2019 AFDR Highlights: Sales Closing Ratios

This is the seventh 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 (FLDC), 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.)

Sales closing ratios

The three most important metrics in evaluating the effectiveness of a franchise development team are:

1. the ratio of leads to sales
2. the ratio of applications to sales
3. the ratio of discovery days to sales

All three ratios in the 2019 AFDR were within range of those from the previous 6 years. However, for this year’s AFDR we made a change in the leads-to-sales question, specifying “qualified leads,” not all leads. This explains the huge increase to 14 percent from previous years, which were nearly all in the 2 to 3 percent range.

This higher closing ratio speaks to the importance of having a pre-qualifier working at the front end of your sales process. Weeding out the more “iffy” leads on the front end saves the sales team a lot of wasted time and effort during the ensuing stages of the sales process.

In her presentation of the AFDR results at last fall’s FLDC, Diane Phibbs, Chief Content Officer at Franchise Update, said, “With the number of leads going down and the applications and discovery days to sales ratios increasing, it looks like franchisors are reaching the right target audience.”

 Next time: Franchisors exceeding goals.

 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.