Franchise Lead Generation Trends for 2014

Peak-performing franchisors unleash the power of “story”

By Thomas Scott and Joe Mathews

Chart.FranchiseLeadGen.LoResBest-selling business author and trainer Zig Ziglar once said, “People don’t buy drills, they buy holes.” He meant that people often make decisions with their end result in mind. Think about any big decision you’ve made — there’s almost always a deeper purpose lurking in the background. You send your kid to college because you want them to have a happy and prosperous life. You buy a home so you can foster a healthy and fulfilling family life.

When it comes to buying a franchise, which is almost always an intense, emotionally-charged decision, people go even further than buying the “holes.” They’re buying a personal story about how the franchise adds value or solves a problem that is worthy of the risk. The narrative they tell themselves about what’s possible influences the entire decision-making process for candidates.

Qualified franchise candidates aren’t really buying franchises. They’re buying their own story about how their lives, careers, and situations will predictably improve by being a franchisee of a particular brand. This narrative may or may not play out in actuality, but by then the investment decision will have already been made.

In a franchise investment, the more a franchise candidate can relate a brand’s story to the one they have in their head, the more open they are to having conversations with franchisee recruiters, learning more and eventually making a decision to purchase. The biggest trend for 2014 and beyond is that simply bombarding franchise candidates with ad copy bullet points is a poor way to tap into this hidden desire to relate.  Candidates make decisions in “story form” not in “bullet form.” Companies that most effectively articulate a detailed, interesting and helpful brand story will do better at increasing franchise candidate engagement and thus increase the number of franchisees they recruit.

Where do franchise candidates go to gather information and form their story about franchise chains and look for positive reinforcement for the story they’re already telling themselves? According to Franchise Update’s 2014 Annual Franchise Development Report, franchise candidates originally sourced information about the franchise they ultimately invested in from predominantly three trusted sources:

  • The internet (42%)

  • Referrals from social and professional networks (32%)

  • Franchise brokers (17%)

 

2014 Franchise Update Annual Franchise Development Report Summary

 

91% of all deals done by franchisors in the survey can be traced back to self-directed internet activity, referrals, and broker networks.

Here are our major franchise lead generation trends for 2014:

Trend No. 1: Franchise candidates will conduct more self-directed research and demand more transparency of information before they talk to a franchisor representative.

Consider where the deal flow comes from. First, the internet. Franchise candidates scour the web looking for concepts they can connect to and information they can trust. Until a franchisor can quickly make the following case, they will have a tough time telling their story to qualified franchise candidates:

  1. The franchisor’s products and services are unique, valuable and difficult to copy.

  2. The franchise is profitable and will continue to be so into the foreseeable future.

  3. The franchise is sustainable and positioned to be around for the long haul.

  4. The business is engaging. The franchise candidate can see themselves involved in the business on some level.

  5. The business appears to fit what the candidate is looking for (financial return, quality of life, etc.).

To make this determination, franchise candidates want information they can trust. They turn to the internet first. If they don’t get what they need there, they often delve into their social and professional networks or hire a franchise broker.

Keep in mind that franchise candidates don’t necessarily want to hire franchise brokers.  They want trusted sources of information. They want the real story, not hype. They want a business that delivers on their needs and objectives, one where they can leverage their particular brand of genius. They want to make informed decision. They want to eliminate risk, and they want to win.

Perhaps, just perhaps, franchisors’ refusal to post robust and transparent information about themselves online provides the lifeblood of a franchise broker’s business. The skimpy advertorials found on franchise advertising portals don’t meet the typical candidate’s needs and eventually drive them to the broker networks. Neither do the salesy “online brochures” franchisors create as franchise opportunity websites. Almost every active lead a franchise broker works exists as a “dead lead” in some franchisor’s database.

