One of the greatest challenges to franchisors is obtaining quality franchisee prospects. Internet franchise lead generation web sites have proliferated and compounded this problem and have created virtual nightmares for many franchise developers. In a 2003 survey conducted by Franchise Update, they reported that 59 % of franchisor leads originated from the Internet; and 39 % of all franchise agreements signed originated were Internet leads. Referrals accounted for 21 %, and print advertising for 25 % of new franchise agreements executed.
Lead volume is a continual problem in the franchise industry, regardless of whether franchisors receive only a few leads monthly or thousands. Leads are originating from everyplace, all the time, and often the actual source of the lead is not easily determined. Adding to this problem is that online prospects expect to be responded to online in real-time, and not a week from today. They are hesitant to provide their personal information, and prefer to provide only limited contact data at the first contact with the franchisor.
Many large and medium size franchisors have adopted systems and processes in an attempt to stay on top of their influx of leads. Small franchisors usually do not have that luxury, and are overwhelmed with high lead volume, and then opt out from Internet lead generation web sites until they can regroup.
If your franchise system is one of the lucky (or unlucky) ones to receive hundreds of leads monthly, how can you cut to the chase, and filter out of your franchise development system only qualified prospects? If you are receiving only a name and email address for a prospect, how can they be stepped up to being a valuable contact? How do you know if the leads received are “just looking”, or if they actually spent time studying your franchise before having submitted their request? These are important areas of consideration for all franchisors.
Many lead generation web sites allow prospects to pool their requests, whereby prospects can easily click to send their request to many franchisors at one time. Other sites provide tools for pre-qualifying and filtering prospects. Prospects who actually reviewed the franchise opportunity, as well as those who match the geographic, financial, and other requirements and preferences, can be filtered and scored so that the franchisor receives only a pre-qualified prospect matching their interests.
Some franchise online marketers specialize in processing leads redirected to them by the franchisor, and then market franchise opportunities via a series of auto responders and marketing messages. Those prospects who take a positive action as a result are considered to be serious and are passed back to the franchisor for follow-up. It is believed that a substantial number of good prospects become irritated by such aggressive online marketing techniques and ignore, or opt out of the messages they receive.
Can better lead management assist franchisors develop quality leads? Are there best practices to utilize? The answer to both of these questions is, “yes”.
The prerequisite to a successful prospect qualification program is for the franchise company to have contact management software, and to have the people in place to follow-up with their franchise candidates. Some franchisors develop their own systems in house, and have one or more fulltime employees working as “qualifiers” who personally speak to every lead before passing the prospect to the next level. Other franchisors outsource this service. Nonqualified prospects are removed from further consideration, if applicable, at that point.
The process which we recommend uses and recommends that the qualifier, or the prospect qualification service, manage the prospects during the initial stages of the franchise buying process. The qualifier(s) would handle steps one through step four of the process, and the franchisor’s sales department follows through with steps five and six. These are the steps, which we recommend:
1. Personal contact with the prospect. If a phone number has not been provided, then an attempt is made to obtain one, and to set an appointment.
2. Prequalification and verification. We verify critical information already provided by the prospect, and if not already provided, we obtain that information from the prospect, and ask additional qualifying questions. If the prospect responds favorably, then a timeline is set for moving forward, and more information is provided online about the franchise, including a franchise application.
3. Franchise application. The qualifier or outsourced company receives the franchise application instead of the franchisor. They conduct the credit check, Patriot Act check, and a background check, as required by the company.
4. Disclosure prior to Discovery Day. This is a time saving step which is applicable to those franchisors who disclose early. Disclosure should be made print version, or by the FTC electronic disclosure demonstration project guidelines. This may be done by the franchisor, or they can outsource part of the process to a company approved by the FTC for electronic disclosure. Companies can receive back their online Acknowledgement Of Receipt the same day sent, which starts the 10-day clock, and have their compliance reporting done for them.
5. Possible closure of sale at Discovery Day. Meet, and show and tell about opportunity to prequalified prospects. If not previously disclosed, then disclose to final approved non disclosed candidates. If previous disclosure has been made, then execute franchise agreement.
6. If not predisclosed in Step 4, and after 10 business days following Step 5, closing of sale. Approved prospect is contacted for further discussion about the franchise opportunity, their questions are answered satisfactorily, and sale is closed. Franchise agreement is signed and returned to franchisor for execution.
