For franchisors, operating a successful business requires more than maintaining the status quo; to thrive and grow, you must look for ways to continually improve. This requires taking a close look at your current processes, evaluating if and how they drive your business goals, and identifying areas for improvement. Altogether, this is known as process transformation.
However, franchisors often equate process transformation with the implementation of new technology. While technology is a critical aspect of process transformation, your primary focus should be on how your people, processes, and technology impact business outcomes. According to Harvard Business Review, 70 percent of digital transformation initiatives fail because they focus on the technology rather than business outcomes.
By following the four steps below, you can optimize processes across all major functional areas of your business — and as a result, better understand what’s going on in your business, improve efficiency, and make more informed decisions to drive franchise growth.1. Unify Your Data
The foundation of all process improvement is data unification. This isn’t about physically moving your data to one location; rather, unification means being able to connect and access data from all your disparate systems. Ideally, users should be able to interact with all data as if it came from a single source — rather than having to go into each system individually and analyze separate data sets.
This can be especially challenging for franchises, as franchise systems contain a lot of complex, interconnected data. However, the benefits are compelling: Unifying your data will allow you to uncover insights and see correlations you might otherwise miss.
2. Identify Your Core KPIs
Next, you need to identify your core key performance indicators (KPIs). These indicators should help you better understand the health of your business, so you can implement the right actions to drive meaningful outcomes.
The “right” KPIs may be different for every business, but there are a few key considerations that can help you select appropriate measurements. The right KPIs should:
- Focus on leading vs. lagging indicators: Leading indicators are predictive measurements, while lagging indicators are measurements of known outputs. For a gym franchise, for example, a leading indicator could be how many people sign up for a yearly membership. This can help you predict performance metrics like sales and revenue. A lagging indicator, on the other hand, would be the actual measurement of your sales over the last year. While this can assess your business’s current state, you can’t take any action to impact it — it’s already happened.
- Set compelling benchmarks: By creating benchmarks, you establish expectations for your business. With these in place, you can assess if you’re not meeting those expectations and adjust your actions accordingly.
- Be important to franchisors and franchisees: For your KPIs to be effective, they must be measurements that you and your franchisees care about — such as sales, costs, and cash flow. These factors impact the success of individual franchises as well as the business overall, so they are more likely to drive appropriate actions.
3. Align Actions to Drive KPI Behavior
At this point, true transformation can begin. With established core KPIs that measure the health of your business from all perspectives, you can now align actions to impact those goals. However, it’s not about simply guessing what actions will have an impact; we recommend using a standardized approach:
- Identify best practices from experts. Source guidance from internal and/or external experts who can recommend specific actions that are likely to help your unique business.
- Test those best practices across your system. Best practices may not be effective in every situation. It’s important to test within your specific environment to see if the actions work for your business.
- Adjust best practices based on what you learn. Based on your test efforts, you can make adjustments to those actions and processes in order to produce the right outcomes.
- Apply best practices. With a good understanding of the specific processes that drive your KPIs, you can implement those best practices across applicable segments of your business
- Engage through training and coaching. Incorporating these best practices in coaching and training efforts going forward will help everyone in the business embrace and apply them.
Once you’ve identified best practices that drive your unique KPIs, your next step is to scale them for the broader organization. This involves creating actionable playbooks that detail exactly how to execute the right processes, as well as automating standardized activities.
By establishing standardized processes that drive KPIs, you will help your franchises operate in an efficient way that positively impacts business outcomes. Learn more about how FranConnect can help you implement these four steps by watching our recorded webinar and demo, “4 Key Steps to improving your processes for Franchise Development, Operations, and Engagement.”