sales volume is $X, but past performance in no indicator of future results. Your results will vary depending on the quality of real estate, transferable skills, experience, capitalization, whether or not you attended public schools, have lingering psychological issues resulting from inconsistent potty training, and whether or not you are dumber than a box of rocks.”

2010: Franchise Salesperson, “Can we do an earnings claim?”

Attorney: “Yes and it could be safe to use it on your website and in your marketing but let’s see what other companies do and how often they get sued before we try it.”

Among smart franchisors, the conversation shifted from “Should we or shouldn’t we?” to “How do we tell the best story possible?”

2013: Franchise Salesperson: “Can we do a Financial Performance Representation?”

Attorney: “Yes. First let me apologize for all the hard times I have given you over the last 20 years. Let’s sit down and discuss what issues and questions a candidate has and how we can best use our financial data to satisfy these concerns and move them forward in the process, just like you’ve wanted for more than two decades. Can you find in your heart to ever forgive me?”

Franchise Salesperson: “No.  Give me what I want and then go play in traffic.”

How Much Can I Make? – Now the most important question potential candidates want answered

Largely, an Item 19 Financial Performance Representation (FPR) needs to address basic concerns a candidate has early in the process, such as:

1. Is the business profitable?

2. How quickly does it ramp up?  When can I stop feeding the machine and start taking money out?

3. Is the business sustainable?  Will it continue to make money into the foreseeable future?

On one hand, Mr. Unhelpful Franchise Attorney of 2005, Esq. is right: A franchisee’s success may depend on such factors such as the quality of their location, the health of the economy, whether they are smarter than an eggplant, and whether they get hit by a Greyhound bus the day after tomorrow. But the overwhelming majority of candidates who are significantly more savvy than garden vegetables (even the formidable aforementioned Solanum melongena … look it up) will want to drill down into your data as much as possible in order to get the best possible answer to the questions “how much can I make?” and “What can I count on the business for?”

Before you craft you item 19, Ask yourself? What’s the purpose of an Item 19?

Look at your business from the candidates perspective.  What do they need to know?  What questions do they have?  What are their biggest concerns?

And as long as the information is historically accurate and representative of the chain, Lane Fisher, a trailblazing franchise attorney who represents more than 75 franchises, says that in his experience, there is little legal risk.

He believes there’s more danger for franchisors who avoid making robust financial performance representations. In the absence of an item 19, Fischer believes some sales people bob and weave around that question, and look for alternative ways to provide something resembling an answer. In the process, they frustrate the heck of out candidates who just want a straight-forward answer — and sometimes spill details and data that amount to a de facto illegal earnings claim, paving the way to potential future litigation.

Franchise candidates look to the Item 19 because they want to paint a picture in their minds of how they might perform as an owner in your franchise system. So, the top 20% of your stores have gross sales of $X, and the system-wide average revenue is $X. That’s nice to know, but it doesn’t tell a candidate much. If I’m a high-school teacher considering opening a franchise in Buffalo, N.Y.; I want to know what average gross revenue is in mid-sized cities; what average gross revenues are for franchisees with a teaching background; what average revenues are in Year 1, Year 2, and Year 3; the average length of time it takes to reach break-even; average labor costs in New York; and average revenue at locations in upstate New York.

Absent any data, a candidate is usually going to imagine the worst — I’m going to hand over my life savings, fail miserably, and wind up living in my mother’s basement. Or perhaps go into business with unrealistic expectations which were never properly managed. Count on this franchisee to harpoon future deals and kill off your growth.

Providing more data about franchise performance allows your sales team to help franchisees more accurately understand the opportunity.

Why Most Earnings Claims Suck

The vast majority of established franchisors now offer Item 19 financial performance representations (finally!), but most are still taking a very conservative approach in terms of the data they make available to candidates. A typical Item 19 might disclose average revenue, and break down performance into quintiles (average revenue for Top 20%, Top 40%, Top 60%, Top 80%, all stores).

If a franchise has been in business long enough that it’s shifted its business model, a savvy franchisor may craft an Item 19 that draws its data only from existing stores that closely resemble the current business model being offered to candidates. For instance, if your business originally targeted mall kiosk locations, but now looks for standalone retail spaces of approximately 1,200 square feet, it doesn’t make sense to provide data on mall kiosk performance to franchise candidates. Or perhaps the business has a new merchandising strategy, menu items, or décor package. Instead, the franchisor might draw its Item 19 data from the new strategy or model. That’s a step in the right direction, Fisher says. The important thing is that your criteria is consistent, and that your reasons for excluding some franchise locations from the earnings claim data are based on sound, defensible logic. As with any Item 19 earnings claim, you’ll need to maintain data records as well as a record of the logic that went into how you crafted your claim.

But to truly unleash the power of your Item 19 earning claims, franchisors should look deeper — and they should begin by gathering their sales team together to answer a basic question: What anxieties do candidates have?

Are people worried about ramp-up time? Are they worried about conversion rates? Are they worried about their personal sales skills? Are they eager to know how absentee-owner units perform? Are they worried about how their experience as a mid-level manager in a customer service call center will match up against the demands of their new business?

A great Item 19 will answer some of these questions. If your candidates are worried about their sales skills, you can craft an Item 19 that talks about your company’s booking rate, how much revenue comes from national accounts, and the rate of repeat business. Oh, $X a month will come to me directly from my franchisor’s national sales efforts, 2-out-of-3 people who call me will hire me, and customers come back 87% of the time? Suddenly, I’m not so worried!

Maybe your candidates are worried about how long it will take for the business to generate a replacement salary. A franchise performance representation can be crafted that shows when the average franchise reaches its break-even point, and the pace at which it begins generating growing gross profits.

Your financial performance representations should be designed to provide accurate information that meets your candidates’ anxieties head-on, and provides helpful answers which keep them engaged in the process. They should help tell a story about how your business is unique, profitable, and sustainable for the long haul.

How to suck even less: start offering supplemental FPRs

A well-crafted Item 19 can help answer a lot of general questions, but what about specifics? What if a CPA wants to know how other CPAs have performed or a professional salesperson wants to know how other professional salespeople have performed relative to the norm?

Can you provide that answer? Of course you can, you’re probably telling yourself! I’ll just give them a list of franchisees who have similar backgrounds, and let them call and get the great answers they’re looking for!

Software companies have a saying, “GIGO. Garbage in, garbage out.”  Meaning “bad input, bad output.” Franchise salespeople also have a saying, “Ask a bad question, you get a bad answer.”  A robust item 19 eliminates a lot of bad candidate questions.

For instance, one of my past franchise candidates once asked a mature franchisee, “What profits are you making?”

And she accurately answered, “We aren’t making any profits.”  She was a high volume store which generated great cash flow, but no profits, meaning no additional taxable income. She financed the store 100% and was retiring the debt with discretionary cash flow. She paid herself and her husband a salary and the business paid for the automobiles, cell phones, and other expenses which would otherwise be personal expenses.

The franchise candidate however interpreted her answer as, “She has been in business 3 years and made no money yet. She is failing…”  I couldn’t move him off this position. We lost what would have been a good franchisee to a false narrative created by a bad question coupled with an unhelpful answer.

Supplemental financial performance representations can eliminate a lot of similar types of confusion, build trust, and help candidates craft a story that’s more likely to reflect their experience as a future franchise owner.

Help franchise candidates build their own narrative

Zig Ziglar once said “People don’t buy drills, they buy holes.” But I’d like to expand on that idea. I don’t think people buy holes, either. They buy their own story about how their situation will improve by drilling a hole.

Carrying this logic into franchising, candidates don’t invest in franchises.  They invest in their story about how their lives and careers will improve as a result of being a franchisee. They buy a story about what it would look like to achieve whatever their definition of success.

Supplemental financial performance representations are tools that dispel misinformation and put dreams in sharper focus. As long as you use the same criteria for supplemental FPRs that you used in your main Item 19, there’s no reason not to break out a subset of franchisees and provide FPRs that show how similar franchisees have performed in mid-sized cities, or in a given state, or among franchisees with backgrounds in restaurant management, sales, car repair, teaching, public accounting, etc. If a franchise candidate has concerns about the ability of accountants to generate sales, why not show the candidate how other accountants have performed? If your candidate wants to open a store in the Southeast, and that’s one of your strongest regions, why not provide a supplemental FPR showing just how strong your franchise performance has been in that region?

Won’t that get you in trouble? Not if you do it right, Lane Fisher says. Remember, the goal of a supplemental FPR isn’t to massage the data in order to make things look better — it’s to provide the most relevant data which best addresses a particular franchisee’s needs and concerns.

Start thinking of your item 19 as your most powerful marketing tool. Properly crafted, an item 19 should help you recruit better qualified candidates and should create ways to make your franchise lead generation much more substantial. Think outside the box – or outside your FDD. The item 19 belongs on your website, on your portal pages and in your marketing. It, like its brother, the item 7, are the two FDD sections candidates most want access to BEFORE they talk to a recruiter.

If you use the exact same methodology when creating your supplemental FPRs that you did when creating the one in your Item 19, then you’ll be on solid legal ground. You’ll also be providing a valuable service — not just to your franchise sales team — but to franchise candidates.

