Multi-Unit Franchisee Magazine Issue II, 2011

customerscount BY JACK MACKeY creating loyalists Nurturing existing customers must be a key strategic goal for franchise organizations u ntil your organization figures out how to drive higher sales and profits at existing stores, adding new units is very risky. The only time McDonald’s got in real trouble came when they focused on growing sales by adding new units while neglecting to grow same store sales. The source of sales—customers—can be a tricky, fickle bunch. They say they like the way you treated them and the service they received, but then they go across the street and spend their money with your competitors. If only franchisees could figure out how to transform customers who visit once or twice into customers who are loyal! Customers who return again and again are by far the most profitable. Without an everincreasing stream of loyal regulars, franchisees find themselves anxiously looking at the franchisor’s marketing calendar as the answer to generating the traffic needed to survive. But rarely will the “Five Dollar Footlong” come along and deliver a double-digit bump in sales for franchisees. Marketing and innovation are crucial elements in driving traffic. But gaining customer awareness and customer trial is just the beginning of growth. Without sustained same store sales growth, multiunit operators are on very shaky ground. Ron Shaich, founder of Panera, sets an even higher bar for multi-unit leaders than same store sales growth. He recently wrote, “Earnings growth and real value creation occur only when a company is able to generate same store profit expansion over multiple years and add high return on investment, or ROI, to new units.” There are only three ways to grow profitable sales in existing units: 1) get current 88 Multi-unit Franchisee Is s ue II, 2011 customers to increase their frequency; 2) get them to leave more gross profit dollars behind on each visit; or 3) get more new customers. The surest way to grow is to do all three at the same time. Based on 100 million customer experience metrics in the SMG Benchmark Database, th

Multi-Unit Franchisee Magazine Issue II, 2011 | Page 90