Trimming Development Costs in Tight Times
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Trimming Development Costs in Tight Times

As we all hope for the best in 2010 and realize we have weathered the biggest part of the economic storm, we need to look at the franchise development world differently--in this case, under partly cloudy skies.

Marketing for new franchise candidates must continue, and as leaders of our respective development departments we must scrutinize every dollar we spend on people, advertising, and travel. Lately we've all been challenged on cutting budgets, people, and advertising but still somehow we are expected to attain the same amount of sales as we did in previous years.

So how can we preserve our advertising and recruitment dollars and still get the job done and deliver new franchisees to our companies? Get creative!

In reviewing your department and personnel, start by considering whether any cutbacks should be made. Since the lead flow is slower, can one person do two jobs? Can you turn that money into advertising dollars for more candidates? Do you have any internal functions you can outsource to cut costs and gain efficiency?

Cost-saving ideas

  1. Invest advertising dollars wisely.
  2. Know what sources are the best producers with respect to both leads (quantity) and conversions (quality).
  3. Enhance your company website.
  4. Start using an electronic brochure.
  5. Start using an electronic FDD.
  6. Eliminate/combine salaries of sales department personnel.
  7. Work the leads effectively.

Outsource changes to the experts

Outsourcing these cost-saving ideas is an important step in getting your program right. We can't be experts on all aspects of the franchise development department. As leaders, however, it is our responsibility to pull the respective pieces of the puzzle together to give our department the best chance for success. I have found most department heads reluctant to suggest using outside services; they believe they were hired to do everything, when in reality they were hired to move the brand growth ahead. In my earlier years in franchise development, I was no different--until I realized that my results and reluctance to use outside vendors only held back my personal and franchise development growth.

  • Franchise advertising agencies. Are you delivering the right message in your franchise collateral materials? Do you really know what to say, or should you find an expert who has multiple clients and may have recently tested ideas of where and when to spend your recruitment dollars. When is the last time a professional agency wrote an advertisement for your company?
  • Website companies. Is your website doing everything it can for your brand? Does it give you the number of leads you need? Many websites are optimized for retail customers, not franchise candidates. Creating a separate website for franchise prospects can make a dramatic difference in traffic, conversions, and extended messaging more appropriate for franchise candidates.

Electronic delivery of materials

Electronic brochures, now used by 40-plus percent of companies, not only save postage, they create a more effective sales process by speeding delivery; allow the sales consultant more control of the process and timeline; eliminate the cost of an in-house employee to prepare mailings; enable candidates to forward them to others who might be interested; and allow you to make changes on the fly, much like on a website.

The FDD is one of the most important tools in the sales process. Every qualified candidate must receive one at some point. Early delivery of an electronic copy can be very effective. If the candidate continues to move forward and becomes a serious candidate, you then mail them a printed copy. The electronic copy also makes it easier for a candidate to send to their advisors and attorney.

In-house sales consultants

Evaluating your internal team is the hardest part of the decision process. Personnel changes aren't easy. But as a wise man once said, "You can't save a villager and lose the village." It is our responsibility to run the most efficient and profitable department we can. You have to look at lost opportunity for the company and your other sales professionals and make tough decisions today. Several companies I know of are cutting all internal cost by outsourcing the entire sales process. Each company must look at this alternative in 2010 and make the best decision for their program.

Work the leads and work them again

Be sure you are making the most of the leads you are receiving. Are they being followed up in a timely manner? Is the best person working them? Is your CRM system recording all the leads? Are you using your CRM system effectively to measure results? Check two or three times a month to be sure all the portals are working properly. Leads are like gold today. Treat them accordingly!

What I'm talking about here are all-around best practices. To succeed with partly cloudy skies we must manage all the moving parts of our departments more effectively. Take the time to give your department an unbiased assessment, think of how you can help close more deals, do more training, and run a tight ship. Finally, clean up your expenses and ensure that you have a budget for success. This is your opportunity to "be the solution, not the problem."

Published: May 24th, 2010

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Franchise Update Magazine: Issue 2, 2010
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MSA provides domestic and international franchise advisory services to franchisors and companies seeking to establish franchise and licensing systems.
The Titus Center for Franchising, one of Palm Beach Atlantic's Centers of Excellence, offers a concentration in franchising to business students.

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