By Keith Gerson, CFE
Even as the health-related stories about the pandemic continue to evolve, the business world faces a common challenge: moving forward. Most organizations have already realized that they can’t sit back and wait. They have to put plans into action and adapt quickly as necessary. The world of franchise sales faces its own set of challenges, but also some great opportunities. As we have reached the midway point of 2020, now is a good time to zoom out and consider what you must do as franchise leaders to ensure your development efforts continue to drive growth. Here are my Top Five Must Do’s for Franchise Sales Leaders now that we are halfway through this unforgettable year.
- Hold your team accountable
According to a recent June 2020 poll conducted by the US Bureau of labor Statistics, and as reported by Statista, 20% of U.S. adults are working from home during the COVID-19 outbreak. In addition, there are a total of 13.3% of Americans are currently unemployed. Two key takeaways are that for many industries, there are record levels of people that are interested in owning their own business, AND there has never been a better time for reaching people at home. The problem is that according to FranConnect’s 2020 Franchise Sales Index Report, 74% of new leads were never called by Franchisors. Conversely, we found that 85% of franchise deals were those that were contacted within 4 hours or less. At the cost of nearly $200 per lead, according to the Franchise Update Media Group’s annual franchise sales study, this is squandering over $177k in average franchise sales budgets per brand.
What’s one to do? The head of franchise sales departments need to do a better job in tracking their employees contact rates and response times. An effective Franchise Sales such as the one that FranConnect offers can ensure that this information shows up in real-time on a Command Center based on role (i.e. VP of Sales, Franchise Sales Managers, etc). And nothing creates greater focus on what’s important than publishing performance rates by team member.
Starve the things that aren’t working and feed the things that are.
An example of this truism can be found in the category of franchise portals. We find that the average closing effectiveness rate of portals are only 0.32% meaning that it would take approximately 300 leads to culminate in one sale. However, if one were to do further analysis of each portal that is serving the brand, they could find that some brands such as Franchising.com has a lead to deal conversion rate of 2.3% according to the results of FranConnect’s Franchise Sales Index for 2020 (which translates into 100 leads equaling 2.3 sales on average). This reminds me of the old cliché “don’t throw the baby out with the bathwater.” Now don’t get me wrong – portals can be very effective – both as a “virtual billboard” helping prospects in their online research, and in creating incremental deals as portals contributed a total of 10.4% of all deals generated (or 768 deals in total across 597 brands in our data).
- Know that recognition beats compensation when it comes to referrals
In analyzing the lead to deal conversion rates by marketing source, we find that referrals resulted in the highest conversion rates at an astounding 6.60%. Yet very few Franchisors are able to change the behaviors of their franchisees when it comes to making those referrals. How do you change these behaviors? For the sake of this blog, let’s assume that your support center is there for your franchisees in helping them to realize their goals and underlying reasons for affiliating with your brand. These often include the franchisees search for an improvement in lifestyle, income, debt reduction, equity and ultimately wealth. These are what I’m calling “table stakes.” But when it comes to referring prospective franchisees, trust me when I say that bribing them with a big check for encouraging their family, friends and associates will do little to motivate them. What does work? FranConnect recommends one or more of these following best practices:
- Sending videos that recognize franchisees who help your system to grow
- Crafting ongoing campaigns that reinforce the “why” behind the referral program
- Offering a “rainmaker” plaque/award on stage at annual conventions
- Including Franchisees that refer candidates that join your system in your Chairman’s Club, with a trip with other high-achieving franchisees to a special warm-weather event in locales such as the Bahamas, Mexico, or Hawaii (when travel becomes a thing once again)
- Adopt the Rule of Seven
All of your hard work and efforts to attract great leads to the top of your sales funnel are for naught if you don’t have an effective program in place for nurturing those candidates through the sales process. Research has led to the development and proof that supports what is known as the “Rule of Seven.” This is a principal that simply states that it takes an average of seven interactions with your brand before a purchase will take place. And the interactions take the form of a call from your franchise sales managers, reading a review, receiving emails and content that enable the buyer’s research capabilities, etc. Our research shows that only 25% of franchisors have campaigns established for new leads, and only 15% are sending campaigns to those leads that have been moved to the dead lead files.
And doing this will require a robust CRM that is actively used and maintained. And by robust, I mean that the CRM should be able to help you map out workflows and with a dashboard or “Command Center” for receiving greater insights into your sales funnel in real time. (Coincidently, FranConnect just happens to have such a CRM…)
To summarize, the key takeaway in this area is that franchise marketing and sales teams need to use a mix of personal and automated outreach before abandoning a lead. High-performing sales development teams typically aim for a minimum of 7-12 touch-points (AKA “The Rule of Seven).
- Tighten the screws on your CRM
Final recommendation…. If it isn’t in your CRM, it never happened. We have found that most salespeople are driven by human interaction over data entry. With the potential of your sales team potentially becoming ill from the COVID-19 virus, or with so many franchisors having to had some reduction in force – you can’t afford inaccurate or incomplete data entry, which can cause your brand to lose valuable information if the salesperson is down for the count or they leave the company. Lead intelligence is vital and sometimes the salesperson even forgets what was discussed with the prospect once a couple of months have passed.
To achieve each of these recommendations, it behooves the head of sales to set the proper tone and expectations. Ensuring that your sales teams have all the knowledge they need in one place and the ability to be more productive with both the lead and their calls is the way forward throughout 2020 and beyond.
How Can We Help?
Learn more from our research: FranConnect is the recognized leader in franchise management software, and we are working tirelessly to help our customers adjust to the new realities of business in 2020. The takeaways in this blog post were influenced by the FranConnect Franchise Sales Index 2020 Report. For the full report, visit our Resources Page.
Want to take a look at FranConnect? Regardless of how your franchise business has been impacted, it's never been more important to ensure that your development, operations, and marketing are working for you. If you’d like to talk to one of our experts about how our customers are surviving and thriving, we invite you to Request a Demo today.