How To Fight The Gloom And Lift Sales By 14 Percent

A client has asked if I could share some thoughts on current trends and opportunities in the franchise sector. Here are a few observations and suggestions to help you stay relevant and drive results.

Firstly, yes, many businesses, especially those with a retail presence, are relatively flat or down in sales – but not all by any means. The growing use of smart phones and tablets is changing the behaviour of customers who are increasingly consuming products, entertainment and information online, as well as becoming more fickle about how, when and where they shop.

The simple truth is franchisors must ensure their brand provides an online option for customers to gain access to goods, services and useful information. This is no longer just an interesting concept – it is a necessity. Franchisors that ignore this because "things are okay" or “it’s all too hard” do so at their peril. In a study we ran three months ago with Zhanna Kremez from Griffith University, 46 percent of franchisors were still considering their options when it came to using e-commerce. This is a concern because customers are not!

A memorable experience

Speaking of customers, now would also be a good time to do some fresh customer research into the relevance of your product or service, and how your offer could be enhanced. During times of rapid change we all need to be attentive to changes in our customers’ thinking. What they wanted from us a few years ago may not be what they want now.

For franchisees, the opportunity is to focus more than ever on delivering a memorable, positive experience. It’s no longer just about the product. The first 10 seconds of any interaction is particularly important. This is when a customer will often decide whether a business is worth their time and money. Franchisees showing sales growth are usually those who ensure there is a friendly, helpful person willing to make eye contact with customers as they approach the business. They also ensure that the last touch point with a customer is a positive one. This is often where a product or receipt is handed to the customer. If this is done with care and an intention of gratitude, the customer will literally feel a sense of warmth and leave the business subconsciously feeling this is a place they would like to return to. In psychology this is called the Primary and Recency Effect. It is a simple but powerful phenomenon, often ignored in business.

Attitude is everything

Speaking of delivering a positive experience, franchisor executives need to be setting the right example here. Remember culture flows from the top. Ensuring all contact with franchisees is relevant, useful, respectful and constructive is essential, especially if they are feeling the squeeze. Judgemental comments such as “if you’d just follow the system you’d be okay” will not deliver the results you want.

Another major research project we have recently completed into franchisee performance has also shown that attitude is everything. Franchisees who are able to sustain an attitude of confidence and hope are showing 14% better financial performance than those succumbing to the gloom and doom around them. While a franchisee's attitude is largely up to them, franchisors that provide competent leadership and support are definitely helping to bolster the spirits of their franchisees. And remember, the most powerful message you can give is “We care about your profitability!”

Margin control

Finally a note on cost control. Sluggish sales and rising costs, mean franchisees need to be particularly sharp in this area. Those achieving the best profit margins are diligently using productivity tools (often provided by their franchisor) such as staff scheduling rosters, stock control systems and benchmarking analyses to set and achieve small, achievable improvements. Several one percent improvements can quickly add up to several thousand dollars in additional profit.

In summary those businesses, franchisors and franchisees, who are fighting the gloom and growing sales are:

  • Making themselves available to customers online
  • Revisiting their customer offer to ensure it is relevant
  • Using the Primary and Recency effect to deliver an exceptional customer experience
  • Maintaining a positive “can do” attitude
  • Investing in a culture of care and respect
  • Delivering competent leadership and responsive support
  • Using cost control systems, with everyone focused on franchisee profitability

    Incorporating these strategies into your conferences, planning sessions, leadership development programs and ongoing franchisee training is an effective way to future proof your network. If you need help or want some ideas please give us a call. We are working on a number of innovative learning programs that will help you drive real business results.

    Until next time,

    Greg Nathan

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