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.

Amit Klienberger, Menchie’s CEO, speaks at a CEO secrets to success session

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:

1. 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.
2. Is the business unique?  What is the franchisor’s consumer value proposition?  Why do customers shop this brand instead of others?
3. 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?
4. What is the culture?  Who is the franchisor?  What do they stand for?  What would they be like to work with?
5. 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?

Want to grow in 2013? Pay attention to these important trends:

For many franchisors, 2012 was not an easy year to recruit franchisees and 2013 will not be a breakthrough year for many franchisors either.

Economic uncertainty, a stagnant economy and tight credit will create an environment where franchisors are going to rely on same store or same franchisee year-over-year increases rather than opening a significant number of new units to drive royalty revenue north of current levels. 2013 will be another bloody year for those franchisors committed to mediocrity.  Only operationally excellent brands with strong franchisee validation will see performance gains.

Companies boasting strong unit economics and solid validation have a story to tell and a willing audience of interested would-be franchisees ready to listen.  The trick for 2013 is connecting the two. The way prospective franchisees and franchisors connect will continue to evolve in 2013 according to 7 distinct patterns.

Here are the 7 trends to watch:

1. Out with “Lead Generation” and in with “Buyer Generation.” Ask a smart franchisor “How many leads does it take to generate one franchisee?” and they will answer “One…the right one.”   The traditional focus on generating large numbers of ‘leads’ for salespeople to sift through is giving way to a focus on what it really takes to engage and recruit the person most likely to buy a franchise. What questions and concerns do they have? What types of information are they seeking?  Where do they go online to learn about what you have?  Smart franchisors are building content-rich websites and designing content-driven campaigns designed to attract and engage the person most likely to buy rather than trying to be all things to all people.

In our study of franchise buyer behavior on websites, we found that the average franchise buyer spends 50 minutes on a company’s franchise website, looks at 33 pages and spends an average of 90 seconds reading copy on each page. This data completely contradicts yesterday’s wisdom of being stingy with information.  Stingy websites may generate more leads, BUT LESS BUYERS. 

The lesson for 2013: people who will buy your franchise have an appetite for 50-60 minutes of information. If you don’t give it to them, they move on to other sources and you lose your chance to convert them into a sale. Content marketing for your franchise development efforts is no longer optional, it’s the price to play the game and it takes skill to create an online environment that really engages buyers and breaks down barriers to conversation.

2. Targeted Searches and Online Engagement – Google has issued 21 upgrades to its search algorithm in the past year all focused on one goal: helping people find relevant and recent content during online searches. Smart franchisors have adapted.

They understand all the various ways candidates will search for them online and take proactive steps to own the first search page for each key question or key search phrase.

Google is giving priority to those smart franchise brands that have deeper and more structured content on websites and who publish articles that relate to what people are searching for.  Google’s goal is to find and rank content people want to read (not just skim). If you have more robust content on your franchise opportunity site, you’ll be rewarded not just by higher rankings, but with higher franchise candidate engagement. Most smart franchisors will be redesigning their websites in 2013 and 2014 with more content, a deeper franchise opportunity research funnel, more video, integrated franchise blogs and a well-crafted and relevant story.

3. Reinventing Franchise Opportunity Websites: Over the past few years, franchise brands have generally built the same type of website: a 7-9 page franchise website with commonly-named pages. Look at several sites and you’ll see the same pages across the top navigation: About Us, FAQ, Investment, Our Process, Why Us, Contact Us, Next Steps. Each page fits on a single computer screen and has a single paragraph with a handful of bullets and a photograph.

These sites, mostly designed and built on the advice of web designers who have never worked a lead or sold a franchise, focus on getting franchise candidates to submit forms.

Designers of these types of sites are short-sighted for they do not look further down the franchise sales pipeline and determine how engaged these leads are, how likely are they to return calls, and most importantly, how likely are they to invest in a franchise? 

They set up environments where franchise salespeople or lead screeners are chasing those who fill out a form and trying to convince them why they should talk with the franchise salesperson.

Smart franchisors do not chase leads.

They give candidates the preliminary information they need, contact them as soon as possible on same day the candidate’s information is received, and make it easy for franchise candidates to reach out to them.

Smart franchisors understand franchise candidates have two separate thresholds of information that need to be successfully crossed if a candidate is to invest in a franchise.

The first threshold is the information a candidate needs BEFORE THEY ARE WILLING TO TALK TO A FRANCHISE REPRESENTATIVE.  The second threshold is the information a candidate needs before they are willing to stroke a check.

The threshold of information needed to earn a conversation on both fronts is INCREASING.

Many franchisors are still laboring under the delusion, “I will whet their appetite with some information, BUT IF THEY WANT THE REAL STORY, THEY HAVE TO TALK TO US.”  Those are the franchisors who find themselves stuck in the beginning of the funnel, being screened out by franchise candidates who block their calls and delete their voicemails.

Remember, when a franchise candidate fills out a form, they are requesting “more information” not “more conversation.”

Here is the thought process Franchise Performance Group uses to design franchise opportunity websites and author content:

1.  What candidates are most likely to invest in a franchise and succeed?
2. What are these candidates most concerned about?  What questions would they need answered BEFORE they are ready to speak with a franchise representative?
3. How do we effectively communicate the following:
   1. What makes this business unique?
   2. What makes it profitable?
   3. What will keep the business profitable and sustainable for the long haul?
   4. What would it be like for the franchise candidate to own a franchise?

Then we start mapping out all the questions a franchise buyer is likely to have before they opt in and during the first conversation with a salesperson.  We then organize the answers into an “easy to read and navigate” website which tells a compelling brand story, has multiple short forms on every page and we use a downloadable ‘report’ so a candidate gets something substantial in return for completing a form.

4. Out with “Bullets” and “Headlines” in with Brand Stories: Stories are the essence of communication and as long as there have been people, we’ve used stories to relate to each other, better understand the world around us and make better decisions. Brand storytelling was the big marketing trend in 2012 outside the franchise industry and the few adopters saw sizable performance gains over traditional marketing messaging.

Traditional franchise lead generation focused on benefits-selling; single pages with a couple of paragraphs and bullet points that focused on the features of a franchise system. Smart companies are learning that brand storytelling – the practice of weaving together information into a narrative that reads like a story like a magazine article – works much better and is much more effective at engaging franchise leads.

Brand stories don’t live in silos, either. Smart franchisors are connecting all of their online content so that breadcrumbs all lead back to the franchise website. This is true of email campaigns, portal ad pages, PPC landing pages, organic search content, social media posts and just about any other online content.

Expect to see franchise brands engage in brand storytelling to help generate franchise leads in 2013.

5. Resurgence of Google Adwords and PPC advertising aimed at THE MIDDLE OF THE SALES FUNNEL: ask around the franchise industry and you’ll hear lots of horror stories about how PPC marketing cost a ton and didn’t produce a result. As franchise buyers have changed the way they do self-directed research, PPC advertising is again playing a crucial role in recruiting franchise buyers.

When we track organic and paid search results for actual franchise buyers, we’ve seen a trend develop in 2012: people who buy franchises are using organic search terms that either relate to the brand name or the category of business the franchise is in.

They are not using unrelated terms or terms that stray outside the category of business. For instance, a carpet cleaning franchise client gets sales via PPC ads from people using the brand name of the company or the category of business: carpet cleaning franchise, carpet cleaning franchises, carpet cleaning franchise for sale.  These candidates enter the process with a good idea or more educated about the type of business they are looking for.  They are most likely further down the decision-making funnel than someone who googles the term, “franchise information,” or “franchises.”

For our clients, we find that generic terms such as “low investment franchise” or “home based franchise” may generate “click throughs” or “leads” but we do not find that these terms generate buyers.

Furthermore, when a company launches a content website that ranks highly for the same industry terms AND launches a targeted PPC campaign, conversions increase by 20-30%, generating both more leads and more buyers. Having multiple mentions on the first page of Google for the terms buyers use makes a measurable difference.

The implications are that targeted PPC should be part of your spend in 2013. It should also be managed by the same person who manages your website and manages your lead generation. The lesson: website content and PPC campaigns are connected. Hiring someone to manage PPC campaigns who isn’t involved in your overall organic lead generation won’t produce a good result but having someone who understands what it takes to convert and engage a buyer will. Spends might not be large – from $2,000 a month or less – but reach buyers at the point where buyers at their point of interest, which is always the goal of marketing.

6. The return of Franchise Portals. Many franchisors report a “love-hate” relationship with franchise portals. After several years of decline, a few franchise portals have rethought how they approach marketing and are showing signs of promise. Franchise Update, at its annual leadership and development conference noted in its annual survey that portals showed an increase in contributing to closes.

We always recommend working with certain portals as part of the overall mix for franchise lead generation. Some portals we work with, notably Franchisesolutions, Franchise.com, Franchise Gator and Franchiseopportunities, have been open to linking to our franchise websites and work hard to track lead data so we both know where leads come from.

Our clients pay for WEB TRAFFIC and not CONTACT INFORMATION.  We look at portals as a sort of “pay per click” advertising; a way to generate higher quality traffic to our content websites. They may get leads directly from the portals but they also get buyers who clickthrough to the company franchise website.

