Chapter 11

Attracting and Keeping Customers

IN THIS CHAPTER

check Creating winning marketing plans

check Exploring national and local advertising ideas

check Knowing and serving your customers

Optimism and luck are necessary ingredients for any business to succeed. And for every new business owner, remaining optimistic can be hard because every business has its ebbs and flows. But optimism can be a whole lot easier to sustain when there’s a long queue of people wrapped around the block waiting patiently in line to buy your goods and services.

There is nothing as powerful to help you achieve this type of optimism than making certain that what you deliver to your customers is so compelling it will guarantee their return — again and again. Then you can sit back and watch how their posts on social media proclaim your greatness to everyone else. How well you consistently perform is the best way to obtain customers and expand your customer base. This chapter explores how to attract customers in the first place. It is up to you to give consumers a winning experience so they turn into real fans.

We begin with a few definitions. Many people use the words marketing and advertising interchangeably, but they mean different things. The savvy business owner knows the difference. Marketing is the big picture and involves every aspects of getting a product into the buyers’ hands. If you pick up a basic marketing textbook, sooner or later you’ll read about the four P’s:

  • Product: Having the right products and the right quantity of products available to meet consumer demand
  • Price: Discount, competitive, or premium
  • Promotion: Getting your offer and message to consumers — advertising is part of what is in here
  • Place: Distribution and delivery to the customer

Advertising is an important piece of marketing. It is a paid communication that attempts to persuade, inform, or create an image in the mind of a consumer. Advertising is merely the messages you distribute to consumers through various media (social media, television, radio, newspaper, magazines, direct mail, Internet, and out of home).

Creating an Effective Marketing Plan

Unless they happen to stumble upon your location by chance, customers are not going to show up at your door unless they know you are there. If your business depends on customers coming to your door, having the right locations where they are going to see your brand on a regular and frequent basis may be the most important marketing investment you will ever make. You might expect that is the reason why the rent on the front pad of the shopping center is higher than the rent for the same space, 50 yards away, on the back of the center.

Here are two of the critical foundational elements of any marketing plan:

There are a lot more. Marketing can be as simple — and as cost-free — as word of mouth. Word of mouth used to be your customers talking to their hairdressers, who tell their clients, who tell their friends, and so on. Now it is as simple as your customer posting about their great experience (or bad experience) on Yelp or Google or another rapid direct social-media site.

On the other end, marketing can be outrageous and costly. Parading an elephant draped with your company’s banner through town may get you noticed, but to be successful, marketing has to be targeted to the right audience and must make sense for attracting new customers to your brand or reminding existing customers to continue coming to your brand.

remember Marketing needs to be planned in a way that the audience will see it, and be cost-effective so you can sustain it.

Successful marketing campaigns are a unique blend of science and art. They present the right product to the right audience in the right manner at the right time. They require research, planning, and — with all the available platforms you have available to you — creativity to break through the clutter of messages your customers are confronted with each day.

Regardless of the methods you use — and you likely will have multiple methods for reaching your customers in your plan — having a plan is essential. Here are some ideas for developing an effective marketing plan:

Brand marketing often boils down to dollars and cents. Franchisees of larger chains gain an edge because their collective marketing dollars can support national and regional campaigns. Smaller chains have to work harder because they lack the financial muscle. In either case, you, as a franchisee, have to do your part too.

tip It is estimated that 80 percent of the products people will need to buy in the future will be available from e-commerce companies like Amazon. If e-commerce is having an impact on your business, type “retail theater” into your favorite search engine, and you’ll see links that will help you understand how to use technology and what changes you should consider to effectively compete in an e-commerce world.

Evaluating National and Local Advertising Strategies

You didn’t join a franchise system to show off your marketing genius — that’s where your franchisor comes in. Part of every franchisor’s role is to help get the word out about your brand.

Franchisors often develop, depending on their size, local, regional and national marketing strategies and advertising campaigns. Some organize advertising cooperatives with franchisees in your area. Some may do no traditional marketing and instead focus most of their efforts on investing in social-media campaigns.

When it comes to local advertising that a franchisee may execute independently or in combination with other franchisees in their market, most franchisors offer marketing guidelines and suggestions and typically create the marketing and advertising materials for the system.

