Franchise Lead Management

Some industry experts trace the first concerns over franchise lead management back to the invention of fire, while others maintain the issues arose later on in evolution, pointing the marker to shortly after Nixon resigned. No matter who is right, the point is that franchise lead management, and the use of technology for other mission critical functions in franchising, has come a long way over the past 20 years.

Back in 1987, franchise sales representatives had 'tickler files,' which was essentially a recipe box with 3x5 index cards for every lead they were talking to. These cards were typically filled out at expo shows, which at that time were the predominant force in franchise lead generation. There was a snap-on lid, with dividers by rank according to how hot the lead was. The franchise sales person would pick out a card, make a phone call and send a letter. If they received a call from the lead and it looked good, they would move to step no. 2 in the divider. Essentially they handled leads like recipes.

Now, of course, thanks to technology and the advent of the internet, franchise lead management has moved light years beyond the antiquated recipe box system - the same can be said for most functions in franchising. Explaining how technology has changed franchising over the past several years is an overwhelming topic to cover in one article. In order to be concise, the gargantuan topic of the past, present and future of technology in franchising is best narrowed to three key areas: lead management, internal communications (Intranets) and payment processing (royalty payments, ad fund contributions, vendor payments, etc.)

Franchise Lead Management

Then: Having moved well beyond the recipe box method of managing leads, the introduction of the internet created a whirlwind of both positive and negative impacts on lead generation and lead management for franchise organisations.

The internet opened up all kinds of lead possibilities, which was great, but then franchisors became deluged with leads. How to manage these leads became overwhelming. The question was what to do with all of the leads.

Leads started coming in from all sorts of web sites simultaneously, most from emails that prospects could send directly from a site to the franchisor. Then, the franchise sales team would have to print the emails out on paper, call the leads, and then cut and paste their notes from conversations into an ACT database or perhaps an Excel spreadsheet that lived on their hard drive at the home office. While that worked for sometime, eventually, the problem was that the information could not be accessed from the road or from anywhere outside of the office network. Most franchisors would initiate manually issued email campaigns from their home offices, with reduced, if any, reporting capability.

Now: Today, lead management is largely conducted electronically and objectively, with ranking and prioritization of leads and issuance of automatic opt-out drip email campaigns. Set follow-up procedures are implemented on a per lead basis based on quality of the lead.

Determining the quality of the lead is a formula. Typically that formula involves timing, multiplied by the individual's net worth, region of interest, and their interest in one or more units. For example, a prospect who indicates a desire for five units within two months in a key growth market and who meets the financial criteria, will receive an entirely different follow-up campaign than one with reduced capital who wants a single unit in a less desirable market. Today's lead management systems would make that differentiation and act accordingly.

Lead management involves a series of questions, such as who to call, when, who is interested in key markets, secondary markets, how many leads turn into deals, what's the cost per lead, what's the cost per close, and more. Everybody in franchising is thinking about contact management as a way of enhancing the franchise sales process with increased accuracy. That's where the initial trend has been over the past six years.

Technology for lead management has moved toward ways to deduce patterns. What does the information reveal? The average franchisor has a lead that's generated by any of the major franchise sales websites and their own commercial website, where a form asks them if they would like more information on the franchise program. Currently, those leads are being imported directly into the contact management system for automatic issuance of email campaigns promoting the franchise offerings, and automatic scheduling of follow-up procedures.

Future: But now we must look to the future - electronic tracking.

By having a record of conversations tracked, franchisors can better manage the sales process. Now, it's moving toward being able to analyse trends - how long it has taken for people to buy a franchise and why. Technology allows them to go back and analyse the process. The biggest thing that is just starting now is recognising the patterns of how a franchise sales team has handled prospective leads and also systems helping franchisees manage prospective customers the same way franchisors manage leads. With "Franchise-to-Consumer" data reporting, customers can fill out an evaluation form on a web site and relay their experience on a particular franchise unit. Did they enjoy the food? How was the service?

Just as a prospective franchisee goes to a site and fills out a form that goes to the lead management system, then an automated reply email campaign, the same pattern occurs with customers. They go to a site and fill out a form - the date comes automatically right into the contact management system and associates it with all the other reviews for that location. Upon the completion of the form, the customer gets an automated email thanking them, with coupons attached to redeem at that location.

Franchisor/Franchisee Communication

Then: Before internet connections, almost all communication between a franchisor and their systems occurred via telephone, in person or by snail mail. Even the slightest adjustment to the operations manual had to be sent via mail or overnight packages. Revisions would come in the form of sticky notes indicating where in the manual the change could be found. When the internet became mainstream, these giant files would be e-mailed individually to each franchisee, again, with cover notes explaining where the changes took effect. Eventually, intranet systems alleviated this painful and expensive task. With intranets, franchisors could simply upload documents to a secured site and alert their systems via e-mail to visit the site for the latest and greatest versions.

Next, intranets moved beyond just being areas where updated documents, ads and promotions were posted, to becoming mechanisms of real-time communication between the franchisor and the franchisee, as well as a place where franchisees could "talk" to each other via chat rooms and message boards.

