Franchise Consumer Marketing Survey

87% are more optimistic about the U.S. economy compared with last year

Top franchise marketing executives from 54 franchise organizations responded to a recent survey conducted by Franchise Update Media Group about marketing strategy, execution, and outlook for their franchise organizations. Respondents represented food, retail food, retail non-food, and service sectors with 70 percent of the total group achieving annual systemwide revenue over $20 million. Although 87% of franchisor respondents indicated they are more optimistic about the U.S. economy compared to last year, only 58% described current business at the unit level as good. 33% indicated current business conditions at the unit level were neutral and 9% poor.

Four noteworthy survey results:

1) The most pressing consumer marketing challenges for franchisors involve the performance of their advertising budgets, strategies, customer profiling, media selection, tracking, and ROI. Another area of primary concern: their brand awareness, representation, consistency, differentiation, and protection.

2) Franchisors believe the three most important factors for building consumer marketing success within their franchise systems are 1) the acquisition of customer knowledge, 2) consistent messaging in brand awareness efforts, and 3) franchisee buy-in, engagement, and execution of local marketing efforts. Franchisors reported that only 30 percent of franchisees spend the local advertising fees required in the franchise agreement.

3) Print is still a major force in generating new customers. The top four most-effective media that franchisees use to generate new customers in their local markets (in order of most effective):

  1. Direct mail
  2. Coupon programs
  3. Newspaper
  4. Local TV

4) Franchisors are experimenting with social media, continuously seeking knowledge on how to use it best. They are diligently working to get their arms around all aspects of social media, with a growing emphasis on protecting their brands through reputation management.

Following are additional survey highlights:

  • 84% of respondents have a dedicated in-house consumer marketing department.
  • 89% have a national supply chain program/intranet/online program franchisees can use to order marketing materials and promotional products.
  •  75% provide a grand opening marketing program that new franchisees are required to participate in.
  • On a scale of 1 to 5 (poor to excellent) franchisors evaluated their overall franchisee performance in the following areas as "good to excellent":

Grassroots marketing activity

36%

Active participation in local communities

45%

Effective execution of company promotions

38%

Customer selling

40%

Customer retention

57%

  • 75% have increased marketing budgets within the last two years.
  • 30% compensate their franchisees when they sell products directly through their corporate website.
  • 86% of respondents outsource marketing activities (including but not limited to): ad agencies, public relations companies, CRM providers, customer loyalty providers, Social media suppliers and services, media planners, in-store merchandising and more.
  • 39% of franchisors have customer loyalty programs
  • 40% market to customers through mobile technology
  • 82% involve franchisees in the consumer marketing planning process
  • 72% have a marketing/advertising council that includes franchisees
  • 28% have regional franchisee advertising advisory committees
  • 58% use ad committee franchisees to help support/promote new campaigns and promotions
  • 81% use franchisee locations to test new advertising and marketing programs

Franchisors ranked, in order of greatest important, the factors that determine the success of a marketing program.

  1. Number/percentage of new customers
  2. Additional sales volume generated
  3. Increased brand awareness
  4. Number/percentage of repeat customers

Franchisors ranked their customers' top priorities over the next 12 months: (Rank 1 is most important)

Responses

Weighted Rank
(Score)

Excellent service

1 (100)

Superior product quality

2 (60)

Trusting relationship

3 (52)

Low price

4 (25)

Brand

5 (24)

Social Media

Forms of social media franchise system respondents are currently using:

Responses

%

Blogging

48.84

Micro-blogging (e.g., Twitter)

55.81

Product reviews (e.g., Amazon)

11.63

Product design or co-creation

11.63

Video and photo sharing (e.g., YouTube and Flickr)

72.09

Podcasts

4.65

Social networking (e.g., Facebook)

97.67

Forums (e.g., Google Groups)

39.53

Social bookmarking

18.60

Virtual reality

2.33

Franchisors use social media for the following reasons:

Responses

%

Marketing research

47.62

Brand promotions, such as contests, coupons

78.57

Brand awareness and brand-building

92.86

Acquiring new customers

78.57

Retaining current customers

80.95

Improving current products or services

28.57

Introducing new products or services

57.14

Identifying new product and service opportunities

33.33

Identifying new customer groups we currently don't target

28.57

Franchisors ranked the top 3 most useful applications of social media. They are:

  1. Brand awareness and brand building
  2. Retaining current customers
  3. Brand promotions, such as contests, coupons

Franchisors use the following metrics for evaluating the effectiveness of social media:

Responses

%

Hits/visits/page views

75.00

Repeat visits

47.50

Conversion rates (visitor converted to buyer)

32.50

Sales levels

17.50

Revenue per customer

15.00

Profits per customer

2.50

Customer acquisition costs

10.00

Customer retention costs

0

Abandoned shopping carts

0

Buzz indicators (web mentions)

7.50

Online product/service ratings

2.50

Number of followers or friends

30.00

Don't know

5.00

73% have social media policies for their franchisees

Published: March 16th, 2011

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