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Lead generation and the Internet

Written by : By Nigel Mayne
Though it may seem hard to believe in this day and age, information wasn't just one click away a decade or so ago. School children scoured leather-bound encyclopedias when writing research papers instead of plugging their topics into Google searches. Incoming college freshmen called their roommates on the telephone instead of looking them up on Facebook and prospective franchisees traveled to franchise expo after franchise expo to find their ideal concept instead of comparing their options online from the comfort of their homes. Why? Twenty years ago, it was rare to find a computer in someone's residence let alone a roadmap to navigate the Internet, which was then in its infancy and quite different than what we know and, in many cases, depend on for information today.

In just the past 36 months, there has been a seismic shift in the way people buy franchises and the way franchisors sell franchises. Much of this change has been driven by the power of the Internet. As technology evolved and information could be obtained without leaving the house, so did the ways franchisors attract new franchisees.

Franchisors realized the Internet wasn't just for computer geeks anymore; it was, in fact, one of the major forces reshaping our world and driving radical shifts in consumer behavior and business response. People were now doing their business research online and to remain on their radars, franchises had to re-evaluate their tactics to appeal to this new audience. Franchise sites and portals began to proliferate, everything from small web developers operating from their homes to large operations that boasted a strategic alliance with online powerhouse Monster.com. By 2002, many franchisors were generating the majority of their leads on line and closing more sales through Internet leads. These leads have slowly become the norm rather than the exception in franchise recruitment.

That same year, Google debuted its "Adwords" advertising model, which further heated competition in the franchise-portal industry. Gone were the barriers to entry for new franchise portals, large investments in traditional media and high-profile strategic alliances with media partners. Anyone could rise to the top of the search-engine rankings by buying keywords and purchasing advertising space on multiple portals to generate leads but the cost to do so fell heavily on franchisors: Franchisor lead costs jumped from $1.50 per lead to $25 per lead or more by 2005, with many franchisors paying between $50 and $100 per lead to assume a leadership position in some franchise portals. One would think these higher lead costs and continually increasing advertising costs would mean higher-quality leads but unfortunately the opposite was true: Quality leads dropped off dramatically since there were far more "tire kickers" submitting queries with no real intention of buying a franchise at all than buyers who were truly motivated to take the next step into franchising.

Following behind this industry trend proved to be quite lucrative for franchisors initially but as more players entered the game, it was necessary for franchisors to evolve ahead of their competition in any way possible to avoid accepting lower growth rates, lower profit margins or both. To do so, franchisors had to look beyond the overcrowded pond where most other franchisors were fishing and forge ahead into uncharted waters. Noting the ever-increasing costs of franchisee recruitment especially in the use of online lead generation portals, the importance of prescreening candidates and providing them with a base of information skyrocketed so I founded MatchPoint Franchise Consulting Network in 2006 to help companies expand their franchise networks and improve their system profitability by reducing franchisee recruitment costs and improving the quality of new franchisees coming into a system. How can this be done effectively so that franchisors and potential franchisees benefit the most?

  • Create a "Win-Win-Win" Outcome: The best caliber franchisee can be a win for the franchisor, a win for the franchisee and a win for our company and its network of professional franchise consultants. To achieve this outcome, companies should help candidates find the franchise system they are truly best suited for. They should clearly explain to candidates that a hot concept today usually won't retain that same buzz for long and shift their focus to concepts that complement their existing skill sets and goals.

  • Narrow the Playing Field: Our profiling systems, for example, assists consultants in helping potential franchisees narrow the playing field to include only the opportunities that will afford them the best opportunity for success, franchisors, in turn, are presented with individuals genuinely interested and motivated in building a new career with their concept.

  • Set a Standard: You don't have to have the largest network of consultants but the ones you do have should be committed to setting the standard for professionalism. Consultants should be provided with only the highest levels of support in the industry in addition to receiving the necessary training to ensure each candidate they meet with is guided toward a franchise concept they can call their own and have the ability to grow well into the future.

  • Understand the Business: Since many franchise consultants work from home to keep overhead low, all communication with clients happens via phone or the Internet. This approach is one that provides them with an unparalleled understanding of the methods individuals employ to find franchise concepts. Consultants can leverage this knowledge and insight to better service their clients, guiding them toward the concepts they would thrive with and away from those less fitting ones.

    As the relationship between lead generation and the Internet continues to evolve, franchisors will watch for the most successful yet cost-efficient ways to get their concepts in front of target audiences. But if the last quarter of 2008--where the Bureau of Labor Statistics reported 1.5 million people lost their jobs, many receiving little to no severance pay--is any indication, the capital to open a business cannot appear out of thin air. Internet or no Internet, it doesn't make the people who find your concept any more qualified or able to buy a franchise. It is still important to utilize the Internet in addition to other lead-generation services to keep your message fresh until the economic tide turns. The Internet has truly changed the way people live their lives and the way franchisors conduct business, but success in lead generation requires staying focused on a moving target.

  • Where will the new trends in Internet marketing take us? Social media is transforming the landscape of the Internet. Mobile marketing is touted by advertising analysts as the way of the future. Psychographic and demographic profiling of Internet surfers is well underway by the Internet giants like Yahoo and Google. The only thing we expect to stay the same is that the industry will keep changing.
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