While our strategy works great for our clients because we have armed them with robust franchise opportunity websites which tell the brand story well.

Linking a skimpy online 1000 word portal description with a skimpy website doesn’t work, which is why franchisors often report closing 1 in 350 portal leads.

7. Radio advertising picks up steam. One of the popular lead generation forms from 2012 was satelite radio. Franchise buyers, stuck in a car during drive-time, could learn about franchise opportunities during commercial breaks.

XM radio is expensive – running from $8-20,000 a month but is working for the franchisors whose budget allows.  It doesn’t produce a killing, but often comes close to covering the total cost. It is a big spend and not recommended for small or entry-level franchisors.

As franchisors start jumping on the XM bandwagon, we expect some dilution of results, but for now we are pleasantly surprised with some of the results we have been hearing. Also expect companies to experiment with local talk radio advertising as an effective way to tell your story in target markets. Radio, like franchise blogging, is a great way to get a complex message across.

Summary

Whatever your budget is for 2013, make sure to take a step back and critically look at your efforts. Are you really giving franchise buyers what they want or is your marketing creating roadblocks? Is your marketing in silos or is it interconnected so candidates can easily drill down no matter what lead source they come from? Take a good look at your franchise website. Does it really tell your story well and answers in detail all of the questions a franchise buyer will have?

There are buyers in the market and our prediction is they will gravitate to brands that do a better job of storytelling and make the information more accessible.

Have a Happy New Year and here’s to a great 2013!

Franchising fights back from recession, but performance gaps keep many companies from expanding

By Joe Mathews and Thomas Scott

“Franchise Sage” Darrell Johnson, CEO of FranData, has played an integral role at the past five Franchise Update’s Franchise Leadership and Development conferences, which is to look at the key economic indicators and predict what it means to franchisors.

Each year, optimistic attendees joke that Johnson, the consummate realist, “sucks hope out of the room” with extremely detailed, accurate, and consistently spot-on economic forecasts. Hope, Johnson implies, is a lousy franchise development strategy.

Attendees at the 2012 Franchise Update Leadership and Development Conference

This year, at the FLDC in Atlanta, Johnson predicted ongoing economic difficulties for the next three years regardless of the political climate. That means continued struggles for franchise systems to recruit new franchisees and improve unit-level economics.

The silver lining? Skilled franchisors whose franchisees perform exceptionally will still thrive even in this weak economy. Perhaps this is why small business confidence remains strong. As in all recessions, people strongly consider business ownership, including franchise ownership, and banks are slowly beginning again to lend to driven franchise owners with operationally excellent businesses.

There’s the rub, though: Franchisors have to consistently perform at high levels.

The days where the rising tide of the economy kept mediocre franchise concepts afloat are long gone. As Franchise Update Publisher Steve Olson said at the conference, “Franchise companies are in danger of missing opportunities to grow because of gaps in performance.”

Franchise Performance Group agrees, and as students of behavior, we also know that breakthroughs emerge from breakdowns. Franchisors can judge the magnitude of the breakthrough possible by the size of the breakdown they are currently in. While improvements often come from adoption of new practices or techniques, seismic breakthroughs come from system reinvention. It’s time for many franchisors to acknowledge their franchise development and operational breakdowns and reinvent to pave the way for organizational breakthroughs.

Franchise Update Publisher Steve Olsen

Our list of takeaways and breakthrough ideas from this year’s Franchise Update Leadership Development Conference in Atlanta:

• Franchise Sales Cultures are Out and Operational Excellence is in. Smart franchisors abandoned the idea “whoever sells the most franchises wins.” They have come to the conclusion that franchising is basically a two metric business: franchisee profitability and franchisee satisfaction.

• Lead count is out and the number of engaged franchise candidates in the pipeline is in. Franchisors used to say, “It takes 100-200 leads to find a buyer.” Smart franchisors realize it only takes one lead to create a buyer. Smart franchisors are focusing on “Buyer generation strategies,” which include offering buyers more substantial and transparent content before requiring them to come out from behind the computer screen and throw their hat in the ring.

• Watch Bill Knight, VP of Development from Chem-Dry. He gets it. His presentation was among the best we’ve seen at conferences. Chem-Dry has managed to open over 100 new units a year, dominating its competition by thinking strategically about lead generation, using brand storytelling and mastering franchise recruiter skills and pipeline management. Knight had an entire room of recruiters nodding in agreement as he gave a detailed and transparent walkthrough of how he drives results. Knight is a perfect example of what it takes to bridge the performance gap in today’s market. Expect to hear more about him in the year to come.

• Attorney Lane Fisher is to Item 19 as Columbus was to the notion of a flat Earth: Fisher elevated the item 19 conversation from “should I or shouldn’t I?” to “How do I best segment the data to best tell our story to our target franchisees?” He advocated Item 19 information on both website and in advertising. A few years ago, the mere suggestion of such a thing would give franchisor’s in-house counsel cardiac arrest. For the 70+% of projected franchisors who have an item 19, listen to Fisher’s opinions. He gets it, and if your attorney is still making it difficult for you to produce a useful item 19, get a second opinion from Fisher.

• Out with skimpy franchise opportunity websites and “franchise tabs” on consumer sites and in with content rich franchise opportunity sites. Large amounts of online content, strategically geared to answer the specific questions franchise buyers ask most often, leads directly to more emotionally engaged and “buyer ready” candidates. Content can be intelligently distributed through franchise opportunity websites, franchise blogs, landing pages, email campaigns, portal pages, online PR. Perhaps the biggest franchise lead generation trend this year was simply that more brands are moving to content-heavy websites built on WordPress and are using brand storytellers to create the sites rather than web designers.

• Mystery-shopping your franchise salespeople is in: This is stunning: Franchise Update reported Forty-nine percent of mystery shopper leads were never contacted by the franchise company. This more or less happens every single year. Our big surprise is how every year we are still surprised. There is a skill deficit crisis among franchise salespeople. VP’s should finally take a stand and say, “Master your craft or do something else.” VPs should also budget significant dollars in franchise sales skills training, coaching and mystery shopping. In the past recruiters could squeak by with sub-par performance because of a lack of accountability and erroneous assumptions by departmental leadership that recruiters are doing their jobs properly. Top performing recruiters often outperform their counterparts by 200-300%. Think about the lost value of the franchise fee revenue, lifetime value of the royalty stream, and equity value of the qualified franchise candidates who get away. Most training and ongoing coaching programs can be paid for with one extra deal.

• Franchise recruiting is a conversation. In any conversation between a salesperson and candidate, three simultaneous conversations are going on: salesperson to candidate; salesperson with himself; candidate with himself. Skilled franchisors know the buying decision is made in the conversation the candidate has with himself. These skilled franchisors create streams of content, franchise opportunity websites, and recruitment processes all designed to manage and shape this conversation. Best-in-class recruiters know how to gain access to the candidate’s inner conversation through sound interviewing skills and open and transparent dialogue.

• Out with “Franchise Opportunity Website as an online brochure” and in with “Franchise Opportunity Website as the franchisor’s first conversation with the candidate.” Want to bridge the performance gap Steve Olson talked about? Design your company franchise website to appeal to franchise buyers, who yearn for detailed and accessible information they can trust. Your site is your online home base, media center and franchisee recruiting tool in one; it’s the most effective way to attract likely buyers through portals, organic SEO, PPC, email campaigns and your consumer website. Franchise Update reported that the internet and referrals were responsible for almost 3 out of every 4 new franchisees recruited. Virtually all of these buyers are checking you out on the website before they are ready to be approached by your recruitment staff.

• Working with Franchise Brokers is an “all or nothing” proposition. Brokers look for companies with strong economic performance, excellent validation and highly trained salespeople. They want franchisors who are ready to grow quickly and develop all 50 states and often Canada. If your franchise takes the “tortoise” rather than the “hare” approach, broker networks are probably a waste of your time and money.

• Franchise salespeople need new skills. Salespeople increasingly need excellent interviewing and listening skills. They need to possess at least the same level of business acumen and sophistication as the franchisees they recruit. The franchise sales game is changing rapidly, and tenure and experience in franchise sales should not be confused with “competence.”

• PPC is worth looking into. Again. Pay-per-click search, often called PPC or SEM, is generating enough buyers to warrant renewed attention. Don’t take money away from improving your franchise opportunity website, portals or PR to experiment, but if you’ve got some left over resources in the budget, spend it to drive web traffic. Franchise Performance Group suggests companies are using much more targeted methods with PPC to generate more engaged leads. Chem-Dry’s Bill Knight talked about how his company is generating some buyers by narrowing in on specific groups of relative keywords and using segments of his content-heavy website to convert leads in place of traditional landing pages and broad based search terms. He is using paid search to expand the organic ranking and reach of his website and it pays off. The takeaway? High-performing PPC is closely related to your organic search and better handled by your content marketers than an SEO company. Overlap the two and you’ll boost quality lead flow.