The franchise system ad campaign: Collective marketing dollars at work

Most franchisors today administer a system advertising or brand fund. In most franchise systems the brand fund fee is based on a percentage of location sales and can range from less than 1 percent to more than 10 percent. In some franchise systems, the brand fund fee can also be a flat dollar amount or based on the number of transactions conducted by the franchised business. There are even franchise systems that don’t charge a brand fund fee at all. The requirements and recommendations often depend on a chain’s size, maturity, and industry. You will also find brand funds where the system’s vendors and suppliers contribute to the funds through their supply arrangements with the franchisor.

remember When considering any franchise, it’s important to understand your marketing responsibilities. Be sure to discuss this with each franchisor you are considering and carefully review your responsibilities in the franchise agreement. Talk to the franchisees in the system about the franchisor’s approach and probe with them the effectiveness of the brand’s campaigns and whether the franchisor is efficient in spending the brand fund’s dollars.

Not all brand funds operate the same way. Ideally, franchisees should have input, and most franchisors at some point set up marketing or advertising committees made up of franchisee and franchisor representatives similar to their franchisee advisory council. In other franchise systems, the franchisor makes all the decisions, and there are even a handful of brands where the fund is totally administered by the franchisees.

No one can guarantee the effectiveness of all marketing, but there should be safeguards in place to ensure that the brand fund is being used only for agreed-upon purposes. For example, if the fund’s purpose is to market the brand, money for the fund should not be used to recruit franchisees — unless the franchise agreement specifically reserves the right to allocate funds for that purpose. The same goes for any other expenditure that’s not related to the purpose of the fund.

Still, you can expect that there will be expenditures made from most brand funds that are not spent on advertising placement, including the costs associated with administering the fund, the franchisor’s marketing personnel, the costs of maintaining the system’s consumer website, SEO costs, fees paid to advertising agencies and public relations firms, and so on. The purposes of the brand fund will normally be set forth in your franchise agreement, so you should be able to easily see the ways and purposes for which funds can be allocated.

remember Be aware of how much and what kinds of administrative and other expenses the franchisor is charging to the fund. Also, if the franchisor owns and operates company-owned locations, you want to understand whether those locations also contribute to the brand fund just as the franchisees do. You would hope so, but not all franchisors do.

As franchise systems evolve, the franchisor’s policies in a host of areas, including marketing and advertising, will evolve and change. Franchise agreements frequently reserve the right to do things in the future that they are not ready to do today. This also applies to the brand fund.

Frequently when franchisors begin to franchise, they don’t have a brand fund in place and don’t intend to establish one for some time. But because they recognize that a brand fund can be an essential part of a mature franchise system, they reserve the right to establish a brand fund in the future. Some franchisors may impose a brand fee on the franchisees today but also reserve the right to impose a higher fee later on. The franchise agreement will provide you with information including the maximum brand fee a franchisor can impose and the conditions upon which the fund can be established or changed. In some cases, we recommend franchisors reserve the right to change or re-allocate the franchisees’ fees and required marketing expenditures among the brand fund, local or regional cooperatives (discussed later in this chapter), and local advertising expenditures, without increasing the franchisee’s total advertising spend. This gives franchisors the ability to shape their marketing and advertising programs as their marketing needs change.

From time to time franchisors may request that franchisees voluntarily boost their contributions to the brand fund. This may be necessitated by the demands of the market. In this case, the franchisor wants all franchisees to contribute at the higher fee being imposed on new franchisees. Although you likely have the right to just say no, you should listen and evaluate the franchisor’s arguments for increasing the fee. In other cases, franchise agreements may permit the franchisor to increase the franchisee’s contribution to the brand fund upon the positive vote of a majority of existing franchisees.

Local marketing options

Local marketing is your opportunity to attract customers to your business location. In most franchise systems, franchisors require or recommend a level of local advertising expenditure. If it is required, the franchisor may specify a percentage of sales or it might establish a fixed amount you are required to spend. Although the franchisor is specifying an amount, it is a minimum amount and may not be all of the advertising that your business requires.

