Franchise Marketing: Understanding Industry and Consumer Trends (Feat. Mike Isakson)
Amanda: Hello, and welcome back to “Franchising with Purpose.” As usual, I’m your host, Amanda Lepore. Today, we’re continuing our series going through each department at a franchise’s corporate office, and how they support you at your franchise. Joining us again, is Mike Isakson, a 50-year veteran of the franchising world, with experience as both a franchisee, and a franchisor. On today’s episode, Mike and I continue our conversation, discussing how sales and marketing departments have become intertwined, and how you have to listen to your clients, your employees, and your franchisor to assist you in marketing your business. And now my interview with Mike Isakson.
We talked a lot about the overlap and you just said it a minute ago between sales, operations, and marketing and how they all work very closely together, so I think that’s a really good transition. And we’re gonna skip around here a little bit, but into marketing, right? Because there’s a lot of, I’ll say, confusion or we use those words interchangeably, sales and marketing, and they are very different, but they work hand in hand. So we talked about what I can expect from my sales team, but what does a marketing department and a franchise system do in a nutshell?
Mike: Well, as I indicated, the marketing department is critically important because it really integrates with our sales effort, and our support effort as we help franchise owners grow their business. In my mind, the marketing department should be looking at what do we need to do to differentiate ourselves and say that there is value, competitive advantage in our service as opposed to a competitor. And so the marketing department should be looking at industry trends, consumer trends for both caregivers and clients, and understanding what we need to do to communicate to those two groups to cause them to say, “I’d like to learn more about the franchisor and services.”
Amanda: Mike, that’s a great point, right? It’s a very, very much a, I’ll call it a national approach, right? When you buy a franchise and you’re buying into a brand, it’s the franchisor’s responsibility to get that brand out there as well as what you mentioned, you speaking directly to the consumer, the employee side of the business, whether that’s caregivers or whatever else is appropriate in different industries. But how does that translate to a local level? Right, so we talk a lot about, and if you do any research on marketing and growing a business, there’s a lot out there to support kind of a very local approach, right? People want to do business with people that are in their local market, that’s their neighbor, that’s, you know, the company right down the street from them. So what does that look like from a franchisor supporting? So how does my national marketing department, somebody who’s really focused on that big picture and as you mentioned, the industry trends and things of that nature help my business in a local market?
Mike: Well, I think what it does, again, in our business because it’s so based on referral is that franchisee, either the franchisee, or their sales team, if they’re out, they’re taking this national trending and information and making that set of value propositions realistic for our clients. And so really, it is very, very much about that face-to-face taking the features and the benefits, if you will, and how does it relate to value to the franchisee. Now, another important part is the marketing department in a good franchise organization has to be very, very focused on how social media, and we talked about this a little bit before, how social media and using pay per click strategies and SEO strategies. That is where many of us do not understand the intricacies of working with Facebook, working with Google, working with other aggregators, and that is where the marketing department needs to have those leaders that understand how does my Google five-star rating, how does my customer feedback, how do referrals, or postings, or reviews fit into building my business because those are all locally-driven. The franchisor is not going to get the franchisee’s client to respond with a five-star rating or positive comments on an internet setting. And that’s where the skill set and the knowledge of how all of that is interrelated is critically important. And I would caution a franchisee, if you spend a lot of time trying to understand it, you’re wasting your time. Because it is so complex and it changes frequently. And that’s where the franchisor’s marketing department is invaluable because they keep up with that and understand what’s happening, especially the relationship with Facebook and Google at this point.
Amanda: Absolutely. I can’t stress enough the importance of social media and Google. I mean, Google is everything and that’s where I think almost everybody turns for the answers for things. And, you know, we talk a lot that they change their algorithms several times a day. I know it’s not that frequently, but it feels like it sometimes. And, you know, you’re absolutely right. If you’re spending a lot of time trying to understand what it takes to get on that first page of Google so that when somebody in my local marketplace is looking, again, I’ll use homecare as an example, that my name pops up there, that’s what I should be leaning on my marketing team for. You mentioned in that answer that if you’re spending a lot of time trying to understand how to get your page to rank, you know, first in Google when somebody’s searching for, well, I use homecare as the example in your area, that your business and your office pops up and they go further and you’re the one that they call. And there’s a lot of other facets to that. You mentioned reviews and those are things that, you know, it’s kind of at the local level and things that you need to do to help that, but if you’re trying to understand how to get your page to rank or how to maximize Facebook and do all the things on all the different social media platforms, you’re kind of spinning your wheels maybe a little bit and wasting your time because that’s why you have a marketing department at the franchisor level. You wanna add anything to that?
