The Flywheel Group » Clint

Are Emotionally Engaged Buyers Really What You Want?

Clint — Thu, 13 May 2010 17:10:28 +0000

Is creating an emotional bond or emotional engagement really what you’re after when working with prospective candidates who are interested in your franchise? If your job function is in franchise sales you’ll probably say “Yes”. If you’re a CEO you’re likely thinking “No?”. The nature of the franchisor-franchisee relationship is complex and must begin with a proper alignment of expectations if you want to achieve long-term viability.

By definition, an emotionally charged buyer is someone who makes a buying decision based on feeling rather than rationale and reality. This creates fertile ground for a misalignment of expectations; the consequences of which are typically dire in franchising. But why is franchising different?

Well, in scenarios where you may be selling goods and/or services and the buyer and seller are independent of each other once the transaction is complete the consequences are not as severe.

As an example, if I visit a car dealership and see a shiny, new, red, foreign sports car I might envision myself sitting behind the wheel, driving around, and being the center of attention. It smells new, it looks new, and it handles great. I could easily romanticize about all the joy this car will bring me, and it’s this type of emotion that will be easily picked up on and played by the car salesman. Despite the high cost of ownership including the premium gas, insurance, expensive maintenance, not to mention the price tag – I can probably talk myself into buying it. However, in a few weeks the newness will wear off and I’ll find that nobody was as impressed with it as I thought they would be. I didn’t achieve all of the joy that I had envisioned that day while standing on the lot and now the reality of the gas, insurance, maintenance, and first loan payment has sunk in. I still like my car but I can see that my expectations were not realistic due to my emotions. I rushed the decision a bit, but perhaps I’ll sell it or just leave it in the garage.

The good news for the car dealer is that they aren’t relying on me to drive the car every day or to maintain it. What I decide to do with the car after the sale is made has no impact on the dealer’s business. A car dealer wants you to be an emotional buyer. They want you to create an emotional bond with the car, fall in love with it, romanticize about how great it will be to have it. Because a rational approach would require studying the total cost of ownership and being realistic about what you’re really getting and therefore you might not buy it.

In a franchising business model the seller (franchisor) is dependent on the buyer (franchisee) after the transaction. This dependency creates a completely different relationship dynamic than a typical B2B or B2C transaction. A franchisee who wants to sell their business soon after opening, or one who quickly becomes overwhelmed with the realities of operating a business and underwhelmed with the fruits of owning it is not an optimal situation. If too many of these misaligned relationships occur during the growth phase of a franchisor’s life cycle the cost of unwinding them, in both financial and human resources, could easily drain the franchisor thus pulling the focus away from new opportunities and setting the sights on extinguishing fires.
The bottom line is that if your franchise sales process is primarily designed to create an emotional engagement with the candidate (especially those who have never owned/operated a business), without doing a thorough job of ensuring that expectations are aligned, then you are most likely setting the stage for long-term failure. You will win the battle of selling franchises but lose the war of building a sustainable, healthy, franchise system.

Investing the time to create a sales process built around understanding your prospective franchisee’s expectations and criteria, instead of trying to create an emotionally charged buyer, is a step in the right direction toward longer-term success.

As always, I look forward to your feedback and comments.

Symptoms vs Problems

Clint — Wed, 12 May 2010 21:22:19 +0000

Quite often we speak with franchising executives about the challenges they’re facing. During these conversations, one subject that is commonly broached is the challenge surrounding franchise sales/development. Many times what the organization’s leadership is explaining to us are symptoms of a problem, but they’re looking for a solution that only treats this symptom. The reality is that there is often a larger problem in play that gets little attention. That problem can usually be broken down like this:

1. Lack of consistent business processes in all areas including franchise sales, pre-opening, operations, and franchise administration.
2. Lack of IT infrastructure that enables the organization to manage their business processes.
3. Lack of analytics/reporting tools that enable management to benefit from business intelligence, or monitor and improve the business.

This is an excerpt from a typical conversation…

Us: “Can you briefly walk us through your franchise sales process.”

Franchise Exec: “Sure, we receive our leads through various portals or from our corporate website. The leads are emailed to a sales person (or our sales team) then entered into a spreadsheet.”

Us: “Ok, then what?”