The reason the franchisor won’t determine your total advertising requirement is because markets and locations differ. If you are the first location in a market and the brand is new to consumers, you likely will need to spend more than franchisees in markets where the brand is well known and the franchise system has established critical mass.

In some systems you will be introduced to the concept of an advertising or marketing cooperative. When a cooperative is established, you will likely be required to contribute a portion of your local advertising expenditure or a percentage of your brand fund contribution to the local cooperative. In some systems the franchise agreement may even require you to contribute an additional percentage of sales to the cooperative. When a cooperative is established, you will be pooling your local advertising dollars with other franchisees in your market or region so that collectively you can afford bigger media buys on radio, TV, out of home, print, direct mail, and so on. The cooperative may be set up as a legal entity or as a loose affiliation of franchisees, normally governed by bylaws prepared by the franchisor. Sometimes a local advertising cooperative may even have a local advertising agency, selected by the cooperative members.

Cooperatives are also a great tool used by franchise systems to ensure that you and other franchisees who share a market have a consistent advertising message to consumers. Imagine if there are 15 franchisees in your city, each advertising a different offer in a different manner, as opposed to advertising that sends the same message. Which approach does more to promote the brand? Cooperatives are also a useful tool in keeping your local web pages consistent across the market and an effective way for a group of franchisees to manage their social-media messages, digital marketing and consumer comments.

remember Most franchisors will have a library of marketing materials that you can use or customize for your business. You may also elect to produce some of your own local marketing materials — but you likely will require some form of approval from the franchisor before you use any of it. Check with your franchisor about its approval procedures.

Before you do your own thing, understand the importance of complying with your franchisor’s approval procedures:

  • Do your materials maintain the franchisor’s brand identity?
  • Are you confusing customers by sending a message that is different from the national campaign?
  • Does your campaign actively sell your product or service?
  • Can you afford to create new materials instead of using those provided by your franchisor?
  • If you are using any form of direct electronic marketing, like emails, are you meeting the legal requirements for those methods? Violations can be very expensive.

warning Make sure that the local marketing materials you want to create are worth the cost, because every dollar you spend on creating new marketing materials is one less dollar you will have to use on marketing your business. Also, before you spend any money creating your own website for your location — before you set up your own SEO campaign, before you sign an agreement for pay-per-click marketing campaigns with Google or another search engine — be aware that you likely don’t have the right to do any of that on your own and most assuredly not without your franchisor’s permission. While radio, TV, newspapers, flyers, and so forth can be local, the Internet is not. Your franchise agreement likely does not give you the right to register any URL as a franchisee, and electronic media comes with serious legal obligations you need to fulfill.

tip Carefully investigate and assess your franchisor’s marketing resources and support — it may have just what you need and are required to use and save you a lot of money, time, and grief.

Local promotional activities can be a powerful way for you to be seen as part of your businesses community. You’ve already told your customers that although the name on the store may be the name of a chain, the business they’re shopping in is locally owned and operated by you. You did that with the sign on your wall, on your business cards, and on your invoices.

Even if your staff wears a uniform with your franchisor’s name on it, they know you are a local businessperson because it’s your name on their check, it was your name on their job applications, only you determine how much they make, and you determine the HR rules for them to get raises and to maintain their jobs.

Still, even though you’ve told customers and staff that you are locally owned and operated, you are still operating under the franchisor’s brand and your local promotions need to be compatible with your brand’s policy and image.

Not every possible promotion is right for every brand. Say you’re a cookie store and you sell your cookies to moms and their children. Another potential customer might be someone shopping at a nearby medical marijuana store. Likely you would gain a slew of new customers by handing out flyers at the local medical marijuana store. But is a medical marijuana store really a place you or your franchisor wants to see the system’s brand linked to? Promotions not only need to say the right words, they also have to be targeted to the right audience. Consider doing the following:

  • Sponsor a Little League team. Provide the kids with T-shirts with your name. (Your parents probably still have your Little League shirt!)
  • Reward students. Hand out discount coupons or announce in social media frequented by students the availability of free products. Or develop award certificates for children who excel in school.
  • Use email marketing. Email marketing can be powerful, but the use of email is more challenging today than in years past because of regulations meant to protect consumers from spam. Make certain your franchisor authorizes you to use email marketing. Even if it does, make certain you don’t violate anti-spamming laws.

    tip The CAN-SPAM Act covers all commercial messages, including any electronic messages containing commercial advertising or promotions. Information on the CAN-SPAM Act and its requirements can be found on the Federal Trade Commission’s website (www.ftc.gov/tips-advice/business-center/guidance/can-spam-act-compliance-guide-business). Be aware of state and local laws as well.

