How to set a budget for franchise recruitment marketing
Whether you are a small or a large franchise, identifying how much money you should be spending on your franchise recruitment is essential to meet your objectives and to grow your franchise successfully, says Sally Butters, Director of Media at Coconut Creatives
First of all it is important to identify what it is you want to achieve. Do you want to recruit your pilot franchisee or do you want to expand your franchise by 30 franchisees over the next two years. It is essential to be very clear on what you want to achieve and how long it should take. Therefore, at the start of every successful franchise recruitment-marketing plan, decide upon some SMART objectives for your franchise network growth. This means that your objectives are Specific, Measureable, Achievable, Realistic and Timely. Your objectives for recruitment determine everything. They determine how much money you should be spending, what routes to market you have available to you and how many leads you need to meet those objectives.
So what does a SMART objective look like?
Your SMART objective could look like this: ‘I want to increase the number of franchisees from 25 to 35 over the next 12 months’. This objective allows everyone who reads it to be really clear on where the business is now, what is being asked and within what time frame. Whether this is achievable and realistic or not depends on the resources and budget you have available for franchise recruitment.
How many leads do you need to generate within your budget to achieve your objectives? Generally speaking, and according to the latest NatWest/bfa Survey, the ratio from prospect enquiry to fully operational franchisee is one or two in 100. That’s one or two franchisees for every 100 leads you generate. So look at your objectives and track back from here: if you want to take on 10 franchisees over the next year, then you are looking at generating a minimum of 1,000 leads.
We recommend that any franchisor should have no more than 50 hot prospects on his database at any one time, where each of those individuals are revisited regularly to track progress through the franchise recruitment process. By ‘hot prospects’ we mean prospects that you have spoken to, qualified as suitable and sent details to. You may or may not have seen them face-to-face but they are receptive to your phone calls and discussions and you have a very good feeling about them.
Any more than 50 and you are not managing your leads properly, allowing prospects to take too long over their decisions. If you have significantly fewer hot enquiries than this, there’s no need to necessarily be concerned. It all maps back to your plan and your objectives for your franchise growth.
If you need to achieve 1,000 leads, you already know there is going to be a lot of wastage, so you need to have a robust recruitment process in place. To achieve this we recommend that you carry out research into your top performing franchisee and how they found you. This provides you with an understanding of which media channels your target audience prefers to receive information through or in which social activities they engage in and this will ultimately ensure that you allocate your resources most effectively.
If you don’t have any franchisees yet don’t worry, you can still compile an accurate profile of your perfect franchisee that predicts their behaviour during their purchase journey.
Ensuring that you are targeting and courting the right prospects in the right way with consistent messages that reflect your brand, is most definitely at the heart of a solid marketing strategy, and all that activity needs to operate within a budget.
How much money should you allocate?
It is really important at this stage that you are realistic about what you can spend on franchisee recruitment. If you plan your spend at the beginning of each year, you will then be very clear about what activities you can and can’t do and if advertisers call you with amazing last minute deals, you have all the information you need to make an informed decision about whether to take advantage of their offer. Planning a budget might sound like a fairly easy concept but in practice it takes careful planning and you must have the ability to stick to that plan.
We have created a budget calculator that can help you set your marketing budget to achieve your SMART objectives. To provide you with an example of how this could look like for your franchise, have a look at the example below.
This example only factors in direct activities to generate leads for your franchise recruitment, so if you need large-scale projects like a new website or you need to recruit a marketing assistant to coordinate your franchise recruitment marketing plan, then this will need to be factored in to the budget in addition.
Now that you have identified your total budget needs over a 12-month period, it is important to break your budget down into monthly spend. Here it is important that you consider the seasonal variations specific to your company and the seasonal cycle of the franchise industry, such as when the major exhibitions are, and therefore where you are likely to experience peaks and troughs in enquiry levels and spend.
Monitoring allocated activities within your budget
What is often apparent is that many franchisors frequently spend too much on their basic advertising activities with few methods for identifying the return on investment of each of those activities. It is important to put Key Performance Indicators (KPIs) in place so you can track what you are doing and review the success of each activity. Typical KPIs will include the number of leads, number of leads to face-to-face meeting, and so on. KPIs should track all key numbers within your sales process. When you are testing new activities, ensure that you give them enough time to bring in fair results but try to book them with minimal commitment to the advertiser. This will ensure that the risk of you wasting your budget is reduced and if things do not work out after, say, three months, you can pull out of the campaign. It is good to regularly review the selection of activities that your new franchisee responded to before they joined.
Lastly, remember that a budget is just that, a budget. You don’t have to spend it all at once; in fact, you don’t have to spend all of it in the year if you hit your recruitment targets. By regularly reviewing what works for you and committing your budget in monthly, three monthly and six monthly blocks, you maintain control over the ability to change direction should you need to increase the number of leads or assign budget in another direction or to another project.