Franchise Exec: “Then the salesperson follows up with the lead to see if they’re qualified and if so we send them an application to be completed.”

Us: “I see. What happens next?”

Franchise Exec: “If the application is returned, we review it to see if the prospect meets our initial requirements. If so, we send them a copy of the FDD, then we’ll invite them to our corporate office for a Discovery Day.”

Us: “What happens after the corporate office visit?”

Franchise Exec: “Well, we just follow up and answer any further questions; discuss the FDD; possibly refer a financing contact. You know, work on getting the agreement signed.”

Us: “Sounds easy enough. So, what’s the problem?”

This is where the conversation usually gets interesting and I say that for this reason – most folks begin to identify their symptoms, not their problems.

“We need to generate more leads.” Symptom.

“We are not meeting our goal for number of franchises awarded.” Symptom.

“We are not able to award franchises in the markets that we want.” Symptom.

“I don’t know what my sales team is doing on a daily basis.” Getting warmer, but still a Symptom.

Now, we could list symptoms for days. But the truth is that until the underlying problem is identified it cannot be solved. I would encourage you to begin working to identify the problems that are the root causes of your symptoms. Try starting with the problem breakdown that I listed above to see if this fits your organization.

As always, I would welcome your feedback.

How-To: Create Leads from Twitter Conversations

Clint — Wed, 24 Mar 2010 18:34:30 +0000

Many franchisors utilize Twitter to communicate their products and services to would-be customers. But how do you know if your social media efforts are paying off? Can you pull up a real-time report to see just how many new leads you’ve created over the past week? If you find an interesting conversation taking place about your franchise opportunity, are you able to effectively get a business development rep involved and respond in real-time?

We’ve posted this video to demonstrate the powerful functionality that’s created by integrating Salesforce and Twitter together in your franchise lead generation process.

Designing a Process for Awarding Franchises – Part 2: Management

Clint — Mon, 15 Mar 2010 00:11:13 +0000

“The significant problems we face cannot be solved at the same level of thinking we were at when we created them.” -Albert Einstein

In my previous post, titled “Designing a Process for Awarding Franchises – Part 1: Leadership”, I looked at the notion of how designing a process of awarding franchises has to start with prioritizing around the characteristics that your franchisees should have. Without fist hashing out this issue, it will be largely unproductive to tactically begin putting together a process that can be managed. For example, creating a system for “selling” franchises to individuals with no prior business ownership nor franchising experience is much different than creating a system of segmenting, targeting, and positioning your franchise to individuals and/or organizations who fit certain characteristics that you have pre-defined. Both of these philosophies will have different implications as to how you design your sales organization, generate leads, create opportunity staging, and develop appropriate metrics. Before you expend a lot of time, energy, and financial resources on becoming efficient make sure you are aligned for long-term success.

A Brief Look at Pre-Internet Franchise Sales

In the pre-internet days, back when times were simpler and your parents had to walk to school barefoot in the snow…uphill…both ways, sales organizations and marketing programs were designed a little bit differently within companies that franchised. Perhaps you would run some ads in the Wall Street Journal and other publications where you felt high net-worth and business-minded individuals would be reading, making sure to include your phone number very visibly -and wait by the phone. You could then hit the franchise trade show circuit, which is where these individuals might come to learn more, because really they had nowhere else to go since there was no internet nor websites to peruse. You would collect some business cards, get home and give a follow up call, send out a shiny hard-copy brochure – and wait by the phone. You might also implement a referral program whereby you would pay your franchisees for sending you leads that turned into franchisees. The franchisors who could afford it would perhaps recruit a seasoned franchise salesperson with an existing “rolodex” of contacts that they could call on.

The franchise sales professional lived and died by the phone. The phone was the sole point of communication, and the franchise sales person was the sole source of information for the interested candidate, besides the FDD (called a UFOC back then) but you would have to talk to the franchise sales person to get it, so…

Another couple of points to keep in mind: 1) Franchise Sales Professionals were typically cold-to-close salespeople which means that they were often first points of contact and deal-closers. They were responsible for feeding the pipeline, closing the deals, and all steps in between; 2) Because of this cold-to-close mentality franchise sales professionals could not afford to miss any phone calls from interested candidates because they needed to continually feed the top of the pipeline, and conversely, missing a call was the equivalent of starving the pipeline.

