Chapter 11
IN THIS CHAPTER
Creating winning marketing plans
Exploring national and local advertising ideas
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:
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).
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.
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:
Pool your resources with other franchisees. Collective investment savings are made possible because of the number of franchisees making or participating in the same offer. The same cost-saving impact affects your media costs. Spending your media dollars effectively should include combining your media efforts with other franchisees so you can afford a stronger advertising plan and even a local SEO strategy.
SEO is shorthand for search engine optimization. SEO strategy needs to focus on optimizing for search engines to ensure strong organic (not paid for) placement. Your messages need to contain the specific keywords people are using to search. This is a careful and deliberate approach that is best produced with specialized expertise in this area.
Many franchisors, through their franchisee advisory boards, work collaboratively to direct group media spends by franchisees and company-owned locations at the local level.
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.
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.
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.
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.
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 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.
Before you do your own thing, understand the importance of complying with your franchisor’s approval procedures:
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:
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.
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.
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.
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.
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 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.
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.
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.
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.
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.
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:
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:
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:
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.