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“What business are you in?” I asked a group of franchisors.
They told me:
- The people business
- The dream-making business
- The problem-solving business
- The customer relations business
- The financial independence business
Yikes.
Who wants to be in the people business?
Have you met anyone who wants to be in any of those businesses? Know anyone who got up this morning and said, “I want to buy a people business?” Given the fact that people are the source of most of our headaches in business, who wants to be in the people business?
I don’t!
Neither, I bet, do you!
And fortunately, you’re not in the people business, or any of those other businesses.
There’s only one business to be in
Unfortunately, there’s a lot of confusion about which business to be in, so I’ll cut right to the chase and tell you. There’s only one business for a franchisor to be in, and it’s called:
Capturing and keeping franchisees.
Given our economic plight these days, capturing and keeping franchisees is more critical than ever. Both goals are equally important. However, one gets more attention than the other.
Why sell them and then not keep them?
Selling franchises—capturing franchisees—gets lots of attention at expos, conferences, seminars and so forth. Reporters get a lot of space to write about how to sell franchises, who’s selling them, where they’re selling them, etc. But rarely does anyone promote keeping franchisees.
What’s the sense of spending thousands of dollars to capture them if you’re only going to lose them?
What percentage of franchises do you replace annually?
Frederick Reichheld, author of The Loyalty Effect, told us that the average business loses 10% of its customer base every year, which means the average business replaces half its customers every five years.
Imagine replacing half your franchise network every five years!
Many franchisors do that and more!
National average turnover rate? It doesn’t matter!
No one knows the average national turnover rate of franchises—any more than we know the national success rate of franchises. And I’m not going to tell you that it matters all that much, either.
What should matter to you, however, is the turnover rate of franchises in your network.
Even if the average national turnover rate was 2% (we know it’s not that!), it doesn’t help you if your turnover rate is 25%, does it? What’s important is that you know the turnover rate for your franchise company and you work on improving it, getting it as close to zero as possible. If you don’t know that percentage, I encourage you to figure it out today.
Meanwhile, I’m working on future blogs to tell you more about why the importance of keeping more of your franchisees.
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