The Internet’s Impact on Franchise Sales

As the internet was gaining traction in the dot-com boom from the mid-90’s through early 2000 and websites became more common for businesses, the spawning of internet lead generation 1.0 began. Companies such as Franchise Solutions (an early pioneer founded in 1993), Franchise Gator (founded in 2001), and many others began to come online.

These lead generation sites became known as franchise “portals” and they simply aggregated landing pages, categorized franchise opportunities, and focused on driving traffic to their sites. Franchisors flocked to these websites as an easy way to stimulate interest and feed the top of the pipeline. This became the new norm for generating franchise leads and many franchisors were listed on several portals at once (I remember managing leads from 8 different sites at one point).

A problem quickly arose. Most franchise organizations saw a major spike in incoming leads as access to the internet and corporate websites broke down a number of barriers and made it very easy for anybody with access to the internet and a web browser to find and request information. Yet, by and large, franchise sales organizations continued to manage the process in the same manner as they had in the pre-internet days. Cold-to-close franchise sales professionals were feverishly answering emails and responding to a multitude of phone calls from anyone who requested information. The process of awarding a franchise is complex by its very nature and has a relatively long sales cycle, thus as leads become qualified and engaged they take up a larger percentage of a salesperson’s time leaving them with less time to focus on feeding the top of the pipeline.

This model is still very prevalent in the industry today. I believe that at the Franchise Update Development conference they’re still handing out awards for the salespeople that answer the phone on the first ring. I’m not saying that that’s a bad thing to do, it’s just that it’s hardly a relevant metric anymore when it comes to measuring the overall effectiveness of any franchise awarding process.

So, we could diverge here and get into a whole plethora of other interesting topics on developing an overall strategy for awarding franchises but we’ll address many of these topics in later posts. For now, let’s take a look at how implementing a two-tiered model would be beneficial.

The Two-Tiered Model

A sales professional has a finite amount of time in the day, right? That person’s time needs to be spent on the greatest opportunities. The franchisors that are more sophisticated in their awarding process have spent time upfront segmenting and developing their own list of targeted leads, therefore these leads have a high priority and the sales (I prefer the terms business development, but whatever…) team should be working them through the stages of the franchise awarding process. However, because you have a website dedicated to your franchise opportunity along with a form where you request information, and you may have a number of other lead-generation sources (you might even be investing resources into the franchise portals), you are going to get leads through those sources. Someone has to talk to, and follow up with, these people. Do you want to adversely impact your top sales people’s time by putting them on initial qualification duty? My guess is “no”.

This is where your Tier 1 sales team comes into play. You should have consistent messaging going out to all of your incoming leads. You should be able to automatically segment all of your incoming leads through your CRM system so that you are customizing the messaging to say the right things to the right people. For instance, if the lead indicates that they have no franchising experience then perhaps your messaging should include some information about the franchisor-franchisee relationship. If the lead does have franchise experience then perhaps you don’t need to include that information in your initial communication. You then want your Tier 1 sales team to follow up with each lead, qualify them further, and if it’s appropriate then they will set appointments for them to speak with your Tier 2 sales team.

Your Tier 2 sales team can then maintain focus on their best opportunities. They also know that when an appointment is set for them by the Tier 1 team that the lead has passed some initial criteria, and that he/she is an engaged and qualified candidate. The two-tiered model is a much more scalable approach. It is a much more systematic process that will allow you to maintain consistency even while ramping up lead-generation, so that you can ensure that every lead is followed up with in a consistent and timely fashion.

There are some basic fundamentals that you need to have in place in order to execute this model properly. As follows:

The correct organizational structure. Clearly defined roles between Tier 1 and Tier 2 reps.
A CRM platform. A fundamental necessity to any sales team, you need a technology platform in order to route and assign leads, record notes and phone calls, allow calendar sharing, create opportunity staging, and to track key metrics around your sales operations.
Well-defined Opportunity Staging. You should have a well-defined process including basic communication strategy around incoming leads, Tier 1 call scripting, and Tier 2 opportunity staging.

