5 Things Franchise Sales Leaders Must Do in the Second Half of 2020
Even as the health-related stories about the pandemic continue to evolve, the business world faces a common challenge: moving forward. Most organizations have already realized they can’t sit back and wait. They must put plans into action and adapt quickly, despite the present uncertainty. The world of franchise sales faces its own set of challenges, but also some great opportunities. As we reach the midpoint of 2020, now is a good time to zoom out and consider what you must do as franchise leaders to ensure your development efforts continue to drive growth. Here are my Top 5 “must-do’s” for franchise sales leaders for the second half of 2020.
1) Hold your team accountable
According to a June 2020 poll conducted by the U.S. Bureau of Labor Statistics, and as reported by Statista, 20% of U.S. adults are working from home during the Covid-19 outbreak. In addition, a total of 13.3% of Americans were currently unemployed. Two key takeaways are: 1) the record levels of people interested in owning their own business, and 2) there has never been a better time for reaching people at home.
The problem is that 74% of new leads were never called by franchisors, according to FranConnect’s 2020 Franchise Sales Index Report. Conversely, we found that 85% of franchise deals were completed with those contacted within 4 hours. At the cost of nearly $200 per lead, this is squandering more than $177,000 in average franchise sales budgets per brand, according to the Annual Franchise Development Report from Franchise Update Media.
So what can franchise sales executives do? Leaders of franchise sales departments must do a better job tracking their team’s contact rates and response times. An effective franchise sales system will ensure that this information shows up in real time based on role (e.g., VP of sales, franchise sales manager, etc.). Nothing creates greater focus on what’s important than publishing performance rates for each team member.
2) Starve the things that aren’t working and feed the things that are
An example of this truism can be found in the category of franchise portals. We’ve found the average closing effectiveness rate of portals is only 0.32%, meaning it would take approximately 300 leads to culminate in one sale. However, if one were to do further analysis of each portal serving the brand, they would find that some perform better than others, such as Franchising.com, which has a lead-to-deal conversion rate of 2.3% (which translates to 2.3 sales per 100 leads on average), according to our 2020 Franchise Sales Index. Now don’t get me wrong, portals can be very effective, both as a “virtual billboard” helping prospects in their online research; and in creating incremental deals, as portals contributed to a total of 10.4% of all deals generated (768 deals in total across 597 brands in our data).
3) Know that recognition beats compensation when it comes to referrals
In analyzing the lead-to-deal conversion rates by marketing source, we find that referrals resulted in the highest conversion rates at an astounding 6.60%. Yet when it comes to making those referrals, very few franchisors are able to change the behavior of their franchisees. How do you change these behaviors? Let’s assume that your support center is there for your franchisees helping them realize their goals and confirming their underlying reasons for affiliating with your brand. These often include the search for an improvement in lifestyle, income, debt reduction, equity, and ultimately, wealth. These are what I’m calling “table stakes.” But when it comes to referring prospective franchisees, trust me when I say that bribing them with a big check for encouraging their family, friends, and associates will do little to motivate them. What does work? We recommend one or more of these following best practices:
- Sending videos that recognize franchisees who help your system grow
- Crafting ongoing campaigns that reinforce the “why” behind the referral program
- Offering a “rainmaker” plaque or award on stage at annual conventions
- Rewarding franchisees who refer candidates who join your system with a trip, along with other high-achieving franchisees, to a special warm weather event in a locale such as the Bahamas, Mexico, or Hawaii (when travel becomes a thing once again).
4) Adopt the Rule of Seven
All of your hard work and efforts to attract great leads to the top of your sales funnel are for naught if you don’t have an effective program in place for nurturing those candidates through the sales process. Research has led to the development and proof that supports what is known as the “Rule of Seven.” This is a principle that states simply that it takes an average of seven interactions with your brand before a purchase will take place. These interactions may take the form of a call from your franchise sales manager, reading a review, receiving emails and content that enable the buyer’s research capabilities, etc. Our research shows that only 25% of franchisors have established campaigns for new leads, and that only 15% are sending campaigns to leads that have been moved to the dead lead file.
Doing this will require a robust CRM that is actively used and maintained. And by robust, I mean it should be able to help you map out workflows and have a dashboard or “command center” for receiving greater insights into your sales funnel in real time. (Full disclosure: FranConnect just happens to have such a CRM.)
The key takeaway in this area is that franchise marketing and sales teams need to use a mix of personal and automated outreach before abandoning a lead. High-performing sales development teams typically aim for a minimum of 7 to 12 touchpoints (The Rule of Seven).
5) Tighten the screws on your CRM
Final recommendation: If it isn’t in your CRM, it never happened. We’ve found that most salespeople are driven by human interaction over data entry. With the potential of your sales team becoming ill from Covid-19, or with so many franchisors having to make some reduction in force, you can’t afford inaccurate or incomplete data entry – which can cause your brand to lose valuable information if the salesperson is down for the count or leaves the company. Lead intelligence is vital, and sometimes the salesperson forgets what was discussed with the prospect after a couple of months have passed.
To achieve each of these recommendations, it behooves the head of sales to set the proper tone and expectations. The way forward through 2020 and beyond? Ensuring that your sales team has all the knowledge they need in one place, and the ability to be more productive with both their leads and their calls.
Keith Gerson is President of Franchise Operations at FranConnect, a recognized leader in franchise management software. For nearly the past decade, he has worked closely with executive boards and leadership teams that are part of the company’s portfolio of more than 800 brands and 150,000 locations, with a focus on helping franchisors achieve their desired goals in sales, operations, and marketing. For more information, best practices, and guides, visit the company’s Resources Page.
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