• Learn to speak “bank:” FranData’s Johnson says banks have plenty of money to lend but hesitate to lend unless they know the money is going to be paid back. Let’s face it, banks don’t want the franchisees’ collateral, they want the principle and interest off a successful business loan. They want to loan on a business that has a demonstrated ability to succeed and a high likelihood of future performance. Learning to speak bank helps you set your potential franchisee up for success with a bank. Bankers, who don’t know your brand and typically have little experience with franchise lending, can’t always interpret an FDD to make a loan decision. Johnson suggested you give the banker a detailed but digestible report on your earnings history and industry segment, placing your brand in context and helping the banker understand the likelihood of success.

• Web analytics — and not just Google Analytics — matter. From the show of hands at Franchise Update, the typical franchise development exec spends little time with web analytic data. Most companies rely on their IT or marketing departments for that, but franchise development staff need to look at them monthly, if not more often, to understand their online effectiveness. For the franchise opportunity websites we manage, we can now track IP addresses with custom analytics, something Google Analytics doesn’t do. The data shows that buyers read more content and spend 400% more time on the site and read twice as much information than those leads who request information and then punch out somewhere in the process. Franchisors are going to start paying attention to the differences between buyers and everyone else.

• Retargeting is paying off. Retargeting — the practice of displaying banner ads on popular websites to the people who visit your website but don’t fill out a form — is picking up steam. Several companies reported that spending a few hundred dollars a month on retargeting increased deal flow by one to two percent, which may not sound like much but represents a significant rise.

• Portals are getting it. Buyers generated by portals made a nice comeback this year. Franchise Update reported that portals were the most productive source of online franchise leads outside of your company website. Portals are working harder to attract better leads and we had some exciting sidebar conversations about some upcoming innovations which will reinvent how franchisors and portals interact. Franchise Performance Group predicts that the “cost per lead” model will be completely abandoned in favor of a flat fee for generating web traffic. Portals tell us that what’s holding up the reinvention is the piss-poor design, content, and conversion results of too many franchisors’ franchise opportunity websites. Smart franchisors are engaging portals in conversations about how to better drive leads to the company website to create a more informed and higher engaged lead. This may mean a lower lead flow but should lead to a higher contact and close rate. Note to franchisors: Upgrade your websites and start publishing more content so we can help portals help us create a breakthrough in franchisee recruitment results.

• More franchisors are filling their franchise sales positions by hiring franchisees to do the job. Franchise salespeople had better take notice of this trend. Franchisors are starting to reject the notion of “franchise sales specialists” because of the overall lack of skill development and unwillingness of franchise salespeople to stay current with how buyers buy franchises. Franchisees are credible and they know the business from the trenches. Need to hire a new salesperson? Take a look at your current or former franchise owners as part of your search.

• More young people are buying franchises. This year, the number of franchise owners in their 20’s spiked. For the first time, 50% of franchise systems now have franchise owners in their 20s and 97% have owners in their 30s. College graduates in a dismal job market are turning to franchise ownership as an alternative. Recruiters should consider young candidates who lack money or skills but might have family support. No doubt some shady franchise salesperson has recently uttered, “Do you know where your mom keeps her checkbook?” Kidding aside, franchisors had better start training franchisees how to deal with extra pressure and dysfunction family businesses sometimes create.

• Culture sells. People want to associate with brands that aren’t just successful but that fit nicely with their own values and priorities. They want a culture that’s fulfilling and fun. Here’s the thing about culture: You can’t fake it. If you build a great culture and back it up with solid systems and marketing, expansion will naturally follow, and your franchisees will turn into your best brand champions. Amit Kleinberger, CEO of Menchie’s frozen yogurt, the dominant brand in the self-serve frozen yogurt segment says, “People don’t buy the ‘what,’ they buy the ‘why.’” By this he means while franchise buyers are interested about how a franchisor gets their product and services to market, they really want to know what a franchisor values and stands for.

If you haven’t attended this conference, consider doing so next year. This is the best source for detailed, tactical information on franchise development, and we recommend sending as many people from your team as possible.

What were your takeaways from this year and what do you intend on doing to make sure your brand doesn’t miss growth opportunities due to low performance?

by Thomas Scott and Joe Mathews

On average, how many leads does it really take to sell a single franchise?

What’s your “lead-to-close” ratio?

If you attend Franchise Update’s annual Franchise Sales and Leadership conference, those are the types of questions you are sure to hear attendees ask each other.

You will hear answers all over the map: from a low of 1 in 50 to a high of 1 in 300. There seems to be little consensus on how many leads it actually takes to close a single sale and everyone you talk to seems unsatisfied with their current ratio.

Franchisors generally think if they can generate 200-300 leads in a month, there must be at least one or two new franchisees somewhere in the pipeline. Franchise sales then becomes a game of finding a “franchisee” needle in a stack of “tire-kicker” straw.

The Problem With Lead-to-Close Ratios

Using lead-to-close ratios assumes there is a relationship between leads; like leads somehow know each other and work together to reach an agreement about which ones are the buyers this month and which ones will either tell the franchisor “No” or enter the “Lead Witness Protection Program” and fall off the franchisor’s radar screen for good.

These ratios assume that every same-sized group of candidates behaves in the same way and franchisors can produce predictable results purely by increasing the number of contact forms filled out or qualification forms submitted. It assumes the “next hundred” leads will act consistent the previous hundred.

But what if we’re simply looking for leads in the wrong way?

Let’s start with the first assumption:

How many leads does it take to recruit one franchisee?

The truth is it only takes one. The right one. The other 99% don’t matter.

The Secret to Franchise Lead Generation:

Here’s the most important concept to grasp about franchise lead generation:

There are simply people who buy and people who don’t buy.

Therefore, franchisors DO NOT need more leads to recruit more franchisees. They need more buyers. Leads and buyers ARE NOT the same people and DO NOT behave the same way. Buyers act like other buyers. They exhibit similar behaviors, act in predictable ways, follow discernable patterns, and share many of the same concerns.

When you begin to market your franchise brand and generate leads, your messaging should be geared towards engaging the people who are most likely to buy. In other words, generate leads for THE END of the sales funnel, NOT THE BEGINNING and give buyers what they are looking for.

Three Steps Towards Creating a Breakthrough

1. Know who buys
Start by gaining a better understanding of who has already invested in your franchise and learn their concerns and know the type of questions they typically ask early in the sales process. People who buy often have a wide range of questions they ask and the scope of these questions defines what types of content you’ll need on your website.

In addition, learn, what were their goals and objectives, what made them take the leap, and how did they see the franchise as solving their problems or bridging the gap between where they were and where they wanted to be in the future?

Investigate where they looked for answers to these questions and what they found online when they looked. The answers to these questions should drive the design and navigation for your franchise website and determine the thrust of your franchise lead generation strategy.

2. Publish your story
Then tell a compelling brand story online. Our data shows buyers have a much higher demand for online content than leads. It also suggests that if you can’t satisfy the visitor with the largest information appetite, you’ll run the risk of driving potential buyers off before they opt in to your sales process.

We’ve built and launched a dozen very different franchise opportunity websites for brands in the past year. We’ve also designed content-driven lead generation programs for these brands using journalistic-style of storytelling to engage buyers. This new and innovative approach produces above average results.

Take a look at these charts detailing out what we’ve learned from our 2012 data for websites we’ve built and generated leads for:

Visitors=anyone who visited the website, including leads and buyers.
Leads=filled out the lead form but did not invest in the franchise
Buyer= filled out the lead form and invested in the franchise

When you look at the behavior of people who buy franchises on the websites we built, something dramatic is taking place: they are spending almost 50 minutes on the company’s franchise website reading 33 pages. That’s an average of 90 seconds per page.

Compare that to leads who spend 14 minutes reading 15 pages, or about 60 seconds per page.

What does this mean?

Buyers today do more self-directed research, read more intensely, and have higher demands for information before they are willing to fill out a contact form. Buyer’s appetite for information needs to dictate franchisors approach when it comes to franchise website design and franchise lead generation.

3. Give Buyers What They Want, How They Want it
Do you have at least 30 pages of relevant and engaging content on your website or are you still buying into the faulty logic of “I will just put enough information on the website to pique their interest. If they want the story, they have to fill out our form.”

Do your web pages have enough depth of information to keep a buyer engaged for 90 seconds? (That’s the equivalent of a 400 word article) or are you relying on short, bullet points that may be acceptable to meet the information demands of leads want, but may be dissatisfying to franchise buyers.

Not all visitors or leads may not want or need the depth content we recommend and most visitors won’t spend the better part of an hour on your site. By increasing the amount of information available on your website, franchisors may actually decrease lead generation and allow tire-kickers to self-disqualify. And that is okay.

Why? Smart franchisors know that lead generation is irrelevant. Buyer generation is all that matters.

Here are a couple of examples of franchise opportunity websites that do a good job generating buyers:

www.ChemDryfranchise.com
www.Vodoofranchise.com

How do these franchise opportunity websites compare with yours?

The Bottom Line

Is your franchise website and content strategy designed to attract more leads or more buyers? Are you serving up enough of and the right kind of content to satisfy their appetite?

If you already have enough leads in your pipeline but want to increase the number of qualified buyers, contact us tscott@franchiseperformancegroup.com or joe@franchiseperformancegroup.com to learn more.

Who knows, you might just be starving your potential franchise buyers.

Base your budgetary decisions on real data and achieve your goal much more quickly

By Thomas Scott

OK, I admit it.

