Brand Ambassadors: 5 Steps to More Referrals and Selling From Within
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Brand Ambassadors: 5 Steps to More Referrals and Selling From Within

Today's struggle for more qualified franchise candidates has ignited greater emphasis for companies to produce franchise leads within their systems.

Last year, 38 percent of franchisors surveyed "incentivated" franchisees who referred prospects that bought their franchise. This year a whopping 65 percent do, according to the latest Annual Franchise Development Report (AFDR). The study also reveals that referral sales continue to produce the highest closing ratios and continue as the number-two sales producer after Internet portals. These powerful stats are cause for more aggressive referral selling.

As we know, providing referral fees alone is not the answer to more deals. A well-engineered program supported by satisfied, successful franchisees is what drives referral success. The AFDR reveals that of the companies that exceeded their growth goals, 78 percent described their franchisee unit business conditions as good--and generated 40 percent of their sales through referrals. Of the companies below goals, 28 percent described their unit conditions as good, with only 25 percent of their sales through referrals. Here's a five-step checklist that may be helpful in reviewing the performance of your referral program:

  1. Engage multiple referral sources. Franchisees are logically your prime resource, but don't overlook your employees, suppliers, and business associates. Tapping these secondary referral sources can also produce qualified prospects. One East Coast sales executive launched an upscale quick-service café by extensively prospecting his industry network. He sold his first 8 new franchisees for the new concept by aggressively soliciting food operators he had built relationships with over the previous 15 years. Also, enlist your vendors for franchisee referrals. As your "partners," suppliers should be expected to refer your opportunity to individuals they know are looking for a business.
  2. Develop a year-round campaign. Include a budget for referral marketing in your media plan. Producing special promotional materials and incentives will spur referral activity, at a selling cost often substantially lower than for other lead generation activities. High-growth companies with referral campaigns stress that recognition, reward, and repetition are keys to a successful campaign. Sending a once-a-year memo announcing referral fees for new franchisees is only the start of what should be a year-round effort. Every two weeks, put your recruitment effort in front of your franchise network with scheduled mailings, website postings, group emails, newsletter updates, and other communications. Create an 8½ x 11-inch, tri-fold recruitment brochure with a referral space on the back panel to identify franchisees, employees, or business associates. This handout piece makes it efficient and easy for the referring individual and informative for the inquiring prospect. The same brochure also can be used as an inexpensive mailer to "borderline" franchise inquiries and as a handout at seminars and trade shows.
  3. Educate franchisees and they'll help you grow. I know of franchise systems with satisfied franchisees that don't generate significant referrals. After a little digging, it's apparent that corporate isn't asking for referrals, and/or they haven't educated their franchisees about the collective power of franchise neighbors and national growth. Smart franchisors recognize they must communicate the direct benefits to their franchisee partners about how franchise growth can increase their branding and equity, reduce costs, provide greater competitive strength, and expand research and development. Ironically, some franchisors emphasize this powerful message when they recruit new franchisees, but then stop communicating this once they join the system. Promoting the growth benefits of franchise development is a year-round effort.
  4. Put participation requirements in franchisee documents. The best time to introduce your referral program is when a prospective franchisee is reviewing your franchise disclosures. This is the opportune and logical time, as it calls out the support of new franchisees to the ongoing expansion of the franchise system. Ask your attorney to include language that requires franchisees to participate in your corporate promotion of franchise opportunities, with their agreement to display corporate brochures in their operations, and acknowledge that "franchise opportunity" taglines can appear in their retail pieces, print, radio, online, and TV and other marketing venues, on customer forms, franchisee service vans, etc.
  5. Applaud your franchisee ambassadors. Broadcast to your franchise system who your franchisee builders are. Recognition is a powerful motivator. Show appreciation to those who champion the expansion of your brand. At your annual convention, consider referral awards as part of your franchisee presentations. Individuals assisting in the growth of your franchise system deserve special recognition. Illustrate the important network contribution of referrals, asking franchisees in the audience who were introduced to your system through other franchise owners to stand up and be recognized.

If you have good validation, and haven't yet done so, build an encompassing referral program. The costs are minimal and the long-term payoffs can certainly be rewarding!

This article includes excerpts from "Grow to Greatness: How to Build a World-Class Franchise System Faster" by Steve Olson. For ordering information, go to

Published: December 7th, 2009

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Franchise Update Magazine: Issue 4, 2009
Franchise Update Magazine: Issue 4, 2009

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