Navigating your franchise business through digital disruption reveals the importance of customer data and franchisee engagement.

Franchising has been a popular brand expansion model in Australia to achieve economies of scale, reduce costs and share risk. However, in today’s digital world mass disruption is occurring with customers now firmly holding more power than ever before.

Australia’s savvy and digitally connected consumers only care about the ‘experience’. They only see the brand – they don’t even necessarily even know if it’s a franchise brand. They certainly don’t see different ownership models and different internal silos. They don’t see a branch of a brand, they see the brand and they form an opinion based on their interactions with that brand.

Franchises, like other traditional business models are being challenged and need to adapt. To remain competitive, they must be able to secure ongoing customer loyalty.

Franchise parent companies are under increasing pressure to no longer just add value by reducing costs in the supply chain but also market the overall business. To do this, the parent company must own and ensure a consistent branded customer experience across all locations and touchpoints.

Knowing who your customers are is a powerful competitive advantage, it means you can market to them, personalise the experience and make it contextually relevant.

Customers seek instant gratification, they want personalised and contextual experiences. Mass marketing is filling their inboxes and consumers are busy unsubscribing and deleting offers that are not relevant and have no insight into who they are and what they need or are interested in at a particular time.

To be effective, marketing now has to be targeted and to do this, brand marketers must know precisely who their customer is.

How to ruin a brand experience

The effect of these internal issues on the customer experience was brought home to me personally when I recently purchased a jacket at a major international franchise apparel brand. The zipper was faulty so I took it back to a large flagship store for the brand in my local shopping centre.

The first question I was asked was ‘where did I buy it?’ Answering that I bought it overseas meant I was refused help in store and told the Australian entity was different and therefore they are not able to fulfil warranty requests. I was then advised to take the issue online.

As a customer, this is very frustrating and reflects extremely poorly on the brand. I think I’m dealing with the same company, I’m in a flagship store, I want my issue resolved and I don’t care about their internal structures, so it ruined my brand experience.

With that one incident years of marketing and good will that apparel brand had built with me was undone.

What works in franchising

Franchisees need to understand the true value of the brand they have bought into. They need to appreciate that they must work as a whole, not a silo store. The value is no longer just held in the local relationship as customers are now highly transient and mobile travelling from one location to another and purchasing through various channels.

It’s about securing the loyalty of the customer for the overall brand wherever they are and however they choose to shop.

Franchisees therefore need to let head office have access to all customer data and focus on being responsible for the best brand image and customer experience they can deliver within their region/stores. They need to act as part of a wide network of passionate brand ambassadors.

The problem is often franchisees invest in buying into a particular brand and believe their core value is knowing what their own customers want.

Franchisees are more frequently fighting head office and resisting sharing customer information, insights and data believing that this is what gives them a competitive advantage. These channel conflicts have occurred before as traditional and digital worlds of business collide but can be overcome to benefit everyone.

Once franchisees release their end user data, head office can begin to successfully market to a consumer of one – relevant and contextual driving higher sales than ever before across all touchpoints of the brand. Without a single view of the customer data this is impossible.

A major hardware chain in New Zealand is currently struggling with these issues, understanding the importance of customer experience, but unable to gain the customer insights they need to deliver more effective marketing approaches because they don’t have access to the customer data, their individual franchises do. What is refreshing is seeing this organisation understand and confront these difficulties now and change its business model to ensure success in the future.

Why brand control is a retail trend

Telecom companies for example are increasingly operating more stores from head office rather than expanding their franchise model, so they can control the experience and leverage the data. They understand the importance of customer experience.

This trend is also hitting the large department stores of Australia as brands move towards creating their own large scale super stores so they can own the complete customer experience.

Westfield shopping centres around Australia are now expanding the number of branded stores while our major department stores struggle to maintain relevance as they can’t ensure a consistent feel for each and every brand they stock.

Franchises need to understand this shift is coming and it’s driven by global influences and fundamental changes in how consumers shop and engage with a brand – franchise models that flex and adjust their structures now will ensure their brand thrives in a changing digital economy.