The $50m question: why are many franchise recruiters failing?

By Sarah Stowe | 29 Oct 2015 View comments

Find out why many franchise recruiters are failing, and how you can avoid the same mistakes.

For the past 18 months I've spent a great deal of my waking life pre-occupied with understanding a complex series of events that I've now come to know as the franchise buyer journey.

This pre-occupation was born out of a desire to understand how the franchise brands I'd been working with can generate higher sales, and in order to do that I had to get a handle on how, when and why franchise buyers interact with companies at the point of first enquiry.

Hearing feedback from both sides over the past six years, it seemed evident that there were huge disconnects in what the two groups were telling us:

Franchise sellers: "Ninety five percent of leads are tyrekickers. They don't return emails and don't even leave their phone numbers. #@+#% useless timewasters!"

Franchise buyers: "I'm trying to understand which brand is the best fit for my financial and work/life goals. I need helpful information to review in my own time without being hassled by a sales rep as I'm not quite ready to buy, and I don't want to have to give up all my details to get it"

Both statements will sound very familiar to most of us. But for me something still didn't quite add up, and I was determined to find out why. My belief was that if we could understand how to improve this primary interaction between both parties, then a huge amount of inefficiency could be decreased.

Lead generation trends

I started to ask every franchise brand I came across, mature and emerging, retail and service, about their typical lead generation and follow up practices, and the answers were pretty interesting.

1. Most franchise brands were using external franchise media to generate leads.

2. Most franchise brands were generating strong, if not sometimes the strongest, leads via their own website forms, although in many cases these people were referred to the site by an external franchise medium.

3. Many, but not most, franchise brands had a good understanding of their overall lead to sale conversion rate (anything from 1 in 30 to 1 in 100).

4. A few, but not many, franchise brands had split conversion rates between lead to candidate, and candidate to sale (the latter typically much higher than the former).

5. Fewer than half the franchise brands were measuring these metrics and conversion rates monthly and implementing tactics to keep improving them. At this point it’s apparent that there is a science to lead generation, and many still weren't measuring the basics. And as we all know, you can't manage what you don't measure.

6. Many, but not most, franchise brands hadn't fully reverse-engineered their lead gen volumes to achieve their sales goals, based on average conversion rates.

7. Most franchise brands would send an enquiry follow up email within 24 hours. 

8. Many franchise brands would send an extensive follow up email, including requests to compete a lengthy application process and confidentiality agreement in order to further the process.

9. Many franchise brands were sending a brief follow up email requesting a telephone conversation to get to know the enquirer and discuss the opportunity further.

10. However in the last two instances franchisors were experiencing low lead to candidate conversion rates, and were frustrated and wondering why.

This last point is the one that I am really interested in. Why would a sane person who has taken several very distinctive steps to research a franchise brand or opportunity and send an email suddenly drop off the face of the earth? It's the $64m question, isn't it?

Well, not quite. It's possibly closer to being a $50m question – which is the approximate cumulative spend on franchise recruitment advertising every year in Australia, based on data from the Asia-Pacific Centre for Franchising Excellence survey, Franchising Australia 2012.

With so much being spent to acquire prospects, and so many being written of before the first hoop has even been jumped through, the potential for wastage is equally high. The key missing link to improving conversion lies, in my opinion, in the very specific best-practice of how to nurture a lead into a candidate and ultimately into a buyer – at scale, with consistency and with maximum cost-efficiency to the business.

How to maximise lead nurturing

Lead nurturing is still is a relatively unheard of term for many franchise marketers, but elsewhere it's a multi-billion dollar industry.

Lead nurturing is defined as the process of building relationships with qualified prospects (often by delivering highly valuable content which helps them progress along a buying path) regardless of their timing to buy, with the goal of earning their business when they are ready.

In Australian franchising it seems that often if a candidate is not ready to purchase, or unwilling to enter into a discussion about buying as yet, then in many cases the potential franchisee is dismissed as a tyre-kicker.

Sales teams will naturally will focus on the low hanging fruit, but when potentially 80 percent or more of prospects are still in earlier stages of the purchase journey, then pipeline practice is critical.

Sure, many of these supposed tyre-kickers may sit on a database and receive a regular monthly company newsletter in the hope that they re-engage, but really and truly is the brand actually providing any meaningful content that is going to nurture a prospect closer to the buying point?

In most cases it seems not, and largely that comes down to franchisors not fully understating which content can achieve this goal, or not having the capacity to act like a publisher as well as focus on the core business activities. It's a very common problem for franchise brands of all sizes, sectors and levels of maturity.

Think about that last time you bought a car, home or a holiday.

  • Did you do research first before engaging a sales rep?
  • Did you what your own time and space to digest the information?
  • Would you have a higher likelihood of returning to the provider that has helped you by providing valuable information to make a better purchase decision?
  • Would you like to have been written off as a tyre-kicker if you chose not to give up all your information or sit through a sales pitch the first time you walked into a car showroom?
  • Would you have continued your buying journey elsewhere and eventuated in purchasing from a provider that offered more information upfront and allowed you time and space to come back when ready?

I certainly know what I would do. It's clear that franchisee research behaviours and enquiry patterns have changed. As Australian consumers we have developed an increasingly low tolerance for product-push advertising and sales reps being the gatekeepers of information we can gather in our own time and on our own terms.

When we are ready to buy, we increasingly go to those that we perceive as trusted experts that have added value to our purchase decision.

It's time for franchise marketers to catch up, and content marketing-driven lead generation and lead nurturing is the way forward.