Franchise brands, in some categories, can be tremendously innovative, and in other verticals can wait to see which way the wind blows before deciding whether to implement a trend to their brand or operations.
We aren't talking about whether to shift logo presentation from serif to sans serif typefaces; we are talking about the core of the brand - making changes to the core promise and operations to reach an existing audience better or attract a new audience.
We see three trends moving into franchise and franchise operations:
- The increased prevalence of loyalty
- Category expansion
- Investment in data and hyper-personalisation
The increased prevalence of loyalty
Loyalty programs are not a new concept, and they certainly aren't new to franchise, but they are increasingly important as a way to compete with other (often non-franchised) brands. The loyalty programs are expanding in their remit and benefits provided to capture market share without degrading the brand through traditional methods like deep and excessive discounting.
Loyalty programs are being implemented across franchise networks to recognise and reward customers for repeat business, cart size, network loyalty and referrals.
These programs may be structured to reward customers with rebates, discounts, special offers within the network or through partner networks.
The additional complexity within a franchise network of the loyalty program needing to run across the system, and perhaps being awarded and redeemed across different locations needs to be negotiated within the network, and while the program is being developed to ensure maximum traction and engagement. Developing a program in isolation and then asking franchisees to subscribe may lead to network frustration about a lack of consultation and local flavour.
What metrics within your franchise are crucial to your success? Which, if you move them 2 or 3 percentage points make a measurable difference to gross profit and revenue? How do you drive more of the behaviour you want without the costs outweighing the benefits?
Identifying the metrics to make the most difference to revenue and GP will help entice franchisees to join the program and for the program to benefit customers across the whole network.
The next trend we see for franchise brands is category expansion or extension. This trend sees brands moving from a core competency into related, or adjacent, areas. Your customer will find these movements a natural extension of your brand, see the synergies and trust is more quickly established than if you were a greenfield brand, or moving into separate categories.
One of our clients, Battery World, has extended its service offering into Roadside Assistance. Most roadside assistance is for flat batteries and battery replacement, so the research that informed this strategic extension demonstrated that there is a link between their core product (batteries) and the extension service.
The category extension trend is present in fast food where Dominos Pizza extended into other food-types and then dropped Pizza from their brand name. And of course, the best brand extension can be seen throughout all Jim's franchises. There are now nearly 40 services to choose from, and all of them are linked by both the business-model (usually single franchisee as owner-operator) and the type of work the franchise does - the work that most of us either don't want to do or is too specialised and sporadic for us to do. Bless Jim's franchisees for doing our cleaning and our mowing!
Investment in data and hyper-personalisation
Increasingly, brand managers in franchise are investing in data and hyper-personalisation. More infrastructure is put in place throughout the network to capture customer data, ownership and use of the data is clarified in the franchise agreement, and the data used to drive traffic, footfall and revenue.
Collecting data at each step of the sales journey helps provide franchisees and the head office with valuable information on the customer, process, where there are opportunities for improvement and the customer journey and service blueprint.
Converting this data to actionable items then powers the next step of the brand and marketing - tweaking your messaging, segmenting your landing pages, customising your content plan, introducing more personas, and, of course, personalising your marketing to your customers.
Franchise has often lagged behind other categories of business because franchisees baulked at collecting data, or there was confusion around who owned the data and could, therefore, use it. Most of these issues have been resolved, and many franchise networks are going through their version of digital transformation and incorporating more data capture, more data analysis and a model of continuous improvement.
If your franchise hasn't yet built on any of these brand trends, now is the time to make it easier for your network to make a difference.