Recently frozen yogurt franchisor Menchie’s, one of FPG’s clients, held a Discovery Day at their Los Angeles headquarters. CEO Amit Kleinberger asked a franchise candidate, “What is it about Menchie’s that made you come here today?” The candidate replied, “The financial return is excellent. The cash flow and ROI meet my criteria. We subscribe to the mission of the company, agree with the future direction of the chain and connect to the ‘We make you smile’ philosophy. I appreciated the transparency of the organization. Menchie’s doesn’t seem to have anything to hide.” Guess where this information and these conclusions came from? Not the franchise development manager, not the sales process and not even the Franchise Disclosure Document. The franchise candidate said he came to these conclusions from the information available on menchiesfranchise.com. Among other things, Menchie’s publishes its startup costs, Item 19 FPR, lengthy interviews with actual franchisees,  and provides in-depth video interviews with the CEO regarding the mission, purpose and future direction of the organization. The business comes to life in a real and authentic way. This candidate entered the franchise sales process predisposed toward making a “go-forward” decision. This is not an isolated incident. Each month, Menchie’s brings 30-60 franchise candidates to Discovery Day. The room is packed to the rafters with like-minded candidates.

Trend No. 2: Recruiting franchisees the same way candidates buy businesses

At this year’s Franchise Update conference, the emcee opened up by asking what he believed to be an insightful and probing question: “How do you define ‘sales?’”

Dave Buzza, Chief Development Officer for rapidly growing AlphaGraphics, stood up and said, “I don’t see my role as a sales job at all. I recruit. I determine fit. I assess the franchise candidate to determine whether or not they have what it takes to succeed and help them learn how their objectives can be met as an AlphaGraphics franchisee. The more strenuous we make the franchise investigation process and the more filters we have, the more we know if they’re engaged and will make a solid-performing and committed franchisee. Those that struggle with or won’t follow the process are dead giveaways for problems down the road.” Then the emcee produced a loud buzzer sound, indicating (in his opinion) that Buzza was wrong, and redirected the conversation back into “sales speak.” It should be noted that Buzza’s franchisee recruitment team “wrong-answered” their way into back-to-back banner years and a breakthrough in franchisee recruitment results.

Think about the last franchisee you successfully brought into your system. At the point they signed their franchise agreement, how would you have described the relationship?  When we ask that question of franchise salespeople, we often hear responses like “friend,” “advisor” or “trusted facilitator.” We never hear, “It was a transactional ‘buy-sell’ relationship.” Then we ask the follow-up question, “When do you feel like a salesperson?” They answer, “When candidates don’t trust me” or “When the candidate isn’t moving forward and I feel like I have to push them.” In other words, they feel like a salesperson only when the franchise candidate isn’t buying.

Next time you are at a franchise sales seminar and someone asks you, “What is your definition of sales?”, please answer, “Failure.”

If successful franchisee recruitment produces a relationship that can be described as “facilitator” or “advisor,” then shouldn’t we be striving to create that relationship as early as possible like Menchie’s does, starting with transparency of information on the franchise opportunity website?

Franchisors who design their websites and franchisee recruitment processes in a way that’s consistent with how franchise candidates research businesses will earn candidates’ trust, break down any barriers to conversations which exist, and like Alphagraphics, grow at a rate above the norm for their category. Franchisors who cling to outdated ideas (like sales philosophies and skimpy websites with flowery sales content) will continue to see lagging results and get left in the dust by franchisors who get it.

Trend No. 3: In with brand storytelling and brand journalism; out with copywriting

Stories are the basis of human communication and decision-making. We use stories to relate to one another and make sense of the world around us. At the root of the massive changes to Google’s search algorithms in the last three years has been a push to help people find the stories they are searching for when they type in a search query.

When prospects begin to do online research, they type in questions or key phrases to get at the stories that help them understand the franchise brand and how the model works. They want to understand the history of the company, how the brand came to be, where the brand is going and who is leading the charge. They want to hear stories about who the customer is and why customers choose this brand. As we proved in our article The New Lead Generation Winning Formula, franchise buyers don’t respond well to skimpy or flashy franchise opportunity websites that overtly hype the brand. Buying a franchise is a huge risk for many franchise candidates; it’s a major life change and an emotionally-charged decision. The typical franchise buyer spent almost an hour on our client’s franchise opportunity website before they filled out a contact form. Then they spent 2-3 months researching the business before deciding to move forward and sign an agreement.

Websites that resemble online sales brochures or traditional advertising copy completely miss the mark, lacking what franchise buyers need to move forward in the process.

Brand storytelling — the craft of using trained journalists and business reporters to dive deep and expand the scope of your franchise brand’s story — is creating breakthroughs for brands that use it.