  • Participate in charity promotions. As a franchisee, you will find that participating in a community event or charity work will also promote your franchise. It builds goodwill and it can build sales. Many franchisors encourage franchisees to support charitable causes that are most appropriate for their local communities and that are in alignment with the brand. See whether your parent company offers guidelines on charitable promotions. It is good form to steer clear of controversial or political issues that could polarize a segment of your customer base.

remember Check with your franchisor as to whether costs of your promotional activities are credited to your local marketing expenditure requirements. This is probably the case, but it is better to know for sure. And be sure to let your staff know about all your promotions and marketing efforts. Consumers easily become frustrated when they visit your business looking for that great offer only to find out no one working there is aware of it.

Any marketing, advertising or promotional materials that involve the franchised business and that include the franchisor’s trademark must almost always be submitted to the franchisor for approval in accordance with the franchisor’s approval procedures.

Franchisors take local advertising seriously. Ask your franchisor for guidance on appropriate media and talk to other franchisees about what has worked and has not worked for them. Most likely, you will have to document advertising expenditures. Your operating manual should specify what counts — and what doesn’t — toward authorized expenditures.

tip Your field consultant and your franchisor’s marketing department may be able to help you evaluate the effectiveness of any promotions or campaigns. Just understand that you don’t want to wait until the end of any promotion to find out that it’s a dud. If it’s broke, fix it as you go. A minor adjustment to your offer or message could save the day.

Most franchisors prepare advertising materials for use by franchisees, and frequently make that material available on the franchisor’s intranet site. Some intranet systems used by franchisors today allow you to customize advertising material for your location or they present the material in modular format, permitting you to tailor your exact offer while maintaining the overall look associated with the brand. Usually, the layout will include space for your name, address, telephone number, and hours of operation. Your local newspaper or direct-mail house can handle the production for you.

Broadcast advertising is similar. Your franchisor will provide you electronically its radio spot or television commercial with time allotted for your local identification. Your local TV or radio station can take it from there.

Ready to get started? First make certain your business is ready for the flood of customers you hope will come. Remember that although getting customers is important, retaining your customers is essential to you and for every other franchisee in the system.

warning Before you start any marketing campaign make sure your business is ready for prime time. If you don’t run your business right, telling people who and where you are won’t help you. Disappointing your customers means that ultimately you won’t have any. Your business must deliver products and services based on the quality standards of the franchise system and give the customer what the franchisor’s advertising campaign has promised.

All Hail Customer Service

Your customers are coming to your business because of the products and services they expect to get under your franchisor’s brand. It is the franchisor’s brand under which you operate — the brand is on your signs at your location and it’s on the side of your trucks. Your job is to represent the brand and, as an independent business owner, do so in a way that makes your location a place where customers know they will get the franchise system’s products and services just the way they expect.

First on your agenda is knowing who your customers are.

Knowing your customers

Knowing who your customers are is essential if you want to deliver great customer service. Having an understanding of your consumers’ wants, needs, buying habits, age, gender, lifestyle, pocketbook, and time schedule will give you the clues you need to serve them better.

No doubt, getting this type of basic information sounds difficult, but it’s not. Much of the information you will need will come from other franchisees in the system and from the franchisor. But supplementing this information with specific information about your market is important.

Customers should be storming your business because you, your franchisor, and all of the other franchisees in your area and throughout the system have done a great marketing job — at least that’s the plan. Your job is to gain additional insight into your local consumers and share that information with your franchisor and fellow franchisees. Because you’re going to have a personal relationship with your customers and are going to understand at a basic level how and why they buy with you, sharing that information is an important contribution you can make to your franchise system.

