July 2010 Franchising World
By Mario Altiery
Pay close attention to lead generation's "sister" processes: creating a franchisee profile and lead follow-up procedures.
In recent years lead generation and even more so, the quality of leads generated, has been a hotbed of controversy throughout the franchising
community. Franchise systems struggling to add new, quality units have demanded closer scrutiny of lead sources. Some individuals have even attempted
to drive fear through the franchise community by proclaiming the end of franchise sales as it is known today, suggesting that franchisors should
abandon all their lead sources and lead follow-up procedures that have been successful in the past or they may not survive.
While franchise development certainly requires slight adjustments to changes in the business environment, it isn't time for panic or making wholesale
changes. There are quality prospects still looking for good franchises and reaching those individuals has always been more closely linked to execution
than jumping to the newest fad in lead generation or follow-up procedures.
To examine lead generation one must pay close attention to its "sister" processes: creating a franchisee profile and lead follow-up procedures. It's
important to review the process of creating an accurate franchise profile which will allow franchise systems to determine the best lead sources for
their brands, as well as re-visiting ways to properly follow up with interested parties to get the most from newly-generated leads.
With many different lead sources ranging from franchise portals to newspapers, trade magazines, referral programs, social media, public relations and
trade shows, how do you determine where to advertise? By developing a franchisee profile and aligning your desired demographic with the advertising
outlet's readership you will more precisely reach the prospects that match your franchise system.
How do you create a franchisee profile? The process can be daunting, let's begin with two key steps:
1. Examine your system and create a list of the transferable skills needed to be a successful operator and weigh those results based on importance.
2. Examine your top performers looking for commonalities in everything from age, hobbies and interests, business background, financial status,
community involvement and family support system
After compiling a franchisee profile, you should approach advertisers and request media kits detailing not only the traffic and frequency of their
subscribers, but more importantly if those subscribers match the traits and demographics of your ideal franchise prospect. You may find advertising
sources you never considered based on mining information about your franchise system and comparing the results with the advertisers. For example, if
many of your top franchisees are older men with an interest in golf, active in local charities and the necessary transferable skills include management
experience and an outgoing personality, you may decide to get a booth at a local charity golf outing conducted by businessmen's groups in a market
where you need a key location. Now that you have created your franchisee profile and are comparing results with possible advertising sources, it's time
to take a look at the two remaining sisters, lead generation and lead follow-up procedures. In Franchise Update's 2010 Annual Franchise Development
Report, statistics reveal franchisors spend the most money on Web leads, followed by referralsalthough closing ratios don't follow money spent quite as
closely.
At first glance we may simply assume that budgets are down, a large amount of money is being spent on the Web and clearly referrals are much better
leads than any of the other sources, but as anyone who has studied statistics can attest, the numbers are not always what they seem. To advance the
following discussion it is important to examine a few other items from the report.
• 42 percent of franchisors spend less than $10,000 per year on the materials that support the franchise development process. (Brochures, FDDs
printed and mailed, electronic FDDs, in-store recruitment materials, video production and others) While 75 percent spend less than $25,000 per year.
• The use of brokers has doubled in the past five years, 78 percent of those using brokers have closed sales in the last year, the majority of
broker leads are created on the Internet.
• 1 percent of leads result in sales, as do 10 percent of applications and 65 percent of Discovery Day visits.
• None of the franchisors who are reaching their development goals consider market conditions poor, while of those not reaching their goals, 31
percent describe market conditions as poor.
The data prompts many other questions, for example:
• Why is so much money spent generating leads, but very little spent on the necessary sales support materials?
• Why are the closing ratios for broker leads higher when they are often essentially the same exact leads that can be generated for $40 by a
franchise portal?
• Is it safe to say the easier leads to generate are the harder ones to close?
You can't necessarily control the flow of referrals you receive. You can encourage them with incentives and a referral marketing program, but you can't
be certain any referral leads will be generated. While if you advertise on quality franchise lead portals you almost certainly will receive an instant
flow of leads but can they be "warmed up" and closed? With the resurgence of trade shows you can meet hundreds of quality prospects in a single
weekend, but is your system set up to handle the follow-up and separate your franchise from the noise created by so many exhibiting brands? The data
also indicates an assumption could be made that franchisors are much better nurturing relationships with prospects in a "warmer" state, meaning
individuals that are a few rungs further up the buying ladder. The art of the introduction also seems to be lacking. For instance, referrals,
individuals who meet the franchisor in an optimistic state of mind and already have a positive view of your franchise business are only responsible for
10 percent of total overall leads, but they are the second-best closing source, responsible for 28 percent of all sales.
A more shocking example is brokers: many franchisors feel more comfortable with the "warmed-up" leads from brokers while the vast majority of leads
that brokers are warming up and passing to franchisors are generated through the Web, and in some cases come from advertisements next to the franchisor
on the exact same franchise portals.
If franchisors were able to take the same portal leads from initial inquiry to application through Discovery Day and eventually closing, franchisors
would save the double-digit fees the broker networks charge to simply perform the initial step of warming up a lead.
Before determining which lead sources are best for your franchise system, you should create a lead follow-up system capable of bringing a quality
prospect through your process regardless of which stage of the "buying ladder" they were acquired.