First, let’s start by defining the difference between copywriting and brand journalism. Marco’s Pizza, the fastest growing pizza chain in the United States, is our client. We designed their franchise opportunity website and publish regular blog posts on the site about their brand. If you were a franchise buyer, which would you find more engaging:

1. A brochure with the headline “Own Your Slice of the American Dream with Marco’s Pizza.  There is Still Plenty of Dough to be Made in the $40 billion pizza industry.”

2.  A story about Pat Giammarco, founder of Marco’s, who was so concerned

with the mix of tomatoes he used in his sauce that he commissioned a grower to develop a proprietary hybrid tomato that combined the best elements of three different tomatoes into one. Marco’s pizza sauce is now made from this hybrid “Franken-tomato” created and grown just for the pizza chain. Furthermore, Marco’s is so concerned about the texture and taste profile of their pizza, the flour they use in their fresh dough is made from high-protein wheat that grows in the northern plains of Minnesota and is harvested only in the spring.

Which do you find more believable? Which draws you in? Which information do you trust?  Which calls to you, saying, “I want to learn more.”

The truth is, there really is still plenty of dough to be made in the $40 billion pizza industry. But the headline sounds too cliche to be credible.

When we took on Menchie’s frozen yogurt concept as a client, a marketing firm had suggested we use the headline, “Success is only a swirl away” on their franchise opportunity website. Does this prompt someone to action? Does this inspire a sense of urgency? Did you say to yourself, “I had better get cracking because success is only one swirl away”?

Brand storytelling is radically different and uncomfortably counterintuitive for anyone who has worked in the trenches of franchise development. At first glance, brand storytelling is shocking in its length and scope. You might think people really only want the quick headlines and that they don’t care about the details. You might worry that you’re giving away too much of the story, thus taking the phone out of your franchise salesperson’s hands. You might be thinking, “I just want to whet their appetite and then make them talk to me if they want the rest of the story.”

The skimpy brochure-style franchise opportunity websites that FPG replaces regularly convert 1-1.5% of their unique visitors to leads (meaning they leave their contact information). When we replace these with article-format sites comprised of 20-30 pages of brand-journalism style content, these websites covert 4-5% of unique visitors while maintaining the same or better lead-to-close ratios. Bottom line is that deal flow increases.  For instance, when FPG reinvented Chem-Dry’s franchise opportunity website to a brand-journalism style article-format website in 2012, Chem-Dry increased the number of franchisees they recruited from their website from 10 in 2011 to 70 in 2012, increasing franchise fee revenues by $1 million.

When FPG creates a breakthrough for your brand, we start with an overhaul of your website but cover everything written: PPC ads, online search results, landing pages, research funnels, email drip campaigns, portal ad copy, online sales brochure copy (such as Captivate or Process Peak) and just about anything else a prospect might encounter. Brand storytelling is the root and foundation of content marketing. If you attended the Franchise Update’s Leadership and Development Conference this year or read the annual lead generation report, you saw the sales resulting from SEO skyrocketed. Peeling back the layers, the companies in the survey reporting such high results were mostlyl using brand storytelling, article-format websites and journalism-style content marketing.

Trend No. 4: The superiority of article-format franchise recruitment websites

When it comes to a franchise recruitment website, there are three options commonly in use:

1. Franchise page or set of pages as part of your consumer website

2. Separate franchise opportunity website that links to your consumer website and is an online brochure with 7-9 pages of information and calls-to-action to complete a lead form or visit an online brochure

3. Article-format franchise recruitment websites that also link to your consumer website but have substantially more content, a research funnel of pages that drive up prospect engagement and an integrated franchise blog that increases social media reach, drives SEO and keeps people already in the process engaged.

Our client Huddle House, an iconic Southern dining franchise, launched its new recruiting website, huddlehousefranchising.com, in 2013 and went from a 1.1% to a 5.4% conversion rate, going from 20 leads a month to well over 100. Deal flow increased accordingly.  FPG client Office Pride, a faith-based commerical cleaning franchise, launched its new officepridefranchise.com website, also in 2013, and went from .04% to 7%, increasing the number of leads it gets from its website from 10 to 90 a month. This is accomplished without adding new visitors, just doing a better job engaging the visitors that are already coming to the site, interested in information. Brochure-style websites just cause you to lose people who would otherwise fill out a form.