Are there performance success ratios, that should be expected when using this proactive system for lead management? Yes there are, and a franchise company should expect over a three month cycle a minimum closure ratio of 1 % from their new leads generated monthly. Some companies, such as PostNet execute franchise agreements with 1.6 % of their leads.
In other words, if a franchisor receives 50 Internet requests monthly, the minimum standard should be that 1 % of those prospects processed would buy the franchise. This only contributes to one franchise agreement every two months! More leads and higher success ratios throughout the process should result in more sales. If 500 requests for information are received monthly, then the number of closed franchise agreements at 1%, increases to 5 new franchisees monthly! At a 1.6 % success rate, then new agreements executed equates to 8 new franchisees monthly.
Regardless of whether you receive results by using outside providers, or in-house pre-qualifiers, it is critical that you incorporate both a strong privacy policy into your program, and respect, and protect the proprietary information provided by your prospects.
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It's a Grind learns recruitment goes easier without paper. Here's how they do it.
June 17, 2004
As appearing in Franchise Update Magazine Spring 2004.
By Ripley Hotch
If you could connect better with potential franchisees, speed up the recruiting process, and save a ton of money doing it, wouldn't you?
Steve Olson is doing it.
Olson, senior vice president of It's a Grind Coffee House, headquartered in Long Beach, has moved the franchise entirely to a paperless recruiting process. It's a Grind's system leans heavily on the Internet.
As an early adopter of the Internet, Olson (a former columnist for Franchise Update) was inclined to move to electronic processes as early as possible when he joined the startup nearly two years ago.
He could see what was happening with franchise buyers: More and more of them were using the Internet to gather information and make initial contact with franchises. It's no secret now that Internet contact is the primary source of leads for franchisors and for brokers.
"I always look at things from the buyer's viewpoint," says Olson, "so how do they communicate? The Internet is the #1 communication choice. Candidates now say ëCan you e-mail that to me?' Fax is a distant second." The important reason for that, he says, is the speed of response: When people are asking, they want the information quickly, and the quickest way is electronic.
If you look at it from the candidate's point of view, and if their first choice is electronic communication, he says, then why do you need paper? As he looked at the process, Olson decided the first thing to go was the printed brochure.
"If this is how buyers are communicating, and if responsiveness is so important to them, then why do we need a printed brochure?" Olson asks. "Many buyers already looked at the web site and most of the print information was just duplication. So we decided to dump the brochures."
The printing and postage costs for the presentation package were $15,000 annually. When the company ran out of their printed materials in 2002, it just didn't reprint. "We never lost a beat," says Olson.
The important element is the web site. The site, Olson says, needs to be response-driven and structured. It needs to be informative, but not too informativeójust enough to drive inquiries. When the inquiry comes in, phone calls and e-mail responses go out.
One e-mail will have a collection of updated photos. The photos show the new stores, and they're full screen. Olson says that has a far more powerful appeal, since the computer screen can be brighter and larger than photos in a brochure. "It has a larger impact than print." For franchises with a strong visual appeal, it has a powerful emotional impact, he says.
The next step has been a live videocam feed from the store. Buyers are given a passcode to log onto the site and actually watch a store, see its customers coming in the door, and see the employees behind the counter serving them. "That puts them in the business and in your store as a customer.
"Even the disclosure documents go out electronically.
But there again, there are large savings on printing and mailing if people want the document onlineóand two-thirds do. Olson estimates a savings of $25,000/year. Perhaps even more important is the time savings: "Between the brochure and documents, and online application, we save a week to a week and a half in the process by eliminating the paper trail," Olson says. And that time savings can mean the difference between getting or losing a sale.
And for those who are nervous about proving a document has gotten somewhere, there is an "electronic trail" rather than a paper one. First, there's a record of an electronic request for the document. Then, when it is opened and saved, a copy is stored with the document service and available for the company's files. That is an acceptable document receipt. "So you're never chasing for document receipts," says Olson. "You eliminate storage of documents; you're never out of print. If your buyer's attorney is out of town, you can instantly send it to him or her. You can send simultaneously to all partners. We figure we save at least 10 hours a week on this.
"How do you decide if your company is ready for this kind of process? Olson says you have to look at your audience to know. "Our investment level is in the area of $325,000, and our buyers typically have backgrounds in sales, marketing or already owning a business. All are active on the Internet." And doing the process as they do appeals to the kind of buyer that It's a Grind wants.
It must be working; in two years, the company has over 200 franchises under development. Clearly, says Olson, "We're responding to them the way they want to be responded to."
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