We’ll explore some of these concepts in more detail in coming posts. For more information on building an effective process for awarding franchises inquiring minds are reading these white papers.

Designing a Process for Awarding Franchises – Part 1: Leadership

Clint — Sun, 14 Mar 2010 01:23:34 +0000

Designing a process for effectively awarding franchises can be challenging. There is both a management and a leadership component to doing it. You may recall the image that Stephen Covey paints in “The 7 Habits of Highly Effective People” whereby a group of Workers are fighting their way through the jungle, wielding machetes and cutting through the underbrush while their Managers stand behind them “sharpening their machetes, writing policy and procedure manuals, holding muscle development programs, bringing in improved technologies and setting up working schedules and compensation programs for the machete wielders.” The Managers are helping the Workers to be more efficient.

The Leader, however, is the person who climbs the tallest tree, surveys the entire area, and yells, “Wrong Jungle!”

As Covey would say, management is efficiency in climbing the ladder; while leadership determines whether the ladder is leaning against the right wall. Peter Drucker says it this way, “Management is doing things right. Leadership is doing the right things.”

You’re probably thinking what does this have to do with awarding franchises, right? Well, the main point is that to design a truly effective process of awarding franchises you first have to be in the right jungle. The franchisor-franchisee relationship is a complex one that’s governed by lengthy contracts that spell out very specific obligations that each party has to the other. If certain expectations get misaligned or are altogether not addressed during the franchise sales process (which happens quite often) this will inevitably manifest itself and result in a problematic relationship at some point. If too many of these “problematic relationships” begin to present themselves this creates heavy baggage for a franchise organization and eats up much needed resources – both financial and human. Anyone who has first-hand experience with this knows that the costs associated with these problems can quickly consume any profit that was garnered through the franchise fee and subsequent royalty payments.

Bryan O’Rourke has written a very informative white paper that addresses this concept in more detail. You can get the paper here.

Let’s continue to look at the Leadership component of developing a process for awarding franchises.

Leadership: The Right Jungle

This is the philosophical, right-brained part of the process that causes the greatest discomfort for franchise organizations to wrap their minds around, especially those in the organization who derive a commission from a franchise sale. I have been there before so believe me when I say that I’m not being judgmental, but realistically it requires a paradigm shift away from conventional thinking.

As a franchisor, your company has developed a product or a service, or perhaps a combination of both. The decision was made that the best strategy to expand your product/service in the market is through franchising, as opposed to bearing the burden of outlaying the capital expenditure and providing management oversight of the individual units yourself. You now need to find people or organizations who are capable of, and willing to, execute your business model day in and day out.

A quick analogy…. imagine that you have been commissioned to create a baseball team that will represent your state in a competition with the best baseball teams from across the country. It is your job to go out and recruit the best team that you can, keeping in mind that your ultimate goal is to put together a championship-winning team. You have a list of positions to fill from the pitcher to the right-fielder. Do you think that you would start with identifying and recruiting the top major-league, minor-league, and college pitchers in your state; or would you sign up someone who had never thrown a baseball before? Seems like an easy answer, right? Regardless of how good your facilities are, or your pitching coach is, you intuitively understand that you need someone with a proven track record of being a solid pitcher.

The same holds true in franchising. If I want to grow my gourmet pizza restaurant concept and compete with every other restaurant in every market that I’m in; should I focus on identifying and recruiting the best restaurant operators that I can? Or should I award a franchise to someone who has never owned a business nor operated a restaurant before?

To ask yourself and your team these questions, with an open mind, and to be willing to accept the answers certainly requires leadership. It’s uncomfortable because you may find that you’ve been toiling away at the underbrush and making progress, only to realize that when you sent someone up the tree to survey the land, they cried, “Wrong Jungle!”

In Part 2 of this post we’ll examine how the advent of the internet created an influx of “leads” and sent us into the wrong jungle. We’ll also discuss the two-tiered model for awarding franchises and how to manage it.