I’m a geek.

At some point in my career, I fell in love with data: Google analytics, click paths, click throughs, visits, impressions, likes and views. If I can dump it into a spreadsheet, I’m hooked on the story the data can tell.

In my business career as a franchisee, franchisor and brand journalist, I’ve learned that a single number often tells the most important story, and that any conversation should start with accurate data.

Franchise lead generation and sales activity create huge amounts of trackable data, from the wide range of reports CRMs generate to the detailed analytics any worthwhile franchise website should crunch. Having access to data, interpreting data, and making data-based decisions are all different things. I’ve recently noticed even the best franchise organizations struggle with collecting, analyzing, interpreting, and acting on the data collected.

The Problem With Data

Here’s the problem most franchisors — salespeople, franchise development directors or VPs and other executives — have with data: Sometimes they form emotional attachments to their ideas and suggestions and dismiss information that would suggest these favorite ideas aren’t working as hoped. It’s what behavioral psychologists refer to as “confirmation bias” — the tendency to accept only the information that matches your preconceptions. Famed psychologist Albert Ellis said “rational people change their story to fit the data. Irrational people change the data to fit their story.”

For instance, how often do unskilled franchise salespeople complain, “My leads aren’t good,” when the top producer in their department is doubling their productivity with the same lead pool.

Here’s an example: A franchise chain I worked with once believed the conventional wisdom common in our industry, “franchise sales is a numbers game. More leads means more sales. All it takes to grow more is to spend more.” Over six months, one franchise system spent $45,000 on franchise portal advertising that generated plenty of leads — about 450 of them a month, over 5,400 total.

How many did they close?

One. A single franchise sale out of 5,400 leads.

So we shifted gears. We started an email campaign targeting likely franchisee candidates, spending $3,000 in the process. The email generated 76 leads and two of the leads generated of which two invested in franchises.

It seems like a clear enough demonstration that sheer lead volume alone doesn’t necessarily determine success in franchise sales; the engagement level of leads does. Some franchise portals are in the business of selling “contact information” to franchisors, reluctant to cut loose of their idea that franchise lead generation was a matter of throwing enough mud at a wall — the more you throw, the more likely some mud would stick.

For the record, we like portals and think they belong in the lead generation mix. Strategic lead generation involves many sources, all working in tandem. It might be that you get a large number of leads from pay-per-click campaigns but none end up buying a franchise or your website might do a great job of converting visitors but they are hard to contact or lack engagement.

Without good data reports, you’ll never be able to connect the dots and make accurate adjustments.

The Three Must-Have Franchise Development Data Reports:

We start our conversations and troubleshooting with these three data reports you must have. They give critical insight into your franchise lead generation and recruiting efforts:

1. Cost-Per-Close Report: Franchise lead generation is complex. How much do you spend? What do you spend on? How effective is this spend?

According to data published at various conferences discussing franchise sales, franchise systems typically spend between $100,000 and $200,000 per year on franchise lead generation. This might cover portals, company website design, PR, SEO, PPC, print advertising, email campaigns, seminars, social media and outreach campaigns. This does not typically cover broker commissions which are a variable cost tied to franchise fee revenue.

The best way to gauge the effectiveness of a lead source is to divide what you spent on each source by the number of deals you closed from it to determine your cost-per-close. Remember, you don’t really want leads. And you certainly don’t want simply contact information. You want franchisees. It only takes one qualified lead to close a deal.

Say your annual budget looks like this:

• Company website design , PR, organic SEO and content production: $60,000
• Franchise portals: $60,000
• Franchise seminars or trade shows: $28,000
• Print advertising: $10,000
• PPC (pay-per-click search): $20,000

Total spend: $178,000, or $14,833 per month.

For each, here are the number of leads generated in a year:

• Company website and content production: 1,440
• Franchise portals: 2,640
• Franchise seminars or tradeshows: 40
• Print advertising: 320
• PPC: 600

Total leads: 5,040

• Company website, PR, SEO and content production: 18 closes, $3,333 CPC
• Franchise portals: 3 closes, $20,000 CPC
• Franchise seminars: 2 closes, $14,000 CPC
• Print advertising: 2 closes, $5,000 CPC
• PPC: $20,000: 5 closes, $4,000 CPC

Now you know which source works best and can budget accordingly. Lead volume alone delivers only half the picture.

So spend money first on the channels that perform and generate the most closes and highest engagement levels.

2. Lead Source Report for your company franchise website: If you have an informative and content-rich franchise opportunity website which addresses the needs, common questions and concerns of your target franchise candidate, most of your deal flow, with the possible exception of franchisors who are deeply plugged into broker networks, will come from your website.

Websites, especially those that use the WordPress CMS, can help answer that question by using some advanced tools and specially designed plugins. Today, through monthly lead source reports, you can track individual IP addresses for all visitors on your website; the click path through the site; the time they spent on each page; and data from form-fills.

This allows you to clear away data points that don’t matter, that actually can clutter up a clear picture of where the quality leads are coming from, and zero in on the data that tell the real story. Your website may have had 2,500 unique visitors last month and converted 5% into leads. It’s those 125 people who filled out the form that you should really pay attention to first.

Forget averages, especially those for time spent on-site and number of pages viewed. They can often be misleading. Averages factor in drive-by clickers who have no chance of buying a franchise and would waste your time. The people who matter are the ones who were interested and engaged enough to fill out the form — and a monthly lead source report tells you what route those people took to your site and, once they got there, what pages they went to and how much time they spent there.

For instance, Google Analytics might tell you the average visitor spent 2.1 minutes on your site and viewed 2.8 pages. Pretty underwhelming, you might think. This site doesn’t work.

But when you dig deeper and track the behavior of people who ended up filling out forms, the story changes. On the content sites we’ve built — including a research funnel of web pages and a detailed, downloadable franchise report — visitors who fill out forms spend an average of 24 minutes on the site and look at 18 pages. They are clearly engaged. When we say we’ve lost the first conversation in the sales process to the internet, your website is where the conversation went.

Lead source reports also tell you how people get to your site. Which ones came via organic search? What terms did they use? What percentage of organic visitors become leads? You might get a ton of organic traffic but nothing that converts. Conversely, you might get a small amount of traffic from some low-traffic terms that converts at a high rate.

By tracking IP addresses of people who fill out forms, you learn where they really come from and the results are often surprising. These data points should drive what blog articles you publish, adjustments to your on-site SEO and the targets of your PPC campaigns. You need both form fills and engaged leads – the two go together.

We create detailed lead source reports for all our clients, and the results always open their eyes and give them a basis for fine-tuning their lead generation strategies. It typically can’t be done with a franchise CRM or Google analytics and requires some additional reporting to use alongside your CRM reports. Without them, our clients would miss some of their best opportunities. These reports use custom analytics, so talk to your web developer or franchise lead generation consultant about your options for gathering this type of information.

3. Sales Process Conversion Report: Most franchise systems use some form of weekly or monthly pipeline report, usually to track nothing more than number of leads, conversions and closes. These are important, but they don’t tell the full story.

We recommend using a professionally designed sales process that holds salespeople accountable for progress at each step. The sales staff should learn to master moving candidates through the process one step at a time rather than always focusing on the close. If you measure each sales step and determine where people are dropping out, you’ll have a much better idea of where to shore up your weak points and strengthen the process.

For instance, say that, in the last quarter of this year, your franchise system generates 500 leads, which result in eight application fills and two closes. If these are the only data points you have, what would you think was the reason for the poor close rate? Most salespeople, in my experience, would blame the quality of the leads in the absence of any other insight.

But if you have detailed, accurate data on each step, you can learn the real reasons. You might discover that only 10 percent of the leads you communicate with even make it to the first webinar. This revelation could lead you to discover your response times are slow, your salespeople need more training in storytelling and listening skills, or your approach on first contact is falling short. Often, small tweaks to scripts and minor coaching for recruiters can make huge differences. Without the data, you’ll never know where to start.

All franchise CRMs can produce automated or customized versions of this report. If you don’t use a CRM, you can track progress on spreadsheets. Salespeople, like most people, hate data entry. It takes discipline and patience to build these reports manually and it is well worth the trouble. But the payoff comes in results.

Our Franchise Sales Data Advice

Start with the reports above and listen to the stories the data tell. Heed the small indicators that something works and experiment to see if you can improve the metric. Don’t be afraid to drop something that doesn’t work. Even the best franchise recruiter can get better — and no franchise recruiter can make sound data conform to his wishes.

“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence,” John Adams once said. When franchise systems learn to make their peace with data, and be open to the stories they tell, they reap big rewards in results.