Your franchisor and other franchisees will help you do this without your having to knock on every door in town. We have moved into an integrated tech economy and culture. Point-of-service (POS) software used by many franchisors enables the capture of information about consumers’ profiles, buying habits, attention to advertising activities, price and discount sensitivity, their reaction to new products, how they prefer to receive products and services, their use of affinity programs, and on and on. Some larger systems, like hotels, have private-label credit cards and frequent-buyer cards to track purchasing trends.

Be observant and train your staff to be observant. As a locally owned business, paying attention to your customers will help you anticipate their changing desires. In an economy where more and more consumer purchases are being made online, having information on why customers choose to purchase from your brick-and-mortar location and what you and your staff do to close the sale — rather than take their business to an e-merchant — is important. Although the integration of technology has been effective, when leveraged with the competitive advantage of the human, person-to-person sales process, your business can really excel and your franchise system’s ability to compete is enhanced.

Providing your customers true value each and every time they shop at your location involves more than mere competitive pricing. Achieving total quality with a keen eye on how you operate your business to meet the franchisor’s brand standards and the needs and wants of consumers is critical.

remember Even in the best franchise systems, with every franchisee having the same tools for success, franchisees will still fail. The difference between success and failure when that occurs is most often the differences between how one franchisee and another use the same tools to operate better. It’s really simple: If you give your customers the best service and the best product, in the way they want each delivered, they will be back.

Showing honesty and integrity

Honesty and integrity are two of the traits you wanted in a franchisor when you made your investment decision. Customers are looking for the same traits in you. If you don’t demonstrate honesty and integrity, without any doubt other businesses will quickly scoop up your customers.

It’s hard to build a great reputation with consumers — it takes time and it often costs money to do so. And it can be gone in an instant. You are a step ahead of the game if your brand already has that reputation and you are counting on the entire system, including the other franchisees, to maintain that consumer perception.

Customers expect to receive the product or service your franchise is known for consistently. They expect with certainty that how the brand is portrayed to them in advertising will be what they will receive. Your job is to give that to them every time so that not only your own business succeeds but also the reputation of the entire brand doesn’t get tarnished.

Franchisors must respond to consumer buying patterns. Care must be exercised in what and how new products and services are added — and old ones retired. It may be an old example, but it still resonates today: Sears quickly entered its long slide into obscurity because it confused consumers after launching its “softer side of Sears” marketing thrust. Sears misjudged the difficulties of going from a brand known primarily for appliances, tools, and home goods to a new brand position offering socks and cocktail dresses. Sears confused both old and new customers, and even when it tried to return to its base, found it had lost its brand equity.

Evolution and change in every brand is essential, but if your franchisor is constantly changing the operations and focus of your business, consider whether undue stress is being imposed on your operations and, more importantly, confusing customers. Consumers need to understand at a visceral level what your brand means, what your brand delivers to them, and what as a system it stands for.

remember It’s important to work with your franchisor to help the system evolve, but it is also important that you provide your feedback when changes taking place are not achieving those goals. If your franchisor has a franchisee advisory council or a franchisee association, working on these issues through those organizations can be effective.

Before launching new products and services and before they retire others, smart franchisors conduct research and testing to ensure that these changes are what customers want. Participating in these tests when you are asked to do so and working to provide the franchisor with the information it needs are positive contributions to the franchise system and you should look for opportunities to do so.

Every customer has a good memory. Customers remember the promises and perception of what every ad said about your brand — and they also remember when it is not delivered. Today, even before they leave your store, and from their tablet or their phone, customers will tell their neighbors and the world about what they like, and more often, what they do not.

warning When you don’t meet each customer’s expectations, you not only will say goodbye to them as returning buyers but likely have also lost others they have influenced in person or online.

So when the brand makes a promise — even if you disagree with it — you most certainly need to live up to it. Customers will more frequently post online and tell their friends about a bad experience because they expect a good one.

tip Take the additional steps needed to maximize each individual customer’s satisfaction and you will reap a positive domino effect. Customer satisfaction is the best marketing you can have and it is the best tool to ensure that customers will visit again and more importantly tell others to visit you too.