At the Franchise Update’s CEO summit this fall, the conversation on the CEO panel discussion centered on how important it was to track conversion rates as the real measure of how effective a franchise website is. For the first time, this year’s lead generation survey included questions about conversion rates and tracking of conversion data. A conversion rate is the percentage of unique visitors — the actual number of people you have on your website in a given month — that actually convert to a lead by filling out a form or calling a trackable phone number. We believe it is the single most important metric to track on a monthly basis and it is the scorecard by which you should evaluate franchise recruitment websites and web designers.

Conversion rates for article-format recruiting websites are much higher: The article format websites we build and manage for our clients, such as the website for VooDoo BBQ, which won the STAR award this year for best franchise recruitment website, averages more than 6%.

What drives the large performance gain? See trend No. 3, brand storytelling. Website designers are not brand journalists, and even a great website designer typically lacks the writing skills needed to capture and engage franchise candidates. Even when these websites are visually stunning, they lack the depth of information necessary to make a difference. Franchise candidates want the same type of information found in the Executive Summary of a business plan.  A great looking site with little or bad content is still a bad site.  A site which converts less than 2% of unique visitors is a bad site.

Here are some high-performance article format websites:

Huddlehousefranchising.com

Marcosfranchising.com

ChemDryfranchise.com

Postnetfranchise.com

Menchiesfranchise.com

Article-format websites are built in a way that’s consistent with how people buy franchises, and they are going to become much more common in 2014 because they outperform other types of websites by a wide margin. If you are evaluating web designers, get specific on conversion rates and brand storytelling skills because that’s what drives performance. Don’t be seduced by a website that merely looks good — franchise candidates aren’t. Although design is important, substance is what drives franchise sales results.

Trend No. 5: Changes in the way franchisors work with portals

Franchise portals remain a significant component in many franchisors’ lead generation strategies and a represent a significant portion of advertising dollars spent. Franchisors have a love/hate relationship with portals. They complain about how many leads they need to sift through to find a deal. But any candidate researching franchises online will intersect one or more portals within a few clicks. For the first time, portals are thinking seriously about what it takes to both produce closes for franchisors and give the franchise candidate what they need, ultimately leading portals to offer franchisors more flexible advertising options.

These include traditional, flat-rate advertising and a range of pay-per-lead, pay-per-visitor and campaign-based advertising strategies that help clients get results more tailored to what they are trying to accomplish. For companies using article-format recruiting websites, this flexibility can make an enormous difference.

Look for portals to ultimately evolve into a highly specialized pay-per-click advertising vehicle where franchisors pay for web traffic rather than contact forms.

Trend No. 6: Paid search and retargeting

If you spend any time looking at search engine results pages, you’ll notice that the top three paid ads and the first 10 organic results on the page have little separating them. Paid search ads have developed a reputation for being difficult in terms of getting good returns and expensive on a per-lead cost. Conventional wisdom held that franchise portals drove up the cost-per-click in their cutthroat competition, leaving little for individual franchisors with a much smaller budget.

But over the past three years, Google’s organic search algorithm has changed more than 30 times, and paid search has evolved as well. Google has made it possible for you to get cost-effective space in those top three paid slots using terms that your franchise website already ranks for organically, or using category terms where you’re a well-established brand.

If you already rank for some of your target terms in the organic results, paid search gives you a second chance to gain visibility. When we ranked organically and got a top-three paid search listing for a client, we saw synergy in the form of a 41% increase in leads generated.

For terms you want to rank for but haven’t been able to, paid search can be the best way to generate leads. Buying visibility works, especially if you have pages or sections of your website that relate specifically to the term you target, which is another argument in favor of article-format franchise opportunity websites. Don’t blow your dollars on generic terms such as “low entry cost franchise” or “home-based businesses.” Target franchise candidates who are actively engaged by buying more specific terms such as “best non-medical home healthcare franchise” or “most profitable quick-service mexican restaurant.”

Although you can purchase ad space for any term, a PPC ad doesn’t guarantee leads or results. The content on your landing page or linked website is critical — the ad just earns traffic but your content is what earns the lead and creates engagement. For this reason, few companies get good results when hiring an SEO firm to manage a PPC campaign. Today, PPC marketing is just another form of content marketing, and it should mirror the content marketing and brand storytelling on your website. In fact, the same vendor should handle both — we always see a large performance gain when we do.

Retargeting, another new tactic that rose in popularity in 2013, pays off big. This form of pay-per-click advertising follows prior visitors to your website and displays banner ads to them when they visit other popular websites. It is an inexpensive and effective way to remain front-of-mind with candidates who have already been to your website but didn’t yet convert.