Do you have experience using these reports and what else is essential in your franchise development efforts?Rich Text AreaToolbarBold (Ctrl + B)Italic (Ctrl + I)Strikethrough (Alt + Shift + D)UnderlineUnordered list (Alt + Shift + U)Ordered list (Alt + Shift + O)OutdentIndentAlign Left (Alt + Shift + L)Align Center (Alt + Shift + C)Align Right (Alt + Shift + R)Insert/edit linkUnlink (Alt + Shift + S)Insert/edit imageEdit CSS StyleInsert More Tag (Alt + Shift + T)Insert Page break (Alt + Shift + P)Toggle spellchecker (Alt + Shift + N)▼
FindToggle fullscreen mode (Alt + Shift + G)Show/Hide Kitchen Sink (Alt + Shift + Z)Proofread Writingcforms.desc
Font sizeFont size▼
FormatFormat▼
Paste as Plain TextPaste from WordRemove formattingInsert custom characterPrintSelect text color▼
Select background color▼
EmotionsSuperscriptSubscriptInsert / edit embedded mediaUndo (Ctrl + Z)Redo (Ctrl + Y)Insert/Edit AttributesHelp (Alt + Shift + H)
CutCopyPasteFind/ReplaceCleanup messy codeFont familyFont family▼
Insert/edit anchorInserts a new tableTable row propertiesTable cell propertiesInsert row beforeInsert row afterDelete rowInsert column beforeInsert column afterRemove columnSplit merged table cellsMerge table cellsInsert non-breaking space characterStylesStyles▼

Blockquote (Alt + Shift + Q)

Thomas Scott
Base your budgetary decisions on real data and achieve your goal much more quickly
By Thomas Scott
OK, I admit it.
I’m a geek.
At some point in my career, I fell in love with data: Google analytics, click paths, click throughs, visits, impressions, likes and views. If I can dump it into a spreadsheet, I’m hooked on the story the data can tell.
In my business career as a franchisee, franchisor and brand journalist, I’ve learned that a single number often tells the most important story, and that any conversation should start with accurate data.
Franchise lead generation and sales activity create huge amounts of trackable data, from the wide range of reports CRMs generate to the detailed analytics any worthwhile franchise website should crunch. Having access to data, interpreting data, and making data-based decisions are all different things. I’ve recently noticed even the best franchise organizations struggle with collecting, analyzing, interpreting, and acting on the data collected.

The Problem With Data
Here’s the problem most franchisors — salespeople, franchise development directors or VPs and other executives — have with data: Sometimes they form emotional attachments to their ideas and suggestions and dismiss information that would suggest these favorite ideas aren’t working as hoped. It’s what behavioral psychologists refer to as “confirmation bias” — the tendency to accept only the information that matches your preconceptions. Famed psychologist Albert Ellis said “rational people change their story to fit the data. Irrational people change the data to fit their story.”
For instance, how often do unskilled franchise salespeople complain, “My leads aren’t good,” when the top producer in their department is doubling their productivity with the same lead pool.
Here’s an example: A franchise chain I worked with once believed the conventional wisdom common in our industry, “franchise sales is a numbers game. More leads means more sales. All it takes to grow more is to spend more.” Over six months, one franchise system spent $45,000 on franchise portal advertising that generated plenty of leads — about 450 of them a month, over 5,400 total.
How many did they close?
One. A single franchise sale out of 5,400 leads.
So we shifted gears. We started an email campaign targeting likely franchisee candidates, spending $3,000 in the process. The email generated 76 leads and two of the leads generated of which two invested in franchises.
It seems like a clear enough demonstration that sheer lead volume alone doesn’t necessarily determine success in franchise sales; the engagement level of leads does. Some franchise portals are in the business of selling “contact information” to franchisors, reluctant to cut loose of their idea that franchise lead generation was a matter of throwing enough mud at a wall — the more you throw, the more likely some mud would stick.
For the record, we like portals and think they belong in the lead generation mix. Strategic lead generation involves many sources, all working in tandem. It might be that you get a large number of leads from pay-per-click campaigns but none end up buying a franchise or your website might do a great job of converting visitors but they are hard to contact or lack engagement.
Without good data reports, you’ll never be able to connect the dots and make accurate adjustments.
The Three Must-Have Franchise Development Data Reports:
We start our conversations and troubleshooting with these three data reports you must have. They give critical insight into your franchise lead generation and recruiting efforts:
1. Cost-Per-Close Report: Franchise lead generation is complex. How much do you spend? What do you spend on? How effective is this spend?
According to data published at various conferences discussing franchise sales, franchise systems typically spend between $100,000 and $200,000 per year on franchise lead generation. This might cover portals, company website design, PR, SEO, PPC, print advertising, email campaigns, seminars, social media and outreach campaigns. This does not typically cover broker commissions which are a variable cost tied to franchise fee revenue.
The best way to gauge the effectiveness of a lead source is to divide what you spent on each source by the number of deals you closed from it to determine your cost-per-close. Remember, you don’t really want leads. And you certainly don’t want simply contact information. You want franchisees. It only takes one qualified lead to close a deal.
Say your annual budget looks like this:
Company website design , PR, organic SEO and content production: $60,000
Franchise portals: $60,000
Franchise seminars or trade shows: $28,000
Print advertising: $10,000
PPC (pay-per-click search): $20,000
Total spend: $178,000, or $14,833 per month.
For each, here are the number of leads generated in a year:
Company website and content production: 1,440
Franchise portals: 2,640
Franchise seminars or tradeshows: 40
Print advertising: 320
PPC: 600
Total leads: 5,040
Company website, PR, SEO and content production: 18 closes, $3,333 CPC
Franchise portals: 3 closes, $20,000 CPC
Franchise seminars: 2 closes, $14,000 CPC
Print advertising: 2 closes, $5,000 CPC
PPC: $20,000: 5 closes, $4,000 CPC
Now you know which source works best and can budget accordingly. Lead volume alone delivers only half the picture.
So spend money first on the channels that perform and generate the most closes and highest engagement levels.
2. Lead Source Report for your company franchise website: If you have an informative and content-rich franchise opportunity website which addresses the needs, common questions and concerns of your target franchise candidate, most of your deal flow, with the possible exception of franchisors who are deeply plugged into broker networks, will come from your website.
Websites, especially those that use the WordPress CMS, can help answer that question by using some advanced tools and specially designed plugins. Today, through monthly lead source reports, you can track individual IP addresses for all visitors on your website; the click path through the site; the time they spent on each page; and data from form-fills.
This allows you to clear away data points that don’t matter, that actually can clutter up a clear picture of where the quality leads are coming from, and zero in on the data that tell the real story. Your website may have had 2,500 unique visitors last month and converted 5% into leads. It’s those 125 people who filled out the form that you should really pay attention to first.
Forget averages, especially those for time spent on-site and number of pages viewed. They can often be misleading. Averages factor in drive-by clickers who have no chance of buying a franchise and would waste your time. The people who matter are the ones who were interested and engaged enough to fill out the form — and a monthly lead source report tells you what route those people took to your site and, once they got there, what pages they went to and how much time they spent there.
For instance, Google Analytics might tell you the average visitor spent 2.1 minutes on your site and viewed 2.8 pages. Pretty underwhelming, you might think. This site doesn’t work.
But when you dig deeper and track the behavior of people who ended up filling out forms, the story changes. On the content sites we’ve built — including a research funnel of web pages and a detailed, downloadable franchise report — visitors who fill out forms spend an average of 24 minutes on the site and look at 18 pages. They are clearly engaged. When we say we’ve lost the first conversation in the sales process to the internet, your website is where the conversation went.
Lead source reports also tell you how people get to your site. Which ones came via organic search? What terms did they use? What percentage of organic visitors become leads? You might get a ton of organic traffic but nothing that converts. Conversely, you might get a small amount of traffic from some low-traffic terms that converts at a high rate.
By tracking IP addresses of people who fill out forms, you learn where they really come from and the results are often surprising. These data points should drive what blog articles you publish, adjustments to your on-site SEO and the targets of your PPC campaigns. You need both form fills and engaged leads – the two go together.
We create detailed lead source reports for all our clients, and the results always open their eyes and give them a basis for fine-tuning their lead generation strategies. It typically can’t be done with a franchise CRM or Google analytics and requires some additional reporting to use alongside your CRM reports. Without them, our clients would miss some of their best opportunities. These reports use custom analytics, so talk to your web developer or franchise lead generation consultant about your options for gathering this type of information.
3. Sales Process Conversion Report: Most franchise systems use some form of weekly or monthly pipeline report, usually to track nothing more than number of leads, conversions and closes. These are important, but they don’t tell the full story.
We recommend using a professionally designed sales process that holds salespeople accountable for progress at each step. The sales staff should learn to master moving candidates through the process one step at a time rather than always focusing on the close. If you measure each sales step and determine where people are dropping out, you’ll have a much better idea of where to shore up your weak points and strengthen the process.
For instance, say that, in the last quarter of this year, your franchise system generates 500 leads, which result in eight application fills and two closes. If these are the only data points you have, what would you think was the reason for the poor close rate? Most salespeople, in my experience, would blame the quality of the leads in the absence of any other insight.
But if you have detailed, accurate data on each step, you can learn the real reasons. You might discover that only 10 percent of the leads you communicate with even make it to the first webinar. This revelation could lead you to discover your response times are slow, your salespeople need more training in storytelling and listening skills, or your approach on first contact is falling short. Often, small tweaks to scripts and minor coaching for recruiters can make huge differences. Without the data, you’ll never know where to start.
All franchise CRMs can produce automated or customized versions of this report. If you don’t use a CRM, you can track progress on spreadsheets. Salespeople, like most people, hate data entry. It takes discipline and patience to build these reports manually and it is well worth the trouble. But the payoff comes in results.
Our Franchise Sales Data Advice
Start with the reports above and listen to the stories the data tell. Heed the small indicators that something works and experiment to see if you can improve the metric. Don’t be afraid to drop something that doesn’t work. Even the best franchise recruiter can get better — and no franchise recruiter can make sound data conform to his wishes.
“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence,” John Adams once said. When franchise systems learn to make their peace with data, and be open to the stories they tell, they reap big rewards in results.
Do you have experience using these reports and what else is essential in your franchise development efforts?
Path:

Developing Peak Performing Franchisees is a project that Joe Mathews and I have worked on since March. I can actually see a light at the end of the tunnel and I’m getting very anxious to have the work published.