Eric Bell, franchise sales director of search portal Franchise Gator, recently provided data about a client illustrating how closely related lead
generation and the perception of lead quality is to proper lead follow-up. He cited an extreme example of a client who was advertising on the portal
for almost a year and although had good lead flow, the company had not closed any sales nor had received any applications and often complained of lead
quality and "tire kickers." Bell felt the franchise had a quality brand but the issues were connected to lead follow-up and suggested the company work
with a professional firm to shore up its development processes before giving up. The client took his advice and engaged a franchise consultancy to
create a tighter and more accurate follow-up process.
To begin, nothing but the actual initial calling procedures and e-mails were changed; the portal's copy, client's Web site and printed materials being
mailed to prospects remained the same. After the first month of follow-up with the new system, the client received 19 applications. In the first year
the client reached 110 percent of their franchise sales goals and continues to be ahead of their goals for 2010.
Bell notes, "When you consider all of this, you realize how important first impressions are! Everything from e-mail correspondence to initial voicemail
messages and the franchisor's Web site holds much more weight in the end-results than the franchisor realizes in many cases."
What needs to be done to generate good quality leads and close the best new franchisee prospects? Paying attention to the "sisters" is the key and
equal emphasis needs to be put on each. Following are some steps to start with:
Step 1. Create a consistent franchise lead follow-up system, accounting for managing different types of prospects at all different stages of the buying
process. If you don't have the information on the background, necessary skills or infrastructure in place to create the process, there are many quality
resources including books, blogs, articles, training courses, franchise conferences and franchise consultancies available within the franchise
community to assist you.
The follow-up system should include exact goals for each interaction with your prospects. Early in the process, if you find yourself on long telephone
calls, followed by lengthy e-mails, you are likely making mistakes. Your sales process should be controlled-allowing for a reasonable amount of
information exchanged at each stage of the sales cycle. If the length of your sales cycle varies from prospect to prospect and your phone calls change
in length and content depending on the day; revisit your process and tighten it.
Step 2. Develop quality materials to support the franchise-development process including an franchise information packet, portal copy, a separate
franchise development Web site or section of your current Web site, follow-up e-mails and specific voicemail messages that mimic your e-mails and
printed message.
Keep in mind that your portal copy, Web site and franchise information packet are your first impressions, so make sure they not only integrate with
your entire franchise development process but also convey the culture, tone and expectations for your system. Your materials shouldn't be judged just
by how they look. The impressions your materials create, evident by the questions and expectations they set with prospects, should be heavily weighted
when determining their effectiveness.
Step 3. Create a strong, accurate franchisee profile and align the results with the best lead sources, placing emphasis on total traffic, demographics
of readership, cost and geographic accuracy. It is not as simple as just looking at your top few franchisees and trying to clone them. Spend time
between your departments, including executive staff, administration, training and field support to gather insights into what "makes" a quality
franchise in order to create a comprehensive profile. And, continue to hone the profile as your system grows.
Utilize your advertising sources. They may be able to adjust your message or placement within their publication to more accurately drive the
best-matching prospects. If you choose to opt for in-house items such as pay-per-click or a search engine optimizing campaign you will need to
communicate your desired goals to the Web marketing staff.
Step 4. Dedicate staff for lead follow up. It is not something that can be sandwiched between lists of other owner duties during a typical work day. If
you are the owner of the franchise and want to perform the follow up, it will be necessary to delegate your other responsibilities. You may consider
the differences between a lead screener and the remainder of the sales process. These can be very different skill sets, the screener is a volume
position making nearly 100 calls per day lasting just minutes each while the following calls may be 30 to 45 minutes each but will be much less
frequent. Although both will have a tremendous effect on the results, it may not be best to have them handled by the same individual.
If you know you aren't going to diligently call the continuing influx of leads, consider hiring someone in-house to warm up your inquiries. If you
choose to outsource this task, consider using a third-party screening company or a broker network. Once dedicated staff is in place, ensure the
individuals have the proper training to perform their role in the development process.
Step 5. Monitor your results: keep track of contact ratios, where quality prospects fall off in the process and what sources result in the best
prospects becoming franchisees. Based on where you lose quality prospects, adjust your system before determining the leads are of low quality. By
tracking the data you will know which lead sources provide the best results.
Don't be surprised if there are a variety of sources that in combination work well. Using a quality message and materials and accurate follow-up
procedures you will likely find many sources successful and by diversifying your advertising you can avoid the challenges associated with spending your
entire budget with one source.
Step 6. Follow-up, follow-up and follow-up. It is often said the first person to reach a prospect has the best chance of bringing the prospect into
their system. However, there is little or no data to support this. Certainly quick follow-up is important, but just as important is being organized and
ensuring the quality of each contact. If you simply call franchise leads absent of goals and each call becomes an organic conversation varying by where
the prospect takes it, you are likely doing more harm than good. Go back and repeat step 1.
Thus, it is better to say those who are first to reach prospects with a clear, organized message using a quality process complete with specific steps
and goals will have the best chance of the prospect joining their system. By ensuring all the proper steps are taken and not neglecting any of the
sisters of lead generation you will likely find better prospects overall, lower costs per sale, a shortened sales cycles and stronger, long-term
franchisees.
And if you put the time into the pre-work, you might find it a lot less frustrating and maybe even some fun!
Mario Altiery is president of Upside Group Franchise Consulting.