Mike: No, that’s exactly right. And the other thing I would encourage franchisees to look at is the reporting suite for pay per click results in the SEO. So, you know, I’d say show me what the dashboard is. And many good franchise companies partner with vendors that do nothing but SEO and pay per click administration. And the marketing department, the franchisor’s marketing department should have a very good handle on what the dashboard looks like. So basically, the marketing department should also be communicating to the franchise owner and this goes back to our sales activity in saying this is how you should be funding and how much money you should be spending for SEO placement or pay per click. So that’s a key part of the marketing department. And again, that’s closely connected with the operations department because the operations department is the quarterback for the franchisee as they go through and start their business. But the ability to understand trends in the marketplace and then how that relates to the social media is critically important.
Amanda: Absolutely, Mike. And I’m a little partial because I am a big football fan, but I love the reference to the operations team being your quarterback and, you know, you’re not gonna ask your tackle to do what your kicker’s doing, right? Everybody’s specialized in their roles and that’s why you have a team, right? That’s why you have that person…
Amanda: …that plays to their strengths. And as a franchisee, you get to take advantage of having somebody who specializes or manages a vendor that all they do is pay per click and all they do is search engine optimization. Because if you try to do it all…
Mike: Absolutely correct.
Amanda: …I feel like you’ll make yourself crazy.
Mike: That’s exactly right. And I think the other piece that the marketing department is responsible for is to share the heart, and the soul, and the culture of the franchise to the franchisees, to the franchisee’s employees and caregivers. And, you know, you should be able to feel that culture moving through logos, moving through what our website looks like, that heart part of franchising is so important, and a good franchise organization should be able to communicate that very, very quickly. And that talks about heritage, culture, and those are things that you should be able to pick up very quickly when you walk through a home office and say, “I see a culture and a heritage in this organization,” because, you know, right, in my opinion, I always like the phrase that, “Culture eats strategy for lunch.” And if there’s culture within an organization, strategy’s important, but that culture just is so critical and that should be just very, very present in a good franchise organization.
Amanda: Absolutely. Yes and amen to all of that. Could not agree more. And you mentioned that marketing really should…that emotion that you feel and we are franchising with purpose here. So that purpose should be very apparent in our websites, and our branding, and our ads, and everything that we do regardless of the industry or the company. And again, in home care, obviously it’s very, very much connected, very much one in the same. We talk about purpose, but that’s a good marketing department is that emotion and that heart behind why it is that we do what we do.
Amanda: Awesome. So, I’m gonna transition from the warm and fuzzies, and the purpose side of things to the financial side because these things require funding, right? We talk about pay per click and search engine optimization, SEO, and all those things that it takes. And I think to support that, most franchises have some sort of a general marketing fund or an ad fund, I know some places call it. So as a franchisee, what should I expect for that to cover? If I, you know, read through my franchise agreement or my franchise disclosure document and I see that there is a certain percentage or a flat fee for that ad fund, what’s pretty reasonable for that to be included in?
Mike: Well, it all, it varies. There’s great variation in that model. And reasonability is not at all, you know, one franchisor may be charging 0.25% of revenue generated and having a cap on, you know, that you can’t pay any over a certain amount. I know of a franchise today that is charging 25% of… Their ad fund is 25% because they’re all television media driven. And they’re doing much, much more. So I think the key thing is to understand what is the general ad fund used for and how is it administered? And so a couple questions that I would ask is how much of the ad fund is actually used to buy SEO placement, or to buy media, or to buy other direct services? How much is used for research? How much is used for consulting? How much is used for staff? And the other thing on national ad funds, many people look at and say, “I want a national ad fund the size of…I want television advertising like McDonald’s has, I want to have that level of activity.”
