"I don't care about numbers and notes on a piece of paper; it only matters if you actually close the sale."
That's how Steve Olson, Franchise Update Media Group's publisher, began his presentation of this year's Mystery Shopper Survey results during the company's Franchise Leadership & Development Conference in Atlanta. It was a simple assessment, but a fundamental one: results speak for themselves.
The Franchise Update organization has been secretly "shopping" franchise companies for a decade now to assess their lead generation and recruiting efforts, originally by telephone and now on the Internet as well. Each franchise organization registered for this year's conference by a specific cutoff date - 156 this year - was evaluated, and its data included in the study.
Researchers looked for data such as which companies answer prospect calls with a live person, how long it takes to return a prospect's call, and how long it takes for the prospect to receive an information packet. On the Internet side, researchers looked at franchise content accessibility, site readability, clear navigation, effective use of technology, and overall site presence. The results were collected, the numbers crunched, and the top scorers were rewarded with the Franchise Update STAR Awards.
The average annual recruitment budget of the franchise companies evaluated this year was $165,000. That's up $12,000 from last year's results. The lion's share (45 percent) of that is being spent on the Internet; print follows at 18 percent, with most of the rest invested in trade shows and public relations. As might be expected from these numbers, the study found a whopping 77 percent of leads were Internet-generated. As you might expect, the study also found that the Internet was the top sales producer, generating 41 percent of sales, while referrals generated an additional 37 percent of sales.
In the area of overall sales performance, Olson said, "Fifty-three percent report 2007 sales are below goals, while only 20 percent report they are exceeding goals." He noted that the average closing period was 12 weeks. Additional stats of interest: 13 percent of applications result in sales; and 70 percent of discovery day attendees are ultimately sold.
Broker networks continue to play a strong role in franchise recruitment. Of the 156 companies surveyed, 42 percent said they use broker networks. Of that 42 percent, 82 percent have closed deals that way.
Olson said he continues to be surprised by the lack of measuring taking place in the area of franchise lead generation and sales. "Only 78 percent of the franchises track their cost per lead," he said, "and only 63 percent track their cost per sale." To take different slant, one in five don't track cost per lead, and nearly four in ten still don't track cost per sale - despite the availability of affordable technology to do so.
He then offered up what he called a performance alert: "Franchisors have greater sales performance intelligence than ever before, and referral sales are higher than ever. Take advantage of these factors," said Olson.
And in a trend that has been identified in the pages of this and other publications recently, the youth movement seems set to continue. One third of all systems in the survey said they have franchisees who are only in their 20s.
The perennially important question of sales compensation was again examined. Eighty-nine percent of franchises said they employ senior sales executives/managers. The median base salary reported was $88,000, and 85 percent of sales people receive a base salary. The study also found 84 percent of respondents pay its sales people commissions on each franchise sold.
For franchisors betting their success on smart use of Internet tools, Google continues to dominate the search engine market share with more than half (54 percent) of the market. And Olson noted, when it comes to search engine optimization, more than 16 percent of the franchises assessed are not listed number-one for their franchise category. Also of interest, sponsored links are now rated above organic searches, and keyword prices are rising as franchisors compete with ad web sites.
Six categories were measured under the key content section of the study: company history, benefits of franchising, available locations/territories, investment required, FAQs, testimonials, and process clearly defined.
The study also looked at whether or not an inquiry form was available at the web site, and how long it took to receive a response to a request. Researchers found that 75 percent of those surveyed did include online inquiry forms, but less than half bothered to ask the prospect's time frame or the area and territory desired.
One of the keys to an effective Internet recruiting strategy, said Olson, is "Make it quick and condensed for the reader, but give them the opportunity to get more info if they're interested."
The telephone continues to hold its ground as an effective recruitment tool. Some of the findings in this year's franchise phone efforts analysis include the following:
Some of those numbers raised a few eyebrows. For example, that 18 percent figure above means that 9 out of 10 times, the qualified prospect (aka our mystery shopper) had to leave a message. But there was more. For example, in qualifying telephone leads, only 65 percent took the caller's name, only 71 percent asked for source of inquiry, only 48 percent took down an address, an alarming 55 percent got a telephone number, and only 46 percent captured an email address.
"Who's training these people?" wondered Olson. "Thirty-five percent didn't get a name, 45 percent didn't get a phone number, and 54 percent didn't get an email address."
The final area of Olson's presentation dealt with how well the franchise call takers did in terms of qualifying prospects and overall level of enthusiasm. Again, the findings weren't good. "Only 40 percent were found to be enthusiastic, and only 40 percent qualified the prospect's finances," he noted. Almost unbelievably, a mere 18 percent qualified the prospect's desired start date. Room for improvement, indeed!
Olson summed up his presentation by noting, "Email and technology are removing us from one-on-one contact, which is always the best way to secure leads."
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