5 Things Franchise Sales Leaders Must Do in the Second Half of 2020
Even as the health-related stories about the pandemic continue to evolve, the business world faces a common challenge: moving forward. Most organizations have already realized they can’t sit back and wait. They must put plans into action and adapt quickly, despite the present uncertainty. The world of franchise sales faces its own set of challenges, but also some great opportunities. As we reach the midpoint of 2020, now is a good time to zoom out and consider what you must do as franchise leaders to ensure your development efforts continue to drive growth. Here are my Top 5 “must-do’s” for franchise sales leaders for the second half of 2020.
1) Hold your team accountable
According to a June 2020 poll conducted by the U.S. Bureau of Labor Statistics, and as reported by Statista, 20% of U.S. adults are working from home during the Covid-19 outbreak. In addition, a total of 13.3% of Americans were currently unemployed. Two key takeaways are: 1) the record levels of people interested in owning their own business, and 2) there has never been a better time for reaching people at home.
The problem is that 74% of new leads were never called by franchisors, according to FranConnect’s 2020 Franchise Sales Index Report. Conversely, we found that 85% of franchise deals were completed with those contacted within 4 hours. At the cost of nearly $200 per lead, this is squandering more than $177,000 in average franchise sales budgets per brand, according to the Annual Franchise Development Report from Franchise Update Media.
So what can franchise sales executives do? Leaders of franchise sales departments must do a better job tracking their team’s contact rates and response times. An effective franchise sales system will ensure that this information shows up in real time based on role (e.g., VP of sales, franchise sales manager, etc.). Nothing creates greater focus on what’s important than publishing performance rates for each team member.
2) Starve the things that aren’t working and feed the things that are
An example of this truism can be found in the category of franchise portals. We’ve found the average closing effectiveness rate of portals is only 0.32%, meaning it would take approximately 300 leads to culminate in one sale. However, if one were to do further analysis of each portal serving the brand, they would find that some perform better than others, such as Franchising.com, which has a lead-to-deal conversion rate of 2.3% (which translates to 2.3 sales per 100 leads on average), according to our 2020 Franchise Sales Index. Now don’t get me wrong, portals can be very effective, both as a “virtual billboard” helping prospects in their online research; and in creating incremental deals, as portals contributed to a total of 10.4% of all deals generated (768 deals in total across 597 brands in our data).
3) Know that recognition beats compensation when it comes to referrals
In analyzing the lead-to-deal conversion rates by marketing source, we find that referrals resulted in the highest conversion rates at an astounding 6.60%. Yet when it comes to making those referrals, very few franchisors are able to change the behavior of their franchisees. How do you change these behaviors? Let’s assume that your support center is there for your franchisees helping them realize their goals and confirming their underlying reasons for affiliating with your brand. These often include the search for an improvement in lifestyle, income, debt reduction, equity, and ultimately, wealth. These are what I’m calling “table stakes.” But when it comes to referring prospective franchisees, trust me when I say that bribing them with a big check for encouraging their family, friends, and associates will do little to motivate them. What does work? We recommend one or more of these following best practices: