Franchise Update Magazine Issue IV, 2012 | Page 36

Grow Market Lead
• Top sales producers. The Internet, at 42 percent, regained its top standing among sales channels in 2012 after
dipping into second place (behind referrals) in 2011, following years of ascendancy. Referrals, at 32 percent, placed
second, remaining about the same as 2011. Brokers, at 16
percent, remained about the same as in the past 5 years.
Print, at 3 percent, was up slightly, but still below its historical levels. “Where the money goes is interesting, but it’s all
about what vehicle or channel is generating the deals,” says
Olson. “Franchisors, after heavy experimentation, are going
back to traditional sources. Social media is ‘traditional’ now,
no longer the new kid on the block. Now it’s about trying to
figure out how to make it work.”

• Top Internet sales producers. In a surprise to many,
portals showed a “significant bounceback from previous years”
as a sales producer in the most recent survey, says Olson, jumping from 32 percent in 2011 to 43 percent in 2012. An indication that franchisors are improving at tracking the results of
their Internet spend, the percentage of those answering “Don’t
know” and “Other,” at 8 percent and 7 percent respectively,
continue to fall or remain much lower than in preceding years.
“It’s really about ongoing optimization and ad portals,” says
Olson. And although pay-per-click and social media showed
a lower return per budget expenditure (consistent with previous years), “There are certain franchises where pay-per-click
does work,” he said.
• Online alternative resources. While sales originating
from “alternative” online sources (as opposed to company websites and portals) continue to remain low as a percentage of total
franchise sales, the good news is their numbers also continue
to rise from previous years. Respondents from 14 franchise
companies reported 46 sales in this category: Facebook, 19;

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LinkedIn, 11; YouTube, 9; Craigslist, 4; and blogging, 3. One
unexpected observation: since the survey began measuring
social as a sales source, Craigslist has made the list every year.
Olson compared using Craigslist to placing a classified ad—
relatively simple, inexpensive, and available 24 hours a day. As
for using social media as a franchise sales tool, he says, “Everybody’s interested in it, but the cautionary note is that this
is not a recruitment source for most franchisors to count on.
It is great for brand engagement, and can be a much better
resource for the retail side of your business.”
• One-to-one marketing. This is a new category for the
AFDR, as the concept of one-to-one marketing makes its way
into the franchise development toolbox. Calling it “the new
kid on the recruiting block,” and “today’s newest recruiting
source,” Olson notes that 40 of the franchisors surveyed have
tried it, with 18 generating sales. “It started on the consumer
side, drawing more new customers to different chains. So is it
going to work for recruitment?” Because one-to-one marketing tools provide hundreds of customizable variables, allowing
micro-targeting of an exact household or individual, franchisors
are now applying them to find new prospects in local markets.
“If 45 percent of 40 franchisors have done a deal, it is really
something that franchisors must consider,” says Olson. “It’s a
low-cost lead generator compared with other media. It’s no
magic bullet, but it’s worth a try.”
• Overall closing ratios noticeably jumped across the board
this year, compared with the two previous years. At 2 percent,
the ratio of leads to sales increased from 1.5 percent in 2011
and 1 percent in 2010, gains of 50 percent and 100 percent,
respectively. “For franchise closing rates, the recession is definitely over,” says Olson. “The increase to 2 percent represents
a return to traditional, pre-recession numbers. As we know,
the challenge is continuing to find more funding sources.”
The ratio of applications to sales is on a steady upswing, rising
from 8 percent in 2010 to 10.5 percent in 2011 and to 13.5
percent in 2012. Olson calls this a dramatic increase from 2
years ago. The ratio of discovery days to sales has climbed to
75 percent, up from 65 percent in the previous 2 years, which
Olson said was the benchmark in pre-recession days. “Best
practices companies continue to elevate their performance
standards as they move into 2013 recruitment. There’s definitely a new, widening gap between the winning and losing
brands in the development race. Franchisors that don’t wake
up are headed for disaster.”