FRANCHISE DYNAMICS – 5 STRATEGIES TO IMPROVE FRANCHISE SALES
The sale of a franchise is unlike any other sale I’m aware of. With a few exceptions, it requires a commitment from the buyer that is unmatched.
In most cases, during the purchasing process, we ask the buyer to quit their job (if they’re employed and most buyers are) and to give up their paycheck and benefits. The buyer generally has to then invest most of their personal or family’s assets to go into a business they’ve typically never done before with people they don’t know. And, we can’t discuss income with you outside of what may be published in a ‘Financial Performance Representation’ (Item 19) which is often not comprehensive.
If you think about it from the buyer’s perspective, is it surprising the buyer is difficult to work with or emotional in this process? Probably not.
Here are 5 strategies every franchise company should be using to improve their franchise sales performance.
1 Have a plan
The best performing franchisors always have a well written plan. In our business, I personally visit with nearly 100 franchisors of every size and type of franchise category, annually. It continues to surprise me, but more than 90% of those company’s do not have a written franchise sales plan.
A good franchisor understands that system growth is an organizational imperative. Growth is important to not only the franchisor – franchisees generally perceive the long-term value of their businesses is increasing when their franchise system is growing.
2 Have a budget
Often, when we meet with clients who have programs that are struggling to sell, we find out that they are failing to invest appropriately in lead generation. The investment in saleable leads is substantial, with current estimates that close rates >1- 2% of leads and lead marketing costs that range from $8,000 to $14,000.00 per sale.
Franchise sales are predictable. If you have a good business concept, appropriate marketing and lead generation budget along with good franchise sales technique, you will generate leads that will lead to meetings and franchise sales. While the ‘sales funnel’ metrics will vary for every franchisor – over time, your leads and lead cost can become fairly predictable. Often we find leadership has unrealistic expectations of the sales team versus the resources that have been allocated to achieve results. One of the many benefits of planning is that you can forecast sales against a lead budget, and all stakeholders can measure outcomes, in a much more effective manner.
3 Invest in the right tools
Technology, when used appropriately, can provide franchisors a significant advantage in both effectiveness and outcomes.
Every franchise company, regardless of size should be using some form of ‘customer relationship management’ (CRM) software. From something simple like ACT! to well-regarded sales software like salesforce.com to the highly specialized franchise industry software available, a good CRM platform offers good data capture from candidate tracking to contact management to lead generation tracking. Using EXCEL doesn’t really
work, over time. It’s shocking how many franchisors do not have a CRM platform to support their sales efforts!
However, be sure to balance your use of technology in the franchise sales process with constant people contact.
4 Invest in the best staff
As the largest ‘franchise sales outsourcing’ company in the business, doing more franchise sales than any other firm in franchising, I can assure you that the ‘secret’ to great sales results is, in part, hiring the best people.
Ideally, you are looking for someone who has great personal sales skills, who has the ability to understand your business, has empathy (remember that buyer is making a life decision!), good business skills, a strong work ethic and can close sales. The money you invest in hiring, training and development of your sales staff can generate significant returns through results, over time.
Even with all of the resources available today, the old adage ‘people buy from people they like, trust and respect’ has never been truer.
5 Inspect what you expect
People tend to perform at the level of expectation that is communicated to them. However, when they under perform, it’s often a function of leadership failing to ‘inspect what they expect’. I’m not referring to micro management, which tends to de-motivate people. But objectives should be set in both terms of outcomes (sales results) and goals (leads, applications, discovery days, cost measurement) to ensure what is planned and resourced can be delivered by the sales team. A CRM tool can make this easier for both leadership and the sales team.
Franchise sales is not easy, nor should it ever be – given the significant impact it can have on the success of the franchisee and the future success of the Franchisor. Organizations that follow these strategies generally create outcomes that are significantly better than those that don’t.