Fundamentals: Franchise Lead Generation with Google Adwords

Clint — Wed, 10 Mar 2010 15:28:45 +0000

As a follow up to yesterday’s post about effectively managing lead-flow, I’ve posted another video showing what I’ve found to be very useful and effective tools for lead generation. You might want to consider incorporating Google Adwords campaigns into your repertoire for franchise lead generation. The ability to target micro-channels and create highly relevant campaigns for specific target markets, along with the powerful analytical capabilities and budget options served up by Google Adwords makes it a no-brainer to incorporate into your overall strategy. The benefits of Adwords is exponentially increased if you incorporate it into your CRM system which will allow you to more easily analyze your ROI, among many other metrics.

Check out this video for an overview of the benefits of a Google Adwords and Salesforce mashup.

Fundamentals: Are You Effectively Managing Lead-Flow?

Clint — Tue, 09 Mar 2010 18:11:37 +0000

In the spirit of posting helpful information that has real-world applicability, I’ve put together a short video demo of effectively managing lead flow. This clip deals with managing incoming or reactive lead flow, as opposed to proactive lead generation.

Sophisticated franchise companies will have multiple lead generation campaigns in place, at all times, and in various mediums. The ability to integrate every lead, regardless of entry point, into your pipeline in real-time and rapidly route, contact, qualify, and follow up with these prospective customers (franchisees) would have at one time put you head and shoulders above your competition. Today, it’s a fundamental process that every organization needs to achieve long-term success. And it’s not enough to have a structured sales process in place. There should be quantifiable objectives and goals built into the process, along with the ability to track analytics at each step, so that a process of continuous improvement and a true reality can be seen in order to make the best decisions. The picture below is a good illustration of various entry points and a lead capture methodology.

I hope that this video will be helpful in learning a bit more about the way that we have worked with others to develop effective lead flow management processes and tools.

The 5 Most Important Aspects of IT for Franchisors

Clint — Thu, 25 Feb 2010 15:57:20 +0000

(Photo: source)

I came across a rather interesting question that was posed on Linkedin yesterday which prompted this post. The question was “Which thesis about IT within emerging franchise networks most appeals to you?” The author, Heath Waldorf, is putting together a thesis paper and was looking for some insight. I obliged….

Information Technology within franchise systems would appear to be a scarcity judging by the lack of conversation on the topic. A few quick searches about franchising and technology will pull up a handful of dated articles on intranets (which are rapidly becoming a thing of the past), there are two LinkedIn groups dedicated to technology in franchising – one has 23 members and the other has 3. There are virtually no conversations taking place about franchise and IT in the cloud… that’s Facebook, Twitter, Google, etc. The technology playing field is being leveled by the emergence of cloud-computing, whereby organizations can utilize and develop sophisticated business apps without a significant investment into hardware or software infrastructure, and access them via any web browser. Inquiring minds are wondering why there is a lack of discussion in the franchising world about this?

Let’s take a look at what we believe to be 5 of the most important aspects of IT for franchisors.

1. Integration with Social Media- Interactions with existing and prospective customers no longer takes place solely via the phone or email or even through corporate websites. Gartner predicts that Facebook membership could hit 600 million by year-end 2010 and it will be the No. 1 social networking site in all but 25 countries. Opportunities to drive new business development and provide customer service will increasingly take place within social networks such as Facebook and Twitter. If your CRM system does not easily integrate with these social networking sites then your opportunities will be limited. Integrating your use of social networking sites into your CRM system also allows you to develop analytics and set measurable KPI’s.

2. Integration with Mobile Devices- With the rapid expansion of mobile devices and virtually everyone in business having either an iPhone or blackberry these days, we have the ability to access information anywhere and at anytime. Having access to all of your new leads for the day, or being able to pull up a complete view of one of your franchisees while on the road, or being able to solve a customer’s problem via Twitter from your iPhone, are all possibilities. And not only are these things possibilities, but they will become necessity and expected in the near future. Having a technology platform that integrates seamlessly with your mobile devices will have great implications for businesses.

3. 360° Views- Building out a 360° view of your franchise system is possible and is necessary to long-term success. Having a single-source, easy-to-access, view of every interaction with your franchisees from lead through the awards process to pre-opening to training to operational information is vital to creating and improving your systems. Knowing where all your touch points are with your franchisees allows you to create analytics and develop KPI’s and measurable benchmarks for improvement. Making decisions based on anecdotal evidence won’t cut it anymore. Read What is a 360° View, Anyway for more information on this topic.