Making sure customer experiences are positive (and fixing ones that aren’t)

You will face all kinds of customers at your business. Sometime customers will be using your location simply to experience and try out your merchandise, fully intending to go home and buy it online because they think online purchasing is more convenient or lower priced. How you show that customer why your buying experience cannot be matched online will allow you to compete in a tech-driven retail economy.

remember You need to be on your toes at all times and maximize each touch you have with your customers. Bad things will happen, and how you positively and quickly respond to them and your customers will significantly impact your customer’s views, potentially changing a negative experience into a positive one. If you don’t approach customer service in this manner, expect your franchisor to take some action to protect the brand.

When mistakes happen, look inward first. Strip apart your operations and see what improvements and changes are needed. Go back to the basics of what is in your franchise operations manual and training material, because they often will remind you of what you should have been doing to avoid your particular problem. Don’t be bashful about admitting your problems and seek help as early as possible from your franchisor’s support team and other franchisees. If the problem you discover is within your staff, consider retraining your employees or replacing them.

Bottom line, in responding to customer problems:

  • Respond quickly.
  • Listen to what your customer has to say — without interruption.
  • Apologize and then apologize again for any errors.
  • Be polite and make eye contact.
  • Put yourself in your customer’s shoes — think about how you would want the problem resolved.
  • Promise your customer a correction — free product or services, discounts on future sales, shifting employees, extra attention, and so on.
  • Prove yourself the next time.
  • Make certain that whatever occurred doesn’t happen again.

Be aware that very few customers verbalize their complaints to employees or management, especially if money is not involved. More often, you find out about poor customer service when it kicks you in the stomach and you read about it on Yelp even before the customer reaches their car in your parking lot.

There are many ways to understand whether your customers are happy, and the best way is to do so personally is with your eyes and ears. Listening to and watching customers and employees is important. Staying on the floor and observing your business at all hours is more important than sitting in your office in back of the store doing paperwork. You can get your administrative and other duties done at more appropriate times.

Here are some other ideas:

  • Read your mail, email, Yelp and other social-media sources and don’t discount, dismiss, or rationalize the ones you don’t like.
  • Solicit input from customers, vendors, and your staff.
  • Talk to your customers directly. Don’t just stop by the table and ask them how things are going. Introduce yourself, be a positive part of their experience, and hopefully they will share with you a small problem before it becomes a bigger one.
  • Use the sophisticated tools you may already have at your franchise, such as your POS system that captures sales and customer information. These tools can help you schedule your staffing better to meet customer requirements on a moment-by-moment basis.
  • Go the extra mile and hire a local research company to gather quantifiable research on your business’s consumer performance. If you want to hire outside experts, talk to your fellow franchisees about combining forces and splitting the cost.

Looking beyond your cash register

Every part of your business makes an impression on the customer. No question, the end product or end service offered by your business and the franchise system is why customers come in the door to begin with. But customers also notice how well you run your business. Things like maintenance, employee appearance, and friendliness do matter. For all shoppers, especially parents with small children, not having a clean and well-stocked restroom might lose them as customers — because they may have made their shopping decision precisely because you have a reputation for the cleanest restroom in town. Paying attention to detail is a big part of customer service. It’s also an important part of retaining your staff and enabling them to give great customer service. Nobody likes to work in a dirty environment.

Your job at the local level is the same as your franchisor’s at the system level: setting, enforcing, and achieving tough standards — because if you don’t, your customers will.

As you look at your business, consider the following:

  • Do you have enough staff or the right experience mix on duty at all times?
  • Are your employees friendly, helpful, and well trained?
  • Are problems resolved quickly?
  • Is service prompt, dependable, and consistent?
  • Is the location clean, welcoming, and in good condition?
  • Can your customers see your quality as they drive by? What does the outside of your store say to your customers?
  • Do customers or employees have concerns about security or safety?
  • Is equipment updated?
  • Are products in stock?
  • Are you offering all the products the customer expects from your brand?
  • Are you meeting the needs of the physically challenged customer?
  • Are you available to answer questions or resolve your customers’ problems if needed?

A perfect business is never going to be possible, but reaching for it consistently is. It takes time, teamwork and frequently, an additional investment on your part. The most important part of striving for the perfect business comes from you and your staff and how you have dedicated your business to meeting brand standards and customer expectations.