Evaluate the Marketing System Before Investing in a Franchise - Does it Deliver the Right Customers?

by John P. Hayes, Ph.D.

Most individuals who buy franchises do so with the expectation that the franchise company will do a better job of marketing the business than the individual could do on his or her own. Marketing acumen, expertise, implementation and buying power are among the major motivators for franchise buyers. Most people admit that they're not very good at marketing, and they can't afford to do it on their own. Therefore they look to franchise companies, particularly to franchisors, to handle that aspect of business development for them.

Franchisees frequently complain about inadequate marketing

And yet, marketing failure is one of the major reasons for dissatisfaction among franchisees.

Here are several reasons why:

• Just because it's a franchise doesn't mean it's a good business, or that you should buy it.
• Just because it's a franchise doesn't mean the franchisor has perfected the marketing program.
• Just because it's a name brand doesn't mean that the marketing is effective all of the time, in all markets.
• Just because it's a franchise, doesn't mean that the marketing generates the "right" customers for your business.

How good is the marketing system?

Before you buy a franchise, look at the effectiveness of the marketing system. Put aside name brand identity, type of business, geographic location, and many of the other issues that you evaluate before you buy a franchise, and dig into the value of the marketing overall.

Ask these questions:

• Does it work? How do you know?
• Is it cost effective?
• How much will it cost you each month to implement the marketing system?
• What does it cost to generate one customer for the business?
• How many customers will the marketing generate daily, weekly, quarterly?
• How much money will each customer spend in your business?
• How often does a customer return to the business to spend more money?
• How many years does a customer remain a customer of the business?
• How often is the marketing program updated by the franchisor?
• As a franchisee, what will be your ongoing marketing costs?

Ask the franchisees, but even then be cautious!

Don't just accept the franchisor's answers to these questions. Ask the franchisees!

Unfortunately, sometimes even the franchisees won't be able to help you assess the marketing system. They think it's doing the job, and it's not.

Not all customers are created equal

For example, a famous name brand franchise system asked me to help them evaluate their marketing system, only to discover that while it generated customers for the franchisees, the customers were the "wrong" customers! They spent too little money, they made too many unreasonable demands, and they drove the franchisees into a frenzy. No marketing would have been better than that kind of marketing! Ultimately, many franchisees in this network lost money and some went out of business because the marketing system was targeted to attract the "wrong" customers.

There are "wrong" customers and there are "right" customers and every business will attract some of both. However, you want to be sure your franchise marketing system delivers more "right" customers than "wrong" customers.

How do you recognize a "right" customer?

What's a "right" customer? Here are several characteristics:

• They spend the most money in the least time
• They frequently return and buy more
• They follow your system and are not disruptive
• They promote your business

Here's why many franchisees are disgruntled

If you evaluate the marketing system using the above criteria, your challenge is more difficult. Frequently, and unfortunately, neither franchisor nor franchisees realize that their marketing systems are attracting the "wrong" customers. Which explains why so many franchisees are disgruntled.

Unless you know that you can do a better job of marketing than can the franchisor (and the franchisor will give you that leeway), you must carefully evaluate the marketing system before you invest in a franchise.

Dr. John P. Hayes, http://www.franchisemastermind.com is a 30+-year franchise veteran, working with franchisors and franchisees in many aspects of business including leadership, management, customer relationships, strategic planning and marketing. Join his tele-webinar: How To Capture & Keep The Right Customers. Details are at http://bcafranchising.com/how-to-capture-and-keep-customers

Article Source: http://EzineArticles.com/?expert=John_P._Hayes_Ph.D.