4. Customization- Have you ever needed to further customize your existing platform? Maybe you needed to add a field or change a workflow process or tweak some part of your CRM system so that it fit your business. How long did it take? How much did it cost? Did your technology vendor understand what you were wanting to accomplish? It’s a poor expectation to believe that an off-the-shelf solution will fit your every need without needing some level of customization. This is where many technology vendors make the majority of their revenue because they understand that you’ll need customizations done. But at that point you’re held hostage because it’s a closed platform that only your vendor can modify. You’re stuck with expensive customizations and upgrade fees.

It will be increasingly important for franchisors to use platforms that: 1) give them the ability to customize themselves, 2) allow business users to customize without the need for a computer programmer, and 3) if advanced customization is needed there should be an eco-system of vendors who can perform this customization thereby creating competition and giving the franchisor an opportunity to pick the vendor who provides the most value. Salesforce.com is one example of a company who fits all three of these criteria.

5. Scalability- What I mean by scalability is that the cost structure is set up to pay for what you use. The advantage of cloud-computing platforms is that there is no hardware or software infrastructure to invest in upfront. A per-user fee is paid in a subscription format. If you want more users, you pay more. If you remove users, you pay less. If you sign a 1-year contract and at the end of that year decide that you don’t want to continue then you don’t renew. A strong ROI is much easier to achieve and risk is minimal when compared with platforms that require an upfront investment into hardware and software, whereby scrapping that plan after 1 year would mean a significant loss of investment.

As always, I look forward to any feedback and discussion surrounding this topic.

What do you see in the future of Information Technology for franchisors?

What is a 360-degree view, anyway?

Clint — Sat, 13 Feb 2010 22:33:07 +0000

Like most companies in most industries, franchisors have plenty of moving parts and pieces in their business. For instance, there are potential franchise candidates to evaluate, real estate to analyze, franchisees to train, and franchisees to support; not to mention all of the franchise contracts, leases, and disclosure requirements to keep tabs on. Many franchisors tout ” proven systems” as a main selling point or advantage to becoming a franchisee, however a quick look under the hood would reveal that many franchisors don’t have their own internal processes sorted out. This problem is not inherently unique to franchisors, as it’s a commonly recurring issue across most industries, but we’re going to focus on franchising here.

Potential reasons why basic internal processes are not adopted include the following:

Lack of understanding of what the process should be.
Lack of discipline to consistently execute.
An inadequate workforce.
No priority given to developing processes.
Lack of tools to properly manage processes.
Lack of defined KPI’s and ability to measure them.

The first four reasons listed above could each be examined in excruciating detail, but let’s focus on the last two. Building an effective and profitable system of managing a franchise organization means that the people in the organization need access to a lot of data. And they need it fast. You’ve heard the saying, “don’t take a knife to a gunfight”, right? Well, continuing to operate from Outlook and spreadsheets makes you a knife-wielding fighter (and it’s a rusty pocket-knife, at that). With the emergence of cloud-computing technologies and sophisticated yet user-friendly CRM solutions, you can now afford that gun.

The 360° View

There’s no doubt that by the time one of your franchisees opens the doors of their business they have been through a great deal of interaction with the people in your organization. They interacted with your sales department, they spent time with your pre-opening staff, training department, and operations team. They were also on the admin/legal department’s radar.

A 360° view would give you the ability to look back over the course of this life-cycle and view all interactions with the franchisee from the day they first entered your sales team’s pipeline and extending forward up until the day they exit your system. Having key information available in a single view such as: how and when they entered your pipeline; all communication with the sales team; records of all signed contracts; real estate leases, site developement projects, training records, support issues and communications, unit performance history; and so forth is an invaluable tool in developing a high-performing franchise organization.

Understanding when and where the organization has touch points with prospective franchisees and existing franchisees allows the franchisor’s leadership team to develop measurable goals, objectives, and strategies for each point of contact that you have. Once these goals are in place an organization can begin to measure, benchmark, and improve. Continuous improvement is a core philosophical belief of The Flywheel Group, as the silver bullet doesn’t exist. And without a system, a set of measurable KPI’s, a way to measure them, and a competent team of people to execute, well, then improvement is really just anecdotal.

Learn more about a solution that may be right for your organization: