On the Friday morning after Congress voted down the first, "unsweetened" $700 billion bailout package--and with credit frozen and the lending climate getting icier by the hour--franchise sales executives at Franchise Update's Leadership & Development Conference put their heads together in a Friday morning "mindshare" session to brainstorm answers to some tough questions on what they're doing to make sales.
No matter what the economic environment, franchisors still must sell franchises if they are to grow and thrive. To do that, the majority of franchisees must be able to borrow, whether to start up or to expand existing operations. But with credit and lending frozen, nobody can borrow. So what's a franchisor to do?
That's exactly what Tom Wood asked more than three dozen franchise owners and sales executives in Chicago in late September. Wood, president and CEO of Floor Coverings International, asked attendees to answer the following question as they approached the last quarter of 2008:
"As a group, what are one or two things you can do right now to drive more results in the next 12 weeks?"
Targeting customers as prospects is preaching to the choir. They already like your product or service. Although being a great customer usually doesn't translate into becoming a great operator, the chances of finding enthusiastic candidates are greater than from the leads delivered by your own website, portals, and other online sources.
Profile your best-performing franchisees to see if they are interested in opening additional units. They've already proven themselves, so they know the system, deliver the goods (or services), and may be ready to expand. Work with them not only on financing, but on training them to be multi-unit or multi-brand owners.
If your top producers are not ready to add units, they often are an excellent source of referrals. They're your eyes and ears in the field and can help you size up customers and acquaintances who might have the right stuff to become a good franchisee (as long as they don't open up close enough to cut into their market share).
In fact, the number-one tactic mentioned for finding qualified prospects was referrals. Franchisors with incentive-based referral programs drew a lot of interest from sales execs interested in introducing or restarting a program of their own. With monetary incentives for successful referrals, which can vary from cash to discounts on supplies (check with your attorney), franchisees were glad to place sales collateral in their stores and talk up the brand. The cost per referral (averaging in the $1,000 range) is low compared with brokers; and the percentage of qualified applicants much higher than with online leads. And, as one franchisor noted, referrals can happen without an incentive program. "The cost is nothing if you don't want it to be."
Sales people are natural optimists. In these tough times candidates want to hear the truth. Don't paint an unrealistically rosy picture--it's tough out there. Even "recession proof" services such as hair salons are seeing a decline as customers wait longer between cuts and colorings.
Quaint as these may sound, local career fairs are becoming a source of leads and deals as a growing portion of the gainfully employed are feeling uneasy about their future. And as layoffs and unemployment continue to mount, a growing number of serious, skilled professionals are looking for a new career, or at least a "Plan B."
Many franchisors are taking this time to review their sales process from top to bottom. They're looking to find where it needs improvement--and they're mystery shopping their sales team to see if the process is being followed.
Franchise Update's own mystery shopping (posing as a qualified buyer and phoning in and emailing to the 148 franchise companies at this year's conference, who represented 57,000 units) revealed such fundamental flaws as:
Scary stuff in these uncertain times, when leads are down and each sale takes on greater importance to system-wide growth. (For more on lead generation and benchmarking your franchise sales process, check out Franchise Update Media Group's Annual Franchise Development Report, www.franchiseupdate.com/afdr.)Yes, times are tough and money is tight. It's not the economy stupid, it's the stupid economy. So get smart. Focusing on fundamentals, recruiting leads from every possible source, and keeping current with your lenders can help mitigate the pain.
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