A thorough discussion on building a sustainable franchise system would not be complete without a review of the ultimate responsibility of the franchisor: protecting the brand. From the beginning, the franchisor has to ensure that trademarks are secured and that collateral materials and the online presence positively represent the brand. What more should the franchisor be focused on as the brand relates to the end customer? Let’s look at the key areas related to the brand: brand positioning, customer feedback, and cause marketing.
Brand Positioning
The franchisor needs to understand the brand’s position in the market and leverage that in printed and online messaging. Are you the low-cost, high-quality, or high-service brand? The messages need to be consistent and your franchisees thoroughly trained on them, so that they understand your brand. At a recent International Franchise Association (IFA) conference I heard Frances Frei, a Harvard Business School professor, talk about achieving breakthrough service. She ventured that to be great at one thing (service or quality) you had to intentionally be bad at something else (price), and if you are not intentionally bad at one thing you will be mediocre at everything. Franchisees struggle with how to compete on price when others in their market are cheaper. As the leader of BrightStar, I have taken a stand and am leading our franchisees to focus on the areas in which we can drive quality and value so that customers focus more on those things and less on the price.
The franchisor constantly needs to innovate the offering to the customer. The franchisees and Franchise Advisory Council may make suggestions or pilot ideas, but it is the responsibility of the franchisor to implement, package, and train franchisees on new ideas and new offerings. The brand must be kept fresh and relevant in the eyes of the customer. This takes constant attention and investment. From inception, we have invested approximately 20 percent of our profits on market innovation (to fund the national ad fund in advance of receiving national ad fund contributions from franchisees) and service breakthroughs, and 20 to 50 percent on technology. The technology investment will lessen in future years, but the investment in innovation, or R&D, can’t, if we are to continue to be the market leader in the eyes of our current and future customers. Our competitors will not sit still, so we have to constantly strive, invest, and think about ways to be better.
The franchisor must establish a differentiation in the marketplace for her goods or services and train, train, train the franchisees on how to market, advertise, and talk about their differentiation. Success in acquiring market share will depend on being the best in one area of differentiation—price, selection, time, quality, or service. When franchisees embrace and commit to the higher purpose of the brand, franchisees will be motivated to build the brand. This means that franchisors must spend the time to educate franchisees on the DNA, the soul, and the positioning of the brand up front in the recruitment process and continue to do so during training. If franchisees aren’t clear on what the brand is and what it stands for, then they will spend more time reacting to competition (i.e., price) than building a brand that means to the community what you originally intended.
If you have appropriately engaged your franchisees in understanding the higher purpose of your brand and have made the right investments to create true differentiators, then competition will be irrelevant. In Goodto Great, Jim Collins admitted that one of his biggest surprises was that all of his Level 5 leaders seldom, if ever, mentioned their competition. They almost always discussed how they wanted their companies to be perceived and designed marketing and advertising systems and strategies to bring that about. Put another way, they were never defined by their competition. That said, your franchisees will want to understand their competitors in the industry so they can verify that your brand is superior and follow you. Remember, franchisees do not follow blindly.
It will be beneficial for your franchisees if you assess the industry and equip them with information about how you are different from the perceived competitors, so they know how to sell against them at the local level. Keep in mind that many of your competitors will be doing the very same thing with respect to their brand. Healthy competitors and competition are good for everyone—it means that there is a demand for your products or services.
Customer Feedback
It is common to solicit feedback from your brand’s direct customers because they have already engaged your brand’s goods or services. It is necessary, though, to understand how all potential customers view your brand in the marketplace: If you don’t assess how prospective customers perceive your business, you won’t understand why your franchisee lost the opportunity to convert them to actual customers. As more customers share their opinion about brands online and seek advice from their online friends as to what brands to do business with, companies—particularly franchisors on behalf of the brand—must invest in understanding, and potentially improving, the perception of and the actual customer experience with their brand.
Before They Are Customers
Equally important as input from BrightStar’s current customers is how individuals experience our brand before they become customers. Toward that end, we determined that an investment in a“mystery shopping process” could create a big breakthrough in helping franchisees improve their phone reception and client intake process. Every incremental improvement in how a potential client feels about our brand will increase the reputation of the franchisee at the local level and has the potential to increase revenues. I would encourage all franchisors to think about building a mystery shopping program (in which a third-party company is hired to visit or call the franchisee’s location to see what the experience is like, identify areas that can be improved, and report back to the franchisee and franchisor on the results) to help gather information about the experience of being in the shoes of the customer and to see how the customer perceives the brand. If you structure the program to focus on improving results through feedback, coaching, and retraining, such a program will hugely benefit franchisees. Do not use this type of program as a disciplinary program, because franchisees will not see this investment as being in their best interest. That said, if you see a pattern of poor performance in complying with brand standards after repeated mystery shops and attempts to improve compliance, you may need to proceed to stronger action.