One of my favorite chapters is Chapter 3: Understanding Behavioral Styles. The chapter explorers the behavioral differences of franchisees. In the early 1920s, an American psychologist named William Moulton Marston sought to create a mode that would allow him to predict and explain how normal people react to both situations and other people. To test the accuracy of his new theories of behavior, Marston needed to create a system of measurement. Incorporating some of Carl Jung‘s personality theories – including the concept of four distinct personality and behavior styles – Marston created an assessment tool that measured the following behavior characteristics:

• Dominance
• Influence
• Steadiness
• Compliance

From these four characteristics the DISC theory and assessment tool were named. Marston proved that those who possess similar characteristics also happen to speak, listen, process information, make decisions and produce results in similar fashion.

DISC has become one of the most widely used and universally accepted measurements to determine whether or not the skill people possess match what is required for a particular position. Franchise Performance Group believes DISC is among the best available tools to help identify and manage franchisee’s strengths and weaknesses and potential sources of conflict that typically arise between franchisors and franchisees.

DISC theory clearly shows that through consistent patterns of behavior, people essentially become typecast actors in their own movies, playing the same character again and again. Although people and events are not predictable, the way they interpret and respond to other people and events are, and can even be measured with a shocking degree of accuracy.

Here are the four typecast characters as Developing Peak Performing Franchisees describes them:

Action Heroes core strengths

• Visionary: Results-oriented and goal focused. Seldom loses sight of goals or the big picture.
• Decision Maker: Strategic, tactical, takes action.
• Efficient: Always pushes for the quickest, easiest, simplest, and most efficient way to produce results.
• Responsible: Strong leaders. Takes charge.
• Implementation: Finds a way to make things happen. Very action-oriented.
• Entrepreneurial: Multi-tasker, takes risks, involved (hands-on).

• Has creative problem solving ability. Will work to avoid conflict with franchisor and other franchisees.
• Sees the big picture. Goal-oriented.
• Consensus builder. Will work to influence other franchisees into his way of thinking.
• Works well with others. Functions well on a team.
• Easy to talk to, relate to.
• Optimistic and trusting.
• Outgoing, team builder.
• Builds quality relationships.
• Makes work fun.

• Objectivity.
• Very methodical and process driven.
• Functions well within a structured environment. Will follow the franchise system.
• Great listening skills.
• Empathetic.
• Team players, model franchisees.
• Servant leaders.
• Easy to talk to, relate to.

Private Eye core strengths

• Objective and open to new information.
• Very methodical and process driven.
• Quality driven.
• Functions well within a structured environment. Will follow the franchise system.
• Great listening skills
• Will find holes in the system. Brilliant at creating processes and procedures that plug the holes.
• Diplomatic.
• Highly analytic.
• Very persistent, consistent.
• Conscientious.
• Democratic manager, good at soliciting feedback.

What style or styles do you most closely represent? What styles do your employees or franchisees represent? Do you adjust your style to match the styles of others?

A special thanks to our illustrator Mark Weber who did a superb job illustrating the core strengths of our characters.

Google wants you to publish more content about your franchise opportunity if you want to rank highly for key terms

Everyone hates spam.

Spam doesn’t just clog your inbox; it clutters up your Google se

arch results.

Google has declared war on what it calls “webspam” — websites that rank highly for specific terms but don’t have the content people are really looking for. Think of the Internet as a river, and webspam as the tires and discarded refrigerator blocking the flow and ruining your view. It’s annoying, even dishonest.

Last year, Google began the attack on webspam with its Panda algorithm update, which removed content farms and rewarded sites that published well-written, original content. This year, Google rolled out its latest spam-killer: Google Penguin, which further penalizes sites that manipulate search methods solely to rank higher in search results.

Penguin penalizes websites that use extensive link building as the primary source of SEO by lowering how they rank. Companies traditionally have hired SEO firms specifically to build links. But users have said that much of the content that ranks highly is not what they are looking for and is poor quality, and Google has responded by dramatically altering the search algorithms.

Google is hammering webspam because it undermines the company’s mission: to deliver relevant results. Google determines a site’s relevance by monitoring the billions of daily searches by millions of users and registering what sites they visit, how many pages they view, how long they stay and what content users share on social networks; until recently, it also tracked how many other sites linked to each site. The longer users stay, and the more pages they view, the more engaged they are.

In short, Google doesn’t want you to hire a SEO company to manipulate the search engine; it wants you to redesign the scope of your website and publish better written and more relevant content for readers.

How does this affect my franchise opportunity website?

1. Quality content matters. In the post-Penguin landscape, franchisors should think hard about the universe of questions franchisee candidates are most likely to ask when researching a brand. If you’re a barbecue franchisor, you might ask, “How do I start a barbecue (or BBQ) business?,” “How much does a BBQ franchise cost?” or “What are the most popular BBQ menu items?”

Google rewards companies that publish rich, informative content — pages and blog articles — that answers pertinent questions, keeps users engaged and prompts them to share it on social networks.

If you’ve invested in link building, black hat SEO tactics and encourage content providers to generate content that matches what users are looking for. To rank, franchise opportunity sites need original, well-written, meaty content for Google to crawl and index.

If you are still thinking of your franchise opportunity website as an online brochure with a handful of pages and just a few paragraphs and bullets on each page, expect your ability to earn organic search leads to diminish over the next year. More detailed and expansive content written specifically for people searching for subjects related to your opportunity is no the ante into the lead generation game.

2. Engagement matters. It’s not enough just to rank. To win and keep a top spot, sites have to be “sticky” — visitors have to want to stay there. Users remain on typical websites for an average of 33 seconds. The average for most franchise opportunity sites is 90 seconds to two minutes. Induce users to “stick” for more than two minutes, and your ranking will rise.

You can get people to stay through pages with content written in article formats, as in newspapers and magazines, with embedded photos and videos. Navigation should be simple and logical; visitors should be able to get to any page with, at most, two or three clicks. You should include clear calls to action to navigate to a new page. Interested users — and if they weren’t interested, they wouldn’t be on your site, would they? — will stay and read. Web pages don’t have to be short and consist of text in bullets. Pages with detailed, relevant content will draw more viewers and keep them there for longer.

3. Your home page doesn’t matter like it used to. Google users are typically looking for the answer to specific questions. If you’re frequently publishing content on your franchise site, you’ll see that a large percentage of traffic enters through internal pages, not the home page. That’s a sign that the content matches what people are searching for. Optimizing your homepage for large numbers of individual terms isn’t a good practice anymore – at most a website’s home can be a relevant result for 4-5 terms. Real estate on your website is inexpensive so it pays to add more pages and optimize each for specific terms.

That’s why the most important lesson from Penguin is: Hire writers to help you tell your story and design your franchise opportunity website so you can publish many more pages. It’s critical now to create content Google recognizes and rewards because Google is where the franchise leads are going to research franchise opportunities. That trend is only going to grow in 2013.

Rethink the design and site structure of your website, too. Do you have a blog? A funnel of pages that help an interested candidate do research? How about organic landing pages targeting keywords that people interested in your business might search for?

Implication: Google’s Penguin update is the latest in a series of updates that will continue to change the way franchise systems can generate internet leads. They key tool a franchise system has is its website and for the foreseeable future, the quality and scope of content is more important than the design of your site. If you haven’t reworked your franchise opportunity website – or if you still lack one altogether – this is a good time to take a new look.

Someone right now is searching for something you sell. Does your franchise site have what they are searching for?

Want feedback on your current website? Start a conversation with us about what lead generation opportunities you might be missing.

Bill Knight, VP of Franchise Development for Chem-Dry Carpet Cleaning

Bill Knight, formerly of Lenny’s Subs, TCBY and Ruby Tuesday’s, joined Chem-Dry Carpet Cleaning as vice president of franchise development in 2009, in the depths of the recession.

Franchise growth had stalled in 2008, and the company hired Bill to kick it back to life. He immediately took the established steps franchise pros use to boost lead generation: He redesigned the company’s franchise website, launched portal advertising, networked with brokers and took out full-page ads in Entrepreneur magazine — steps straight from the roundtables of the IFA conference.

Leads and sales increased incrementally, but nowhere near as much as Bill had wanted. By 2011, Chem-Dry — with almost 3,500 units worldwide — was generating only about 350 leads per month. The system’s close rates were typical of franchise systems: 0.7 percent overall, 0.4 percent for portal leads. Bill wanted much more.