Image courtesy SEMValet

Retargeting – Image courtesy SEMValet

Smart franchisors tie organic SEO, paid search, content marketing and retargeting together, creating a breakthrough that’s difficult to replicate with individual vendors. If paid search isn’t in your budget, it should be, because the same people who click on organic results also click on paid ads.

Trend No. 7: Response time for inbound leads becomes critical

Typically, when a franchise inquiry comes in during business hours, the call is returned within 24 hours; the same day, if possible. CRM sends an automatic email response; two additional follow-up calls are scheduled over the next few days or weeks.

While this may work with a referral lead, an engaged customer turned franchise candidate, or broker lead that are already teed up, it may be a recipe for underperformance for inbound leads coming from your company website, franchise portals or email campaigns.

Here’s the issue: People expect a fast response. When you’re online reading a company website and you reach the point where you opt in, you’re expecting some type of immediate follow-up call. Imagine going to a restaurant, sitting down and having waiters ignore you for 30 or 45 minutes. It’s frustrating.

When you don’t call quickly — meaning less than 30 minutes after the lead comes in, and in less than 5 minutes if possible — you give a prospect the same frustrating experience as someone who sits unattended in a restaurant. After half an hour, the longer a prospect waits on a call, the less likely they are to answer your call. Delaying calls more than a few hours are even worse — they actually damage your ability to earn a conversation with a candidate.

Inbound lead generation is not limited to franchising; outside the franchise industry, call response time is measured constantly. Companies strive to have immediate lead response or a response in less than five minutes. They do this because data from Insidesales.com, a salesforce partner, shows that a five-minute or less response time during daytime hours produces a 400% increase over lead calls that take one or more hours.

Response times in franchising rarely get close to one hour. In fact, the majority of franchise leads, if they get called at all, don’t get a call back on the first day. The Franchise Update annual mystery shop of the 130-plus companies attending last year’s Franchise Leadership and Development Conference made this point clear: More than 50% of the leads for top franchisors got no calls at all.  This is the same story every year.

When we track calls made for clients, we always see a fairly large gap between what the salespeople say or think is happening and what is really happening. Response time across the industry is really poor, and the fully loaded cost of lost deals as a direct result is a lot larger than you might think.

Want to increase closed deals? Start by measuring the response time of calls and the number of follow-up calls. Here’s our recommendation for call response (which may make the case for adding a lead screener to the department):

— Call within five minutes during business hours for the lead, not the salesperson — that’s 7 a.m. EST to 6 p.m. PST. Calls after more than 30 minutes are considered a fail.

— Everybody has caller ID, and the first call is most likely screened, meaning the prospect, even if they really want to talk to you, will let it go to voicemail. Especially so if they don’t recognize your phone number or it’s from a different area code. Because of this, leave a message explaining who you are and then call back in 10 minutes. If you don’t get them on the first two calls, call back a third time 30 minutes later.

–If you have their cell phone number, immediately text them and let them know you left them a message.  It is shocking how few franchise salespeople text their leads although leads often read texts before emails or listen to messages.

— If you don’t get reach them on those first three calls, make two additional calls within 48 hours: one between 8-9 a.m. in the prospect’s time zone and another between 5-7 p.m., also  in the prospect’s time zone. It turns out that the majority of sales calls are made between 10 a.m.-2 p.m. in the salesperson’s time zone, statistically the WORST time to make calls.

That’s five calls in a short period of time. It’s also two more calls than an experienced salesperson typically makes. Data from outside the franchising industry says it now takes this many touches to reach people and increase your contact rate. It isn’t that people don’t want to talk or aren’t interested, it’s just that we use technology in specific ways, and by not calling people this often, you are going to miss the majority of your leads.

Companies are struggling with how to reconcile the increased work it takes by adding call screeners, blocking out times for bulk calling early and late in the day and experimenting with call-automation software and power-dialers that organize the calls and make it easier for a salesperson to increase touches.

Whatever you chose to do in 2014, tracking and reducing your response time and increasing follow-up touches is going to be critical for growth.

We saw an improvement in 2013 over 2012 for franchise lead generation. It stands to reason that 2014 will be a better year than we’ve had in some time — but only for those companies that can adapt to the way prospects are researching and buying franchises so that they’re more in line with what franchise buyers want.