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Death and taxes are sure bets, others are less so in marketing


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Mark Siebert

Since Donald Trump’s surprising November election, one of his most discussed issues is the simplification of the American tax code. As is stands, the tax code is a robust 3,728 pages, boasts seven differing tax brackets and has enough loopholes to make an economist’s head spin.  

But when it comes to franchising, oversimplification can be the death of a franchise recruitment campaign. Without itemizing your prior year’s activities in detail, you may miss some of strategies that would maximize your results.

Auditing your leads

Most of those reading this column are very likely tracking at least the basics of franchise lead generation, such as cost per lead and cost per sale. But neither of these measures, when looked at in isolation, provides a good measure of performance.  

If franchisors were to look only at costs per lead in measuring marketing performance, they would likely allocate all their marketing dollars to franchise portals, which, for the most part, have notoriously low close rates. So while most franchisors can draw meaningful conclusions on lead costs, those conclusions do not account for quality.

Costs per sale, on the other hand, only become an effective measure once your ad spend is large enough to become statistically significant across multiple media.

To illustrate this, imagine holding two sacks that each contains 100 marbles. In the first, one black marble and 99 white. In the second, five black with the remainder white. If you somehow managed to draw the sole black marble from the first sack in five tries, while failing to do the same from the second sack, you’d likely assume that the second sack was a waste of time, and move on.

The problem, of course, is that a single arbitrary event combined with a sample size can skew your beliefs and altered your efforts. Franchisors must thus contend with “the law of small numbers” to avoid the unconscious urge to create bias.

So the challenge for franchisors that do not have obscene marketing budgets is in determining lead quality without allowing sales bias or gut-feel assessments to enter the equation.   

One objective measure used by more astute franchisors is “connection rate”—a measure of the percentage of leads that actually engage in dialogue with a franchisor. If your sales team can actually speak with 50 percent of the leads generated by one source and only 25 percent of the leads generated by another, it is generally a good assumption that the former will be a more productive lead source, all other things being equal.  

Of course, all things are never equal. But by dividing cost per lead by the connection rate, you can derive a new, more meaningful measure of lead quality—cost per connection. In the example above, dividing a hypothetical $100 cost per lead by 0.5 and 0.25 would yield costs per connection of $200 and $400 respectively.

This same type of analytics can be applied to any other well-defined step in the sales process, generating measures like cost per application or cost per discovery day.

Diminishing returns

In doing your year-end audits, it is also important to remember that various media may grow less effective over time, because at some point, most of the people who are inclined to respond (other than new subscribers) will have already done so.  

At that point, your ad may serve you well from a branding standpoint, but may do a less effective job in terms of lead generation.

Alternatively, with Adwords, people are being exposed to your message only when they are ready to buy (or at least start shopping). But with a strong pay-per-click management effort, the performance of these ads should improve over time as “A-B testing” will allow you to improve messaging and capture rates while using negative keywords to eliminate unwanted (and expensive) clicks.

The right deductions

It’s important to remember that tracking means nothing unless it leads to action. And when it comes to franchise marketing, that may well mean sacrificing lead generation strategies that have worked in the past in favor of the new and unproven.  

Ultimately, franchise marketing is less about reporting last year’s gains and losses than it is about anticipating the future by spotting trends. So the most successful marketers will embrace change and constantly look to reallocate.  

Media buying is an imperfect science. What will work well for a foodservice franchisor with a large investment will likely be completely inappropriate for a small investment service concept. And the media marketplace and media effectiveness is constantly evolving. So what works today may or may not work in the future.  

With that in mind, we recommend that franchisors weed out the bottom 10 to 20 percent of media performers at least every six months, and replace them with whatever is next on their list. But in taking this approach, franchisors need to temper their decision-making with an understanding of the role various media play in the sales process.

For example, a public relations budget that’s creating brand credibility may help improve close rates, even though PR is traditionally not a great lead generator.

And to the extent that PR creates backlinks to your website that improve your SEO, even the leads it does create may be impossible to measure. So again, an oversimplified short-form approach may not lead to the best results

Unlike death and taxes, there is nothing inevitable about franchise marketing success.  It takes persistence and ingenuity—and even then there is no magic bullet.

But for astute franchise marketers, a rigorous approach to lead generation activities, the desire to look beyond the superficial,  and a willingness to move on when something no longer works can lead to healthy returns year after year.   

Mark Siebert is CEO of franchise consulting firm iFranchise Group. Reach him at 708.957.2300 or info@ifranchisegroup.com. His new book is “Franchise Your Business: The Guide to Employing the Greatest Growth Strategy Ever.”

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