“We were doing everything the best franchise companies were doing,” Knight said. “Problem was, it wasn’t enough to hit our growth numbers. With close rates at or below 1 percent, our franchise recruiters were swamped with calls and sales activity but were not able to focus on getting quality people across the finish line.”

Today? Different story.

Chem-Dry’s franchise development website generated only 25 a month in 2011. In 2012, it generated an average of 159 leads per month. The close rate on those leads tripled, from 1 to 3 percent. Chem-Dry expects to close 70-100 deals this year, generating more than $1 Million in franchise fees. The vast majority of closes this year are coming from the company website.

So how did Bill turn things around?

He read Game-Changing Trends for Franchise Sales by Joe Mathews and Thomas Scott of Franchise Performance Group, who wrote that the economic collapse and Internet have led franchise candidates to demand more information about franchise brands before they are ready to speak with a franchise representative.

The article argues franchise systems that don’t tell robust stories about themselves were losing qualified franchise candidates to brands that used compelling narratives, franchisee and customer interviews and data about investment costs and returns to lure more engaged franchise leads. The old way of selling — give potential franchisees snippets of information to whet their appetites and—hoping they will answer the phone was obsolete.  Franchise candidates now researched franchises on their own via the Internet, and the absence of information compelled them not to learn more about the “stingy with information” franchisors but to look elsewhere.

In 2012, Bill hired Franchise Performance Group to develop a new, content-heavy, story-rich franchise development site, chemdryfranchise.com, which includes a blog with detailed customer interviews, franchisee Q&As and stories about Chem-Dry’s successes. The content is written by FPG’s team of veteran journalists, who are skilled at crafting narratives, answering important questions, ferreting out compelling details and getting to the heart of a story. By filling out a franchise form, candidates can download a detailed franchise report. Chem-Dry publishes weekly blog and PR content specifically designed to drive lead generation.

We asked Bill to share his thoughts on the new strategy.

What were you doing before to generate leads? What was and wasn’t working?

We had this well-rounded, multi-channel approach to lead generation, and we did all the things that you’ve heard are best practices by attending IFA and Franchise Update conferences.

We did advertisements in Entrepreneur magazine, which works well but is expensive. We used franchise portals, which I see as a billboard and an opportunity to use good SEO to match up with the franchise site. We have been part of broker networks, which has worked pretty well in the past. We wanted to leave no stone uncovered.

One thing I’d always been disappointed in is the organic leads that came from our franchise development website. When I started with Chem-Dry three years ago, the franchise opportunity was advertised through a single page at chemdry.com. I bought chemdryfranchise.com, and we moved that page to a website that was created to generate conversions for people interested in starting a business.

Our previous franchise website was typical of ‘industry standard’ franchise websites. It looked great and had typical pages with lots of bullets and some videos. We had great traffic — about 2,400 visitors a month — but it never converted the way we thought it should. Less than 1 percent of the visitors converted to sales leads and we only closed 1% of those.

Why did you decide to change lead generation strategies?

I read what Joe Mathews and Thomas Scott wrote about lead generation in today’s world and the way that well-written content can engage people though brand storytelling. The website that FPG created for us is well laid out. There’s a research funnel that is pretty linear and tells the story of what Chem-Dry is, how it’s different, the value proposition, how the investment fits together, and includes franchise testimonials and customer testimonials that allow candidates to gather info — and when they’re ready to engage, they can engage.

It has a lot more pages than a typical franchise website and each one answers a common question someone doing self-directed research would typically have.

One of most brilliant things we do is give people a way to opt into our process by downloading a franchise information report. Rather than fill out a ‘request for information’ form, we ask them if they want to download our full report, something similar to an executive summary. The price for the report is your contact information and I think it’s a great way to ask people to raise their hands and opt-in to our sales process.

I believe that FPG’s strategy of earning opt-ins by giving a candidate something really helpful and valuable is the right way to go. We are transparent with out information and we are clear on the site what you get in return for giving us your information.

Providing rich content through brand storytelling, social media, franchise blogs and online PR perfectly dovetails with Google’s new algorithm that ranks pages according to whether they offer engaging content and whether the site publishes new content on a regular basis. Getting good organic search results isn’t as much about link building or link sharing — it’s about having good content that people search for. We do a great job of building in keywords that people are using to get to our site and our organic traffic has grown month over month since we launched.

A franchise website isn’t something you build and walk away from – it’s our “daily newspaper” and it takes real work to keep it fresh and engaging on a regular basis. This is a new area of lead generation for franchise companies and it really pays off.

How has the new website and content strategy performed?

The most overwhelming performance measure that we’ve seen is that our content strategy works. We went from 25 leads a month before the site launched in March to 159 leads in June and will have a larger number in July, despite it being the slow time of the year. It isn’t just that the lead count is higher; it is that we have much higher quality and engaged leads coming from our website. Many come via organic searches to both our consumer and franchise websites. People that fill out forms and download our report are spending a ton of time on the website and coming back multiple times.

We see a big difference in contact rates, too. For portal leads, we only get 11% on the phone and into a first call. For website leads, the number is much higher – 30% get to the first call and we communicate via email and text with a larger number. The trust level from our internal leads is just much higher and there is a huge difference in engagement.

We’ve also had a big change in our lead pipeline. The majority of the active candidates in our pipeline now come from our website. Before, we would have 15-20% of our pipeline from our company website. Now we have as much as 70%. It’s starting to change the complexion of the deals we close. We’ve always had good referrals, but our out-of-network new franchisee leads have lagged in the past, but we’re starting to see our pipeline be filled with these leads. And we’re seeing that leads from the website are outperforming anything else that we’re doing in terms of closing deals.

Now chemdryfranchise.com is converting 5 percent of visitors into leads and our close rate for the website is almost 3%. We expect to close up to 70-100 deals this year and most are a direct result of the website and brand storytelling — that’s over $1 Million worth of franchise fees. It’s been a good marketing investment.

How would you explain the value of brand storytelling?

Most franchise pros are still stuck with this idea: I’m going to tease people into engaging our brand, give them just enough information to pick up the phone or fill out a form or accept a call from us.

That old model of throwing out a little bit of cheese and waiting for a nibble has completely changed through the recession and increased the demand for information. I think brand storytelling fills the void between what a brand typically provides in terms of research material and what they need to provide.

It’s a good chance to provide a clear, concise value proposition about the brand, and it can make the job of researching easier for a person who is trying to get into business with us. If we don’t give them the information they want, chances are they’ll go to someone else who gives them what they need.

Are you ahead of the curve on franchise sales lead generation?

Without a doubt. We made a big investment in this strategy, and I think we’ve made this investment before a lot of other organizations. Lead generation is the number one topic that always comes up at Franchise Update and IFA conferences — “What are you doing to get more leads? Better leads?” We have a great brand and a great story to tell. It’s emotionally engaging. Certainly from a financial standpoint it’s engaging. It’s a 35-year-old story of a great brand with amazing growth potential, the largest in its industry. Why not tell that story? We definitely feel we’re out in front of the curve. So many franchisors are fishing from the same pond — you have to be doing something that others aren’t doing.

What should you be doing, and in what order?

Bring someone in from the outside to develop your story: What is your story? What is your value proposition? I find it odd that a lot of times when you talk to people and start digging into their brand, a lot of folks can’t articulate their story and what the value proposition is. Designing your franchise website should start with the content and story before the design starts. We fit our design around the scope of content we needed, not the other way around.

You’re asking people to make one of the top three decisions in life — buying a house; having a child; starting a business. What is it that makes this brand special, and why would someone want to engage it? Having a skilled storyteller with fresh eyes is critical. A franchise candidate has fresh eyes and the longer you work within a brand, the harder it becomes to step into their shoes.

I’d start with your core brand story, then reevaluate your website. Move on to a detailed and interesting to read report and follow up with a journalistic-style blogging, online PR and social media strategy, all grounded in SEO.

Here’s the important thing: you should do these before launching other forms of lead generation, such as portals, emails and advertising. If you focus on your home base and get it working, your conversion and close rates jump from all lead sources since so many people do self-directed research. It isn’t an either/or. You need multiple forms of lead generation but you’ll strike out if you don’t pay attention to the quality and scope of your home base first.

How important do you think brand storytelling will be for successful franchise sales lead generation?

Thinking about it from a strategy perspective, having well-written content and a very engaging storytelling website is going to be the ante to being in the game. Without it, you are less effective in the rest of your effort — from the engagement level, to catching someone when they are ready to move forward, to your ability to close. I think being out in front of this is important and I can’t imagine that other franchise companies won’t adopt this in the year ahead.

A lot of times in franchise sales and development, the people who don’t get this tend to be the ones who objectify people and don’t ask the questions, “How would I shop for a business?” and “How would I want to be interacted with?” “I don’t want to be pestered by some slick salesman who’s not asking questions about me.” They’re not asking the questions about why people are eager to get into business for themselves, where the pain is in their lives, and where we can help find the solution to that pain. They take out the human element and want to play the sales game on their own terms, and that’s not how it works. If you treat people like people and understand how they buy and how they research, this is a no-brainer.

Curious to learn more about how changing your franchise sales lead generation strategy can create a breakthrough in your business? Contact us to start a conversation.