The franchise buyer takes control – are you prepared to meet them where they are?

By Thomas Scott

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Franchising is an unusual industry. For an industry that generates more than $25 billion a year in sales and has thousands of competing companies, it remains one of the most transparent. Attend any franchise conference, and you’ll find executives from other companies who will share best practices, give thoughtful advice, and take a genuine interest in the success of brands they have no stake in.

We love Franchise Update’s annual Franchise Leadership and Development Conference. Out of all the events in the franchise industry, this event stands out every year as an important place to learn what is working. This is our 10th year attending, and this was one of the best we’ve attended.

FLDC_blog_300x300_1The 17th annual FLDC conference was a record year for the event, with representation from more than 400 franchise professionals from 260 franchise companies. We noticed an aggressive shift in adoption of tactics and some refreshing, forward-thinking advice from presenters. Kudos to the FLDC staff for upgrading content from last year and raising the bar to help make the franchise industry higher-performance.

In 2015, there are record numbers of people considering franchise ownership, franchise brands are prospering, and financing is finally becoming more available. The franchise industry is growing at a steady rate, and according to FRANData, we have been adding one new franchise company a day. Despite the industry’s positive growth, franchise development professionals, VPs, and CEOs are still struggling to recruit enough franchisees and recruit the right franchisees, and the ability to intersect with the right candidates seems just out of reach.

Aaron Goldberg, VP of Franchise Development for ZIPs Dry Cleaning, made a funny analogy during his presentation on “Mastering Sales Fundamentals,” that sums up the key issue franchisors are having in 2015 when it comes to recruiting franchisees:

“When I was young, I had the mistaken impression that if I wanted a date, I could pick the woman I wanted to go out with. I’ve since learned that was totally wrong. Women picked me, and I had absolutely no control over the choice. Likewise, you don’t get to pick your franchisee. Prospective franchisees pick the franchise they want, and as a recruiter, you have no influence over the choice that person makes.”

While tongue-in-cheek, his point is serious. We are in the era of self-directed research, and as speakers from Google have stated, 70% of the decision to buy is now made before prospects request information or speak with a salesperson. According to economist Darrell Johnson, President and CEO of FRANData, franchising is gradually growing, but we are not yet seeing a rising tide and we are not close to a boom.

Competition for franchise buyers is intense, and only the brands that do a good job of grabbing market share and earning the connections with prospective owners will grow. Here’s the catch: just like dating, you don’t get to say if you’ve grabbed market share – that is only in the eyes of the candidate.

Here is our list of important takeaways for franchise development teams from this year’s conference:

It’s time to rework your franchise opportunity value proposition.

Smart franchisors are learning to create more-effective value propositions. In one session, Jack Humbert, VP of Franchise Sales and Finance for J.D. Byrider, flipped through the pages of a franchise magazine he held up for the crowd and commented that not a single ad in the publication had an effective value proposition. Is print advertising dead? You wouldn’t know, because there is a serious disconnect in how brands and ad agencies create value propositions. The typical franchise opportunity ads we see are out of sync with how buyers wrap their minds around opportunities.

Here’s what we mean:

Value proposition No. 1: We are the largest cleaning brand in the country. We are top-ranked, and you can be your own boss and enjoy an amazing lifestyle with our franchise.

Sound familiar? Chances are there are parts of the above statement in your public value proposition. Here’s what’s clear: Statements like these fail. They are overused, vague, and totally lack meaning for prospects. This is a good example of what NOT to do with your value statement, and it sums up 90% of the marketing for franchise opportunities.

Paul Pickett, VP of Franchise Development for Wild Birds Unlimited, a retail bird supply franchise that recruits passionate bird lovers, offered an excellent value proposition, which they now have on their website:

Value proposition No. 2: If you love birds, you can make a lot of money selling birdseed.

The second statement works. It is clear to the prospect, and it targets the core candidate WBU is seeking to recruit.

Humbert summed it up: “For me, a successful value proposition creates curiosity. Curiosity is what propels a prospect into the sales process, and curiosity is what propels someone to purchase a franchise.”

He’s right. Recruitment for franchisees is competitive. Only companies that look outside themselves, market in plain language, avoid clever messaging, and tell a clear brand story will earn conversations with buyers. Overlook your value proposition at your own peril: Having lackluster, muddy messaging will kill your ROI. Not getting a good result from portal advertising? Overhaul your ad page. Is your email marketing underperforming? Perhaps your messaging is off-message. The same goes for your recruitment website and any other marketing materials that intersect with a candidate. If your value proposition doesn’t resonate with your target candidate, you’ll miss your opportunity to connect.

Michael Arrowsmith, Senior VP of Development for Captain D’s, talked with candor about how he launched the rework of his brand with what he thought was a perfect value proposition — only to realize that it was totally off. He went back to the drawing board after talking to his most successful owners and ended up with a value proposition that worked:

Captain D’s provides access to the fast-casual segment with a simple operation, and without competing with other brands.

That was what his target buyer was looking for— they were already in food service, wanted to expand, liked simple operations, and wanted something with some blue ocean and little or no competition. Captain D’s is a brand to watch because it is one of the few brands that can deliver those things.

How do you create a better value proposition? Start by talking to your top performers. The franchisees in your system that thrive can tell you in just a few seconds what the value proposition is. It isn’t rocket science, but chances are it isn’t anywhere close to what your marketing department or outside agency thinks it is.

Franchise Opportunity Website more important than ever

Here’s one clear message that came up in almost every session and presentation: Your franchise recruitment website is the single, most-important part of your growth strategy. If you don’t have a high-performance, stand-alone website geared toward educating potential franchisees, you will struggle to recruit the quality and quantity of new franchise owners you need.

