Franchise Update Magazine Issue IV, 2016 | Page 60
GROWING YOUR SYSTEM
Challenge the pros
“HOW DO YOU MEASURE THE ROI FROM YOUR
ANNUAL FRANCHISE RECRUITMENT BUDGET?”
Scott Mortier
President
The Franchise Whales
To measure the ROI, you have to really
know what you’re looking for. At Franchise Whales, instead of focusing on cost
per lead, which is the standard among most
franchise development executives, we focus
on the cost per closed sale. Leads are great,
but your cost per lead really isn’t always
directly reflective of any return.
The higher the quality of the lead, the
better. I would much rather pay $100 per
lead and convert 30 percent than pay $10
per lead and convert only 5 percent. The
time and money associated with following
up leads that don’t convert isn’t included in
your budget, but it can be a significant drain.
A good rule of thumb is to have your
franchise fee set about five times the cost per
sale. From personal experience, we average
a slightly higher return because, through
decades of experience, we’ve been able to
put the most effective marketing components in place. Without the right processes
in place it can be easy to lose track of where
your leads are coming from.
To understand how much you’re spending to capture leads, it’s important to break
down your marketing components. With
the franchise brands I work with, I tend to
break recruitment budgets into three verticals: franchise portals, digital marketing,
and public relations. Each category receives
about a third of my overall sales budget.
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Franchise portals are pretty self-explanatory and easy to follow in terms of
lead spend. With digital marketing, we’ve
seen the highest return on investment and
it is the easiest to track. We’ve experienced
incredible success using Franchise PPC by
Conversion Whale and its franchise-specific
brand of pay-per-click marketing. Its online
dashboard allows us to know where leads
come from and how much we’re paying
for each.
The third vertical, public relations, is
the hardest to track because it is very difficult to know what article or news segment
made a prospect want to learn about your
brand. That’s where your digital marketing efforts come in. If your PR efforts have
led potential leads directly to your website,
your content-rich franchise opportunity
page will be what helps educate them about
your brand and gives them the motivation
to reach out and talk to you.
Your recruitment spend is an investment
in your brand.
David Leonardo
Senior VP for Franchising
Pet Supplies Plus
At Pet Supplies Plus we look at a number
of options to help us measure the ROI on
our annual franchise recruitment budget,
but primarily we look at two factors. The
first is the cost per close. Second is the leadto-close ratio.
Cost per close is a metric we take from
the total marketing dollars spent in a specific channel and calculate how many deals
we close from that channel. This is a pretty
self-explanatory concept, not as complex
as the second item we like to focus on. In
this instance, it’s very straightforward: we
are measuring how many deals we are able
to close by spending “X” amount of dollars
in a given market.
Regarding the very important lead-toclose ratio, many people focus solely on
simply generating leads. While this may be
effective for driving lead numbers, it may
not always be the best strategy for positive
conversion rates. For example, we can pay
for leads every day, but if we aren’t getting
quality leads, it won’t do us any good.
Granted, the size of our investment
also can determine what criteria we look
at. Given our investment level, lead numbers are not as important as the quality of
the lead. If we were with a less expensive
brand, we might be more focused on the
number of leads because more people could
potentially qualify.
The quality of the lead is what really
matters to us. If we see a channel that has
a high lead-to-close ratio, we will spend
more money and time in that channel to
continue to close deals and expand.
To generate these quality leads, we’ve
used several different outlets, including radio
advertising and editorial spots, trade shows
with multi-unit operators, and a strong network of national brokers who filter through
qualified candidates before sending them
over to us. What has not worked for us in
generating quality leads are the online portals that farm out their leads to a number of
franchisors before doing their homework
up front to see if a particular candidate is
interested in and qualified for a brand.
Although it can be difficult at times to
measure the return on your franchise recruitment budget, this is a system that works
for us, and we’ll continue to monitor our
returns through our cost-per-close metric
and lead-to-close ratio into the foreseeable future. n
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