Unlock the Power of Data, Franchise Experts Say
The smartest franchise brands are not simply looking at data, but also gleaning useful insights to improve operations, such as reducing food waste by evaluating inventory, understanding which menu items are selling and stocking accordingly.
Using big data is the subject of my September Living Large column, which covers a different topic each month as I follow three emerging franchisors throughout the year. I also ask outside experts to share their best practices in the Franchise Times Insights group on LinkedIn, and this topic elicited plenty of comments. Here’s what they had to say:
Look beyond AUVs. Paul Segreto, CEO of Franchise Foundry, says the franchise brands that make the most of data are the ones analyzing customer experience, average ticket revenue, referrals, repeat customers and outside sales. “Basically, analyzing down to what I believe are the simple, yet core points between a successful and an under-performing business,” says Segreto in a Franchise Times Insights group discussion on LinkedIn. “I'm referring to sales, fundamental sales. It's what drives business and is the barometer for the direction of the location, the market and the brand. Of course, it's great to realize and state a 15.2 percent increase in average unit volume, but analyzing the data enables an organization to determine how and why it occurred, and as importantly how to continue to improve sales, and ultimately profitability.”
Data can help define goals. During a recent FranConnect webinar, President Keith Gerson noted several live poll survey results that pointed to many people in franchise systems being unsure of goals and not being held accountable for reaching them. Executing on franchisee performance is a systematic process, says Gerson in the Insights group discussion, and technology and data can help by using “both financial performance management metrics and progress against the franchisees’ own goals and objectives.” Franchisors should create accountability through franchise peer performance groups “in which the technology allows the sharing of rankings and performance of all members of the group at regular intervals,” says Gerson.
Use data to boost retention. “What's the most glaring difference between franchises that grow and those that stagnate or fail?” John Schroeder, a principal at marketing consulting firm Nova Foresight poses that question in the Franchise Times Insights group on LinkedIn. Winning customers is key, he says, but you also must keep them. “Blue Apron, once the darling of Wall Street, retains only 10 percent of their customers yearly, and has lost two-thirds of their stock price since the IPO,” Schroeder says. “The good news is that you have all the data you need to create world-class retention—you only need to take the time to study it.” Franchises need to measure and take action on customer feedback and actually measure their retention rates so they can benchmark results over time.
Join the conversation in the Franchise Times Insights group on LinkedIn. The next topic is: protecting the brand.