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.

Why is this important ? By understanding the keys to success and applying certain disciplines from this learning, emerging franchise brands can greatly improve their chances of survival.

So what are the key variables that separate winners from losers in the franchise game ? Scott Shane of M.I.T.’s Sloan School of Management prepared some interesting academic research in 1998 which identified some key variables which are shown to be the key drivers of success. His research was published in Sloan’s Strategic Management Journal, Vol. 19, 697–707. and deserves close evaluation by franchise managers and franchisee participants.

The study tested his theories through the use of survival analysis on a cohort of 157 new franchisors established in the United States between 1981 and 1983 and tracked over time. The dependent variable in the study was exit from franchising; as previously mentioned Shane (1996) found that three-quarters of all new franchise systems ceased franchising within 10 years of their formation. The high rate of failure of new franchise systems suggested that survival of a new system over time is a critical measure of success (Carney and Gedajlovic, 1991).

Shane’s research focused on mechanisms that leverage “agency costs”, a financial theory which explains how best to organize relationships in which one party (the principal or franchisor) determines the work, which another party (the agent or franchisee) undertakes. Since the agent’s self-interest are in conflict with the principal’s, alignment of outcomes via contactual relationships is a key to mutual success.

Here are his key findings which set forth the underlying characteristics of successful franchise systems:

New franchise systems which permit passive ownership of franchised outlets are more likely to fail than are other new franchise systems.

New franchise systems which require higher levels of franchisee cash involvement are less likely to fail than are other new franchise systems.

New franchise systems which require franchisees to have experience are less likely to fail than are other new franchise systems.

New franchise systems which are geographically concentrated are less likely to fail than are other new franchise systems.

New franchise systems which are more complex are more likely to fail than are other new franchise systems.

New franchise systems which employ master franchising are more likely to fail than are other new franchise systems.

New franchise systems which have higher levels of total investment are more likely to fail than are other new franchise systems.

The results of the study indicate that franchise systems founded between 1981 and 1983, which are structured to economize on agency costs, are more likely to survive than franchise systems which are not structured to economize on agency costs. This finding is important because the failure rate of franchise systems is high, with over 72 percent of the new franchise systems in the sample ceasing to franchise by 1995.

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

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.