Now: Today, the creation of 'mentor zones' has taken that process into a new political era. While intranets greatly improved ease of communications between the franchisor and their franchisees, there was a time when the franchisees stopped listening to what the franchisor was communicating on the sites. Now, franchisors are turning to their most successful franchisees and asking them to convey the information to the system using the same technology. So while discussion forums online used to be moderated by the franchisor, now successful "franchisee mentors" are moderating the topic for them.

The idea of information coming directly from a franchisee lends a perception of much higher credibility To protect the mentor from being bombarded with constant questions, franchisors have created mentor zones with mentors of the month, where franchisees can talk about what has worked for them. In this way, they never have to repeat themselves, and he or she is rewarded and recognised as the mentor, which only furthers their desire to continue to succeed as they help and inspire others.

Basically, the idea of communicating via technology is great, but now the politics of who the communication is coming from is more of an issue. The bottom line is that on intranets, when it comes from the franchisee, the absorption rate is 10 times higher.

Another "now" issue in technology is Hogging - particularly how to cut off a negative blog. Recently a few franchise chains had problems with competitors trying to launch a sabotage campaign against them with bloggers.

The answer is to spin the blog into an interview and to combat with positive commentary and your own blogging campaign. But how do franchisors control internal blogs on their own intranet systems?

The answer is in prevention. Franchisors should establish the conditions and parameters within their own intranet systems. They should lay ground rules, such as no personal attacks, no swearing and to keep the running theme of "constructive." Franchisors can clearly state that they reserve the right to prohibit use of abusers from chat rooms, blogs or discussion forums on the intranet. After all, it is their property. They can delete negative comments or remove the culprits' access altogether.

Future: The future is already moving toward more visual elements. Franchisees are visual people. As speeds and bandwidths get faster, and cell phones and PDAs become more capable, intranets are headed toward visualisation for training, for pitching prospective franchisees and more. Visuals - such as videos of the CEO speaking to existing or prospective franchisees — is making the online process much more intimate and personal. This can include webinars (web seminars) and getting the CEO live over the phone and live over the web to talk with the system in 'real time' about emerging issues and challenges.

The internet is now creating truly global communities, where people are remotely connected in franchising all over the world. For example, IFX Online supports franchisees in 23 countries, but for all they know or care — its one country. Everything is live, up to the minute and here and now. Our technology eliminates delays or any types of cultural blockades. Access to information is as readily available in your neighbouring town as it is in your neighbouring country. This is monumental.

Royalty, Ad Fund and Other Payment Systems

Then: The antiquated systems of yesteryear are perhaps most humorous when it comes to payment systems, and even more scary to consider that today many franchisors have not moved beyond those methods. Being a former franchisee back in those days, I had to total out my cash register with a big long tape, and once a week I had to ‘x' out and do a summary, print out copy of that tape and take the numbers off the tape and handwrite them on a royalty submission report. Franchisees would multiply their net sales, total it, sign the form and write two cheques, one for the royalty payment and one for marketing. They would attach the cheques to the form, sign the cheques and send them in.

The franchisor would receive the cheques and throw the register tape into a drawer, and run the cheques to the bank for deposit. Usually they would never look at tape until they realised they needed to provide some analytical assistance. Amazingly, about 30 percent of all franchisors still use this process.

Now: In the recent past, more franchisees have graduated to filling out a secure, web-based form that produces the totals for them, then printing it on paper and sending it in with their cheque. The report system fills out the form for them and calculates the numbers, but they still have to send a cheque. They typically send the sales data via an attachment using email to their franchisor, which serves as their sales data and royalty determination. The problem is that this is not secure and it includes detailed sales data for every franchisee.

Future: So what does the future hold for royalty payments? Basically, the franchisee will fill out an online form on a secured site that calculates their royalty, and an electronic funds transfer takes care of the royalty fee to the franchisor. Centralisation is also a future trend. More franchisees are now able to pay their royalty, buy supplies from the franchisor and register for the franchisee convention using the same online payment centre, which not only lets them transfer money from cheque accounts, but also allows them to use a credit card. Many franchise systems are using the payment centre for other payments, such as advertising fund contributions.

More franchisees want to pay their royalties with a credit card, not because they are hurting financially and don't have the cash at hand, but because they earn points for airline mileage or other perks offered by the credit card company. The problem is that very few franchisors accommodate payments of royalties via credit cards, mostly because of processing fees. Eventually, credit cards and automatic debits of royalties will become more commonplace, and will likely be voluntary - the franchisee will have the choice of how they would like to pay their royalties and purchase supplies.

Paying electronically offers the additional benefit of benchmarking. The franchisee can begin to see patterns of how their sales are doing and generate reports that track sales comparisons from previous months and years.

Nobody can accurately predict what specific technology will be the next to revolutionise the industry, yet my great crystal ball for the future tells me that advancements will focus on ways that franchisors and franchisees can better track, manage and analyse most aspects of their business.

It's been a long road from recipe boxes for leads and stick notes on operations manuals, but advancements are occurring at rocket speed, and will continue to make life easier, more efficient, and most important, more profitable for franchisees franchisors and suppliers alike.

By Dan Martin - CFE, IFX Intranet provided by Franchise Technology Solutions

19-Nov-2008