Going into 2023: Turbulence, Micro-Goals, Predictions
As we enter 2023, we reflect on strategies that worked for franchisors in 2022 and how they either propelled company growth or hindered success. Will economic turbulence turn 2023 into the strongest year for franchise sales?
In this article and FranX episode, Charles N. Internicola, Nick Powills, and Brent Dowling discuss key elements, predictions, and strategies franchisors can maximize to close deals and stay on track.
Some predictions for navigating franchising in 2023 include:
- Build and Amplify Your Brand Assets
- Optimize Spending
- Forecast Franchise Sales
- Budget for Lead Generation
- Meet the Client Where They Are
- Set Micro-Goals
Build and Amplify Your Brand Assets
You may be underestimating and overlooking your strengths. Dig deeper into your brand strengths and what’s been working. Focus closely on your brand assets – your why you, why now, your founder story, and franchisee’s experiences.
Learn more about our FranX Brand Story Masterclass to craft your Why You, Why Now
If you now find yourself wondering how you can get better, more powerful assets to present to candidates, slow down your digital ad campaigns so that you can focus on content creation.
Another asset that most franchisors boasting more than five units have are records of signings, openings, existing franchisees, and milestones. Digitally documenting these occasions in videos and testimonials can serve as learning tools for potential franchisees and–most notably–is a way to differentiate you from the competition.
Nick Powills, Co-Founder of FranX recalls, “I had a call with a franchisor. They have a good number of units, restaurant space, and a great brand, but no digital assets that spoke to the brand culture. I went to their competitor’s website–same situation. They had a section called ‘Franchising’ that went over the industry and how much money you can make, but there was no ‘why you, why now’.”
Nick goes on to point out that while on the franchise sales website, he did not see a single franchisee testimonial or video of the pre-opening process. When it comes to digital assets, behind-the-scenes type videos give clients insight into the team behind the brand and the passion that went into creating it. If you are an environmentally-friendly business, how do you accomplish that? This may come across as ‘obvious’, but Nick emphasizes that countless brands are simply not finding their point of differentiation.
“Document your stories with videos and photos. Brands are not capturing their moments. Social media needs to impact the brand and storytelling.”
If these assets still do not seem important to you, consider that clients will remember the brands that appeared personable when coming down to a final decision.
If you are confident your digital assets are in tow, your next step for conquering 2023 is optimizing your marketing spending because lead generation is a pivotal asset for franchisors. It is so pivotal, actually, Brent Dowling laments how he wishes he put more money into it in 2022. He recalls how a client once asked him, “Is it true it takes one hundred leads to get a deal?”
Brent’s response is a resounding ‘no’. It only takes one lead to get a deal. He explains that if you have $1,000 dedicated to ads, and you are going to spend it to get one hundred leads, you have $10 per lead to spend. But if you’re going to get ten leads and you spend $100 to get them, it changes the mindset. You’re spending more to get less with the same or better outcome. With the latter strategy, you would perhaps be more inclined to make your ads as appealing as possible to a specific demographic.
This is going to be the shift for 2023 lead generation because of the crowdedness in the marketplace. You are just not competing against your competitors, you are competing against every franchise that exists because they want quality and ready-to-buy deals.
Forecast Franchise Sales
Your company’s data is useless if you do not know how to learn from it. Brent suggests building a ‘pipeline’, or a structured analysis of your lead conversion that allows you to make a sales forecast. Rather than focusing solely on actual closes with franchisees, take note of the number of qualified candidates you attracted, what stage each candidate gets to in terms of conversion, and after a year or two, you can have an idea of what the likelihood of a candidate closing is earlier on.
According to Brent, you can assign monetary value to that sales forecast. If you generate enough qualified candidates but are not seeing conversion levels at the different stages of the process, you can recognize that and work to get that lead flow up in Q1 or Q2 of the next year.
“Something [my clients] have been focused on recently is less waiting for deals to close and making decisions based on sales forecasts,” says Dowling.
Brent adds to this by pointing out the propensity of franchisors to blame missing out on a deal on the lead or the salesperson. In reality, a study he conducted alongside another franchise guru revealed that nine out of ten people do not understand franchising at all. Majority of those who do believe they have an understanding are under the impression it is a ‘McDonald’s play’ where you make a salary, spend more time working than if you were an employee in corporate America, and ultimately, their relationship with the franchisor is predatory. Most leads generated will not understand how franchising works, and it is your responsibility to make a good impression.
Budget for Lead Generation
You cannot count on or wait for the economy to be in an ‘ideal’ state to start spending on lead generation. Charles N. Internicola gives the example of a client he worked with that spent $100k on Facebook ads in 2022. As of January 2023, their budget plummeted to $0. The client realized they needed to optimize their ads to appeal to the personality and situation of the ideal candidate.
“You can’t sell by saying ‘buy my brand’. I think brands are missing the message so the buyer doesn’t resonate with the ad and therefore the ad doesn’t work,” explains Internicola.
There are some people with families active on Facebook who are looking to buy a franchise. If you are trying to sell a breakfast cafe, your messaging should be, ‘Own a business that’s open from 6am to 2pm, so you can have family time!’
The brand is important. The product or service is important. But it is connecting with people and representing their interests that sells.
Meeting the Client Where They Are
Most people looking to make a purchase are highly skeptical of everything right now. The amount of trust afforded to franchisors in the midst of a sales proposition is eroding by the day. When you understand that, your messaging changes. As a franchisor, you will have to learn the target audience for your particular brand, their personalities, the media they consume. You will empathize with the candidate’s needs and their pain points. This will change the game into terms of lead quality.
The messaging changes because you are genuinely inquiring. People are weary of the franchise sales pitch because they feel like they are not being heard. When a message is genuine, it is backed up by a team that is consistent and aligned on a cultural level.
When things get tough, there is an incentive to say you don’t have the luxury of focusing on those goals you set in the beginning of the year. This is where micro-goals come in. Imagine your goal for 2023 is to acquire 15 candidates with high likelihood of signing. A micro-goal towards achieving this would be to set up a certain number of interviews each quarter. Although the economy is turbulent, you do not have to abandon your dreams for your business.
It would also make sense to say that the growth of existing franchisees’ businesses would help sign new franchisees. So, when current partners are not growing their businesses, diagnosing ‘why’ is important for the franchisor. Potential clients can easily spot a struggling business, and so why would they invest into your brand when they can reach out to a competitor with a better track record?
You can have your bigger goals, but you can have more frequent wins with micro-goals. These micro-goals are also useful in gauging how successful your team members will be.
- 2023 will be more favorable to disruptor brands and less favorable to crowded brands.
- Unless you prove you have stronger unit level economics than other brands in the space, you’re all going to be fighting for the same pool of franchise candidates.
- Rise of ‘why did i not think of that’ brands (self serve frozen yogurt, uber). A true point of differentiation is the ‘why you, why now’.
- Franchising will have its biggest boom since the 2009-10 recovery boom. People affected by lay-offs may find franchising to be a solution. They have gotten a taste of controlling their own schedules because of the pandemic. The ‘great resignation’ and recessionary environment could be massive for franchising in Q2. Q1 will be shaky.
- Technology will create new categories.
- For brands in saturated categories, find out what you are not in the space and use that to define ultimately your ‘why you, why now’