Once They Are Customers
In addition to knowing what potential customers think about us, we find it critical to provide an outlet for our franchisees’ existing customers through which they can let us know how we are doing. We send surveys to them through a third party to learn what we are doing well and what needs to be improved at the local level. Ultimately, we benchmark our franchisees on their customers’ likelihood to recommend us to their friends and families (a measurement referred to as “net promoter score”). For locations that have lower than average net promoter scores, they are able to review the answers to the other questions on the customer survey to see what the particular areas of customer dissatisfaction are to make improvements in customer service, quality, or whatever areas are identified on the survey as not meeting customer expectations, to improve the franchisees’ overall net promoter scores. We know that there is a high correlation between a franchisees’ long-term revenue results to the net promoter scores, and we make the review of this information a priority for our franchisees and for our field support team.
If the idea of a net promoter score is new to you, make yourself a note to search for “Harvard Business Review Net Promoter Score” online (www.hbr.org). This measurement has revolutionized the ability to build processes to drive customer loyalty—once you recognize that customers who are merely satisfied are not necessarily loyal, you will begin to understand the need for a new measuring stick. The net promoter score is our new measuring stick to ensure that we are retaining our customers and using their experiences to attract new customers through their word-of-mouth promotion of our brand.
Selecting a vendor to monitor what your customers are saying about you is critical, and you may need more than one vendor to do this effectively. You need to understand who your customer is, especially if each transaction has multiple customers (a decision maker and a service recipient), and how each customer likes to be communicated with. At BrightStar we understand that most home care decisions are initiated and overseen by an adult child and that the senior parent is the service recipient. We also have learned that mail is the most effective communication tool with our seniors—with a response rate above 30 percent—and phone or e-mail is the most effective communication tool with the adult children. We subscribe to all three methods and have found them to be complementary. More intensive surveys of customers can assist you in understanding where the customer expects improvement at the overall level, and these have been a critical component of our investments in driving more value and quality of care to our end customers. More limited surveys simply ask the key net promoter score question, “How likely are you to recommend us to friends and/or family?” This type of survey is more common, less costly to implement, and simple to adopt. The short survey containing only one question will enable you to provide a fast response to the customer: for promoters, to reward them for a referral, and for detractors, to respond to their complaint in a timely and proactive manner. A more thorough survey that asks this question but also asks about all the areas where your franchisee or their staff interact with the customer provides the expanded level of information needed to improve processes to actually improve customer loyalty overall.
Cause Marketing
In thinking about the brand from a broader perspective, factor in opportunities for cause marketing as you grow. Cause marketing provides an avenue to give back to a charity related to your business or the base of your employees in some way. Cause marketing also provides a method to highlight your brand as one that cares about the community and the greater good. Customers want to buy from companies with a conscience, that are socially responsible, and I believe the franchisor, through commitments of time and/or money (or both), can assist franchisees with participating in such events.
BrightStar Care aligned with the Alzheimer’s Association initially because we understood that many of our end customers in our LifeCare segment have some form of dementia. In support of our KidCare segment, we added a charity focused on autism to show our commitment to a cause that impacts children. More important, we are a hugely community-oriented business, and our franchisees are passionate about promoting, raising money for, and giving time to charities. This provides a mechanism for our brand, our corporate personnel, and our franchisees to give back to the communities in which they operate.
As you consider a charity to support, nationally as well as locally, through involvement by your franchisees, I recommend that you choose a cause that all of your franchisees’ customers will want to support unconditionally, like researching cures for multiple sclerosis or breast cancer. It’s easy to alienate potential customers by aligning your brand with any cause that not everyone will want to support.
Closing Thoughts
Your system’s success is ultimately based on the growth in the number of end customers. The franchisor needs to lay the ground rules and training for how to get customers, how to keep customers, and how to communicate with customers. It is too important to the mutual success of the franchisees and the franchisor to leave this to chance.
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You have learned how to build a strong foundation for launching a franchise system. There may come a time when you are ready to expand further—either internationally or into additional franchise brands. Some franchise brands never expand beyond their initial country, and most franchisors only have one franchise brand. The choice will be yours. In the next chapter, we will explore the considerations for broadening your horizons.
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