2020 AFDR: Sales Closing Ratios Improved

Results from the 2020 Annual Franchise Development Report (AFDR) were unveiled in late October at the 21st annual Franchise Leadership & Development Conference (FLDC). The 2020 AFDR is based on responses from 122 franchisors representing 30,119 units.

Participants consisted of franchisors that completed an in-depth online questionnaire. Responses were aggregated and analyzed to produce a broad picture of the recruitment and development practices, budgets, and strategies of a wide cross-section of franchisors. The data and accompanying commentary and analysis provided the basis of the 2020 AFDR.

Highlights from the report were presented at the conference by Franchise Update Media CEO Therese Thilgen and Executive Vice President and Chief Content Officer Diane Phibbs. This is part 3 of 6 on some of the report's major findings.

Ordering information can be found here. (Conference attendees received a complimentary copy.)

Sales Closing Ratios

Another crucial set of metrics in evaluating the effectiveness of a franchise development team are the ratios of leads to sales, applications to sales, and discovery days to sales.

"The ratios have all improved over the past year, which is good news," says Phibbs. "The question is: Are lead conversions going up because there's a smaller, but more qualified set of leads?"

An additional factor for today's higher lead-to-close ratios is the copious research conducted by prospects before they ever contact a brand, in essence, self-qualifying based on what they've learned online and by speaking with franchisees - well before contacting the franchisor.

Since more brands are employing lead qualifiers, last year's AFDR added a new category for qualified leads. The difference is clearly illustrated in the slide: qualified leads to sales were 15 percent, five times better than the 2.9 percent for all leads to sales.

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

The applications to sales ratio, at 27.7 percent, improved from 23 percent last year and was generally within the range of preceding years.

The ratio for discovery days to sales, at 76.7 percent, was up from 71 percent and 72 percent in the preceding 2 years.

In addition to the increased use of pre-qualifiers, Phibbs notes that ongoing tweaks and improvements to the sales process also affect conversions. Still, she says, "The mystery shopping results show there remains a lot of room for improvement."