And oftentimes, franchisees do not understand the magnitude of the dollars that are involved. Many ad funds are hundreds of millions of dollars. And so I think it’s very, very important to understand the size of the ad fund and a franchisee can’t fool themselves, again, going back that the ad fund is going to generate a lead that can be converted into clients. In my mind and in our franchise organization that I’m familiar with, that I’m most used to, that is to build awareness for the brand. And so the ad fund’s very, very important. But don’t for a minute think that that is going to solve all of your marketing advertising. In most cases, you know, a franchisor will say, you know, anywhere from 4% to 2% of revenue should be spent on marketing. And in some cases, the ad funds are 0.25%, 0.50%. So you can’t depend on the ad fund totally, but the ad fund is very, very important as the organization grows, there are certain things that can be done regionally and nationally that give you scale that an individual franchise can’t do.
Amanda: Absolutely. Again, I wanna underscore the point of the correlation between the two, right? If your ad fund is a certain percentage and you’re looking for McDonald’s-level advertising in TV commercials on the Super Bowl, then we have to be realistic about what we’re paying in, and what we’re contributing to that, and what’s reasonable for that to cover. But asking about the administration of it and I think those are all good questions as you kind of go through this process to look into and to really get a good idea of where those dollars are going, how they benefit you and your local marketplace, and how to take advantage of those things.
Mike: And one of the other questions that the franchisee should ask is to say, “What are the caps?” Many ad funds have caps that say, “You pay up to this amount and then you pay no more.” There’s some philosophies that say caps are very, very effective, and some philosophies say that there should be no caps. And I think that’s a question that I think a prospective franchisee should ask the franchisor and say, “Do you have caps on the maximum amount that can be paid into an ad fund or do you not?” And so I think that’s an important question and to understand how the franchisor thinks about that, and what their rationale is of that.
Amanda: Absolutely. Great answers. Anything else that we didn’t talk about as it relates to the marketing department and the support that I can expect from them as a franchisee that you think is important for our listeners to know?
Mike: Well, again, and we’re gonna be moving into the operations department. In most good franchise organizations, there is coordinated access to the marketing department, to the IT department through a process, through the operations department. So one of the questions that I would have is to say as a franchisee, “How do I access the marketing department? And how is that handled?” And then also, “Where is the marketing material, the marketing strategies, the white papers, if you will, where are all those things housed? How easy are they for me to find? Can I go on and do a couple key searches? Can I go and look at that?” I know of one franchise company today that when you try and go on and look at their information, whether it’s operations, finance, sales, or marketing, their online learning system is antiquated, it’s old, it doesn’t work, it crashes. You can’t understand the videos, and on, and on, and on as opposed to one of the things I do and encourage a prospective franchise owner is to sit down and they teach, show me how is the learning system and the repository of all of the good information that is out there. The other question I would encourage people to say is, “When’s the last time the marketing department actually conducted a focus group or did research about the clients and the caregivers that we serve?”
Amanda: Absolutely, all great questions and the access to that information is paramount, right? If it’s out there, that’s all well and good, but if I can’t get my hands on it, then how helpful is it gonna be to me?
Mike: Right. And it should be a couple, it should be very intuitive as they get on the computer and go into the franchisee’s website. And again, it’s a protected website through passwords, etc. But then it should be very, very intuitive how you get the information that you need.
Amanda: Thanks again for joining us on “Franchising with Purpose.” You can find me on Twitter @Amanda_GHC. And don’t forget to visit Griswold Franchising on social media for more information. Griswold Franchise Opportunity on Facebook, @GriswoldFran on Twitter, and Griswold Home Care Franchise on Instagram. And make sure to subscribe wherever you get your favorite podcasts, iTunes, Stitcher, Google Podcasts and check out my personal favorite, griswoldhomecare.com/franchise, for more. We’d love to hear from you. Whether it’s your review on your favorite podcast app or a tweet, if you have any questions or if you wanna hear something specific, send us a message. We’ll see you next time.