2019 AFDR Highlights: Measuring Cost Per Lead & Cost Per Sale

This is the sixth in an ongoing series of highlights from the 2019 Annual Franchise Development Report (AFDR). The 2019 AFDR, unveiled at the 20th annual Franchise Leadership & Development Conference, is based on responses from 109 franchisors representing 34,058 units (26,838 franchised and 7,220 company-owned).

Participants in the survey consisted of franchisors that completed an extensive online questionnaire. Responses were aggregated and analyzed to produce a detailed look into the recruitment and development practices, budgets, and strategies of a wide cross-section of franchisors. The data and accompanying commentary and analysis provide the basis of the 2019 AFDR. Ordering information is below. (Conference attendees received a complimentary copy.)

This week: Measuring cost per lead and cost per sale.

Both average cost per lead and average cost per sale rose in 2018. Nearly 2 of 3 respondents (65 percent) said they track cost per lead, up slightly from 61 percent in 2017, and 56 percent the year before - so steady improvement there. Yet as franchise consultant Steve Olson was quick to point out, this also means that more than 1 in 3 brands still do not track cost per lead.

And when it comes to sales, if you look at the 53 percent who track cost per sale, it means nearly half of respondents didn't know their cost per sale - perhaps the most critical number in franchise development metrics. As we've noted previously, "With all due respect to franchise sales teams, are you kidding?"

Franchise recruitment experts continue to shake their heads at the number of franchise sales teams that set a budget, spend the money, and fail to measure the effectiveness of that effort and spend. Why 100 percent of brands don't track these critical metrics remains a mystery - and could be one reason that so many development departments continue to miss their annual sales goals.

Among those who do track these two important sales metrics, the average cost per lead reported in 2018 was $126, up from $112 in 2017 and $109 in 2016. And the average cost per sale of $8,984 edged up slightly from $8,571 in 2017 (and up from $7,558 in 2016 and $6,300 in 2015).

 Next time: Sales closing ratios.

 Ordering Information
 The complete 2019 AFDR, with analysis and benchmarks, is available for $350. For ordering information, go to https://afdr.franchiseupdate.com or email  your questions to AFDR@franchiseupdatemedia.com.