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Josh Wall, VP of Development for Christian Brothers Automotive, hit this point in his panel on lead generation results by telling the audience that his website created the breakthrough that has given his brand two years of record growth. “It isn’t just that you need content — you need the right kind of content, organized in the right way. You need high-quality video, photos, and other media.” He was proud of his website’s conversion rate — over 7%, which is five times the industry average.

We were pleased to hear Josh give this advice and also happy that three of the top five STAR Awards for top Franchise Recruitment Websites — including Josh’s — were sites we built and maintained.

Here’s the deal: Half of franchise sales in the industry come directly from company recruitment websites. Your website is an extension of your sales team, and it takes the place of the first conversation a candidate has with your brand. The all-critical value proposition we just mentioned? That had better be front and center on your site. How much time do you think franchise buyers spend researching your offering, and how long will they spend on your website? Our data suggests that it is a staggering 52 minutes.

Josh added that before CBA launched their new site, potential buyers were spending a mere two minutes on the website. He realized that he needed serious buyers to spend 45 minutes to one hour to fully understand the opportunity; this is the appetite for information about your brand a serious buyer has. Don’t have enough content to keep someone reading for almost an hour? You’ll lose the recruitment game to brands that do.

Using PR? Spending money on print advertising or radio? A best-in-class website will double or triple your return on non-digital strategies, too.

Companies that are exceeding industry averages invest heavily in the design, brand storytelling, construction, and ongoing upkeep of these sites. Dollar for dollar it has the highest return on investment you’ll make for recruitment.

Want to see examples? Check out our portfolio page.

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Sales to existing franchisees increase

One interesting stat from the annual lead generation survey: 40% of new franchise units companies sold in the previous year were to existing franchisees. This is important — if you don’t have a large number of existing franchisees buying new territories or opening new units, you might be missing a development trend that dramatically affects growth.

We love to see brands devote marketing and sales resources to encouraging existing franchisees to grow. Single-unit operators often become high-performance, multi-unit franchisees, and they are a lot easier to nurture than hoping to recruit the next flashy multi-unit owner. Consider incentives, an internal devoted recruiter, CEO blogging to your owners on why to invest in the brand, and teaching the operations support staff how to spot opportunities for internal growth. Set goals for internal expansion, develop a plan, and work it just as hard as your quest for recruiting new franchisees.

Phone leads increased in 2015, and you wouldn’t know it because salespeople struggled with inbound calls

In July, mobile visitors to Google surpassed the number of non-mobile visitors for the first time. According to the FLDC lead generation survey there was a 70% higher response to a web lead from a traditional form than to a lead that came via a phone call. When mobile visits are over 50% on many recruitment websites, this is a problem.

Are phone leads equal to web leads? We think so. Our data suggests that more serious and more qualified buyers prefer to opt in via the phone number on your website. Visitors on mobile devices are also more likely to use your phone number to call than to fill out a web form. It’s simple, and it gives the candidate more control over the process. Most importantly, we are seeing phone leads close at twice the rate of web forms. Twice.

Based on mystery shop results, our industry has a real problem: A receptionist or qualifier answered 35% of the calls. That means we missed 65% of inbound calls for franchise information — calls where the buyer was ready to talk. That makes me cringe, especially when there are proven solutions to handling these calls and ways to design your website so you turn this into an opportunity for recruitment.

Want more bad news about sales team performance? 34% of the leads in the mystery shop received no return call at all. One-third of all leads were never worked. If the average budget for advertising is $150,000 to $250,000, that means that at least $70,000 of your spend is wasted by underperforming salespeople, and you’ve lost deals you would otherwise close. Every year this number has been high. 34% is one of the better years we’ve seen, but it’s still a reason to get hot under the collar. That number should be zero. Every lead should get a return call. They do in other sales-oriented industries, and we don’t have an acceptable excuse for such a screaming lack of professionalism.

Video for recruitment is more important than ever before

Another stat that jumped out: Only 40% of franchise recruitment websites used any video at all.

Have you heard about the large demographic group called the Millennials? It is larger in number than the Baby Boomers and has a staggering 60% aptitude toward entrepreneurship. Every brand we talked to is spending time thinking how to better position themselves for this all-important group. For Millennials, video is critical.

I asked Michael Ackley, one of our franchise writers and my go-to source for an accurate perspective on how Millennials think,  why video was important for Millennials. Here is what he said without a moment’s pause:

“Video is the gateway to accessibility and authenticity. I want to know that the leadership team is accessible, trustworthy, and authentic. Video is an instant way to achieve those goals because it’s the closest thing to looking someone in the eye.”

Franchise development is a people business. Good, authentic, documentary-style video is rare on recruitment websites. It makes the value proposition stick in a meaningful way and works amazingly well on mobile devices.

For the MTV Cribs generation, video allows instant access into the day-to-day operations of your franchise and a seat at the table next to your CEO. It’s critical.

We do extensive documentary video work on all of our website and brand storytelling projects. Projects that have well-thought-out video simply perform better. Video adds the emotional edge to your brand story that creates relevance and curiosity. Want to see examples of what we are talking about? Visit our portfolio page and look at the brand stories and day in the life videos.

Summary

What to do with this information? Start by taking a step back and talking to your top performers. How do they explain your brand’s value proposition? Look at your recruitment website. Is it organized like the STAR award winners from this year?

Get someone from the outside to give you feedback. Look hard at your performance on mobile devices and pay attention to how you handle inbound phone leads. Most importantly, start doing a much better job of telling your brand story and work on your value proposition so you can earn more market share for your opportunity.

If you need help with any